Enel Quarterly Net More Than Triples on Endesa Units (Update3)
By Anthony DiPaola
March 13 (Bloomberg) — Enel SpA, Italys largest utility,
more than tripled fourth-quarter profit after buying Spains
Endesa SA, adding customers and power plants on four continents.
Net income rose to 1.3 billion euros ($2 billion) from 396
million euros, beating the 731 million-euro mean estimate of five
analysts in a Bloomberg survey. Bloomberg calculated quarterly
figures by subtracting nine-month earnings from full-year results
released in a statement today. Enel kept the dividend unchanged.
The Rome-based utility and a partner bought Endesa in
October, bolstering Enel in markets where electricity demand is
increasing faster than in Italy, which caps growth by law. The
company said it will invest a total of 37.2 billion euros over
the next five years to help boost earnings further.
“The results are good, based on the Endesa purchase, and
the profit targets seem positive, Edoardo Liuni, an analyst at
IlNuovoMercato in Rome, said by telephone today. “The only thing
that may be disappointing is the flat dividend outlook.
Enel fell 24 cents, or 3.3 percent, to close at 6.86 euros
in Milan trading. Italys benchmark S%26amp;P MIB index lost 1.7
percent.
The Endesa deal, which valued Spains largest utility at
42.5 billion euros, was “necessary to establish Italys former
monopoly as one of the largest players in the European market,
Chief Executive Officer Fulvio Conti said during a presentation
in London today. As well as adding generation and 25 million
Endesa customers, Enels expansion abroad will help it cut
reliance on Italy, where power prices fell 5 percent in 2007.
Dividend `Stable
Enel will pay a dividend of 49 cents a share for 2007, equal
to the payout on 2006 earnings. The utility said the dividend
will remain “stable in the five years through 2012.
The company may save as much as 1 billion euros at its
Spanish and Latin American units by 2012 after incorporating
Endesa, Luigi Ferraris, Enels head of administration and
planning, said in a Bloomberg Television interview in London
today. That includes about 730 million euros in new savings, as
well as other cost cutting measures Endesa had planned prior to
the purchase, Ferraris said.
The company is working to make further savings by
integrating Endesas and Enels Latin American businesses. Enel
is “confident the savings and asset sales will allow it to
maintain its A credit rating, Ferraris said.
Enels five-year investment plan will help boost earnings
before interest, tax, depreciation and amortization to 13.8
billion euros next year and 16.6 billion euros in 2012, according
to the companys presentation.
EPS to Gain
Earnings per share are expected to rise by an average 10
percent a year through 2012, Enel said. Per-share profit will
climb to 62.3 cents next year and 83 cents by 2012.
The utility almost doubled fourth-quarter Ebitda to 3.3
billion euros on sales that rose 50 percent to 14.9 billion euros.
Debt climbed to 55.8 billion euros from 11.7 billion euros at the
end of 2006 after Enel borrowed to pay for Endesa.
The company, which will gain generation capacity in Central
and South America, Europe and North Africa, intends to sell
assets including high-voltage power lines and plants Endesa owns
in Italy. Enel aims to raise as much as 15 billion euros from
asset sales by 2012, it said. The utility will create a separate
division for most of its renewable-energy assets and may sell a
minority stake in that business, it said.
Conti is also seeking growth in Russia, where Enel controls
electricity company OAO OGK-5 and bought stakes in natural-gas
fields with partner Eni SpA. He has led Enel in expanding
generation and distribution in eastern Europe and in buying
renewable-power assets in Latin America and the U.S.
Reduce Debt
Enel may be able to cut debt by as much as 12 billion euros
a year by 2012 after the asset sales, it said. That would allow
the company to reduce borrowings to about 48 billion euros next
year and as little as 45 billion euros in 2012, Ferraris said.
The company is in “advanced talks to sell as much as 7
percent of OGK-5 to the European Bank for Reconstruction and
Development and the International Finance Corp., it said. The
sale would cut Enels holding in the Russian company to about 53
percent.
The potential buyers are set to pay about 4.4275 rubles (19
cents) a share for the stake, Enel said.
Enel beat E.ON AG in the contest for Endesa by topping the
German companys bid and offering to sell it some Endesa assets
in Italy and the rest of Europe. The two are set to agree before
the end of the year on the sale, Conti said today.
E.ON may pay as much as 13 billion euros for the assets, ABN
Amro Holding NV analysts said in January.
Conti, whose first three-year term as CEO expires with the
companys annual assembly in June, said in a November interview
with Italian television hed like to stay in his position. Enel
created 9 billion euros of value for shareholders during his
tenure, Conti said then.
To contact the reporter on this story:
Anthony DiPaola in Rome at
adipaola@bloomberg.net.
