Enel hits 4-month high on streamlining plans

By Geoffrey Smith

Investing.com -- Enel (BIT:ENEI) stock rose 1.5% in morning trading in Europe on Tuesday after the Italian-based energy group said it will sell some €21 billion (€1 = $1.0280) of assets to focus on a handful of core markets in the future.

In a presentation to investors, Enel said it will concentrate largely on only six major markets: Spain and Italy, the U.S. and the key South American countries of Brazil, Chile and Colombia.

The plans reflect a withdrawal from many of the frontier markets where Enel has been trying to establish itself as a major name in renewable energy. Wind and solar farms from Zambia to Australia and the Canadian province of Alberta all fall outside of its new perimeter.

The move is also a retreat from some of the other big Latin American operations that it inherited when it merged with Spain’s Endesa in 2009 – including large-scale power generation capacity in Argentina and Mexico. Already this year, the company has sold grid assets in Chile for around €1.3 billion, as well as operations in Russia for less than €1 billion, a figure that hardly reflects the heavy investment it had made there over the previous 15 years.

Enel CEO Francesco Starace said the disposals should be largely complete by the end of 2023, and would help cover investment needs of €37 billion over the following two years, split 60/40 between generation and services on the one hand and grids on the other.

Starace said the measures will help lift earnings before interest, taxes, depreciation and amortization to a range around €20.7 billion next year, rising to €22.5 billion by 2025, up from an estimated €19.3 billion this year. Net income is expected to rise by a more impressive 40% to around €7.1 billion by 2025.

Consequently, Starace said, the group envisages a dividend of at least 43c from next year, which would be an increase of around 7.5% from this year’s level.