Earnings Release • May 9, 2016
Earnings Release
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| Informazione Regolamentata n. 0116-47-2016 |
Data/Ora Ricezione 09 Maggio 2016 18:09:58 |
MTA | ||
|---|---|---|---|---|
| Societa' | : | ENEL | ||
| Identificativo Informazione Regolamentata |
: | 73903 | ||
| Nome utilizzatore | : | ENELN05 - Giannetti | ||
| Tipologia | : | IRAG 03 | ||
| Data/Ora Ricezione | : | 09 Maggio 2016 18:09:58 | ||
| Data/Ora Inizio Diffusione presunta |
: | 09 Maggio 2016 18:24:59 | ||
| Oggetto | : | Enel: Group's net income up and net financial down in first quarter of 2016 |
||
| Testo del comunicato |
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Francesco Starace, Chief Executive Officer and General Manager of Enel, commented: "Results in the first quarter of 2016 reflect very good progress against our strategic plan. Our flexibility and increased operational efficiency enabled us to further improve our competitiveness, in spite of a persistently challenging macroeconomic environment. We added further renewables capacity during the quarter, and
achieved the full integration of Enel Green Power into the group. We continue to make progress with the simplification process in LatAm, which we expect to complete during the second half of the year. Having split the Chilean operations from those in the rest of Latin America, the new companies started trading on the Santiago and New York stock exchanges in April."
*****
Rome, May 9th, 2016 – The Board of Directors of Enel S.p.A. ("Enel"), chaired by Patrizia Grieco, examined and approved the interim financial report at March 31st, 2016.
The following table provides a breakdown of revenue by business area:
| Revenues (millions of euros) | 2016 | 2015 | Change |
|---|---|---|---|
| Italy | 9,170 | 10,324 | -11.2% |
| Iberian Peninsula | 4,697 | 5,358 | -12.3% |
| Latin America | 2,452 | 2,670 | -8.2% |
| Eastern Europe | 1,169 | 1,239 | -5.6% |
| Renewable Energy | 705 | 812 | -13.2% |
| Other, eliminations and adjustments |
(321) | (433) | -25.9% |
| TOTAL | 17,872 | 19,970 | -10.5% |
EBITDA in the first quarter of 2016 amounted to 4,017 million euros, a slight decrease of 6 million euros (-0.1%) compared with the same period of 2015. The change reflected:
Both of these factors were mainly offset by an improvement in EBITDA in the mature end-user markets (Italy and Spain) and in the generation margin in Chile.
| EBITDA (millions of euros) | 2016 | 2015 | Change |
|---|---|---|---|
| Italy | 1,775 | 1,554 | 14.2% |
| Iberian Peninsula | 794 | 977 | -18.7% |
| Latin America | 800 | 736 | 8.7% |
| Eastern Europe | 197 | 233 | -15.5% |
| Renewable Energy | 462 | 536 | -13.8% |
| Other, eliminations and adjustments |
(11) | (13) | 15.4% |
| TOTAL | 4,017 | 4,023 | -0.1% |
The following table provides a breakdown of EBITDA by business area:
Given that EBITDA for the first quarter of 2016 includes the only extraordinary gain in the sale of Hydro Dolomiti Enel cited under the comments on revenues, ordinary EBITDA amounts to 3,871 million euros, a decline of 3.8% compared with the same period of 2015, breaking down as follows:
| Ordinary EBITDA (millions of euros) | 2016 | 2015 | Change |
|---|---|---|---|
| Italy | 1,629 | 1,554 | 4.8% |
| Iberian Peninsula | 794 | 977 | -18.7% |
| Latin America | 800 | 736 | 8.7% |
| Eastern Europe | 197 | 233 | -15.5% |
| Renewable Energy | 462 | 536 | -13.8% |
| Other, eliminations and adjustments | (11) | (13) | 15.4% |
| TOTAL | 3,871 | 4,023 | -3.9% |
Excluding non-recurring items, nearly all occurring in the first quarter of 2015 (mainly relating to some transactions on environmental certificates in Spain, the consolidation of 3Sun and to the recognition of tariff adjustments in Argentina through Resoluciòn no.32/2015), ordinary EBITDA increased by 2% in spite of the negative exchange rate effect equal to 195 million euros.
EBIT in the first quarter of 2016 amounted to 2,670 million euros, an increase of 45 million euros (+1.7%) compared with the same period of 2015, attributable to a decrease of 51 million euros in depreciation, amortisation and impairment losses. This drop is mainly attributable to the effect on amortisation from impairment losses on property, plants and equipment carried out in previous years, as well as to lower net value adjustments of trade receivables.
| EBIT (millions of euros) | 2016 | 2015 | Change |
|---|---|---|---|
| Italy | 1,290 | 1,064 | 21.2% |
| Iberian Peninsula | 395 | 582 | -32.1% |
| Latin America | 585 | 491 | 19.1% |
| Eastern Europe | 139 | 139 | - |
| Renewable Energy | 284 | 370 | -23.2% |
| Other, eliminations and adjustments |
(23) | (21) | -9.5% |
| TOTAL | 2,670 | 2,625 | 1.7% |
The following table provides a breakdown of EBIT by business area:
In the first quarter of 2016, Group net income amounted to 939 million euros, an increase of 129 million euros compared with the same period of the previous year (+15.9%).
The aforementioned increase in EBIT, coupled with a decline in the tax liability compared with the first quarter of 2015, were only partly offset by an increase in financial charges, mainly attributable to nonrecurring items in Argentina and the charges associated with the repurchase of a number of Enel bonds. More specifically, the reduction in the tax rate mainly reflects:
GROUP NET ORDINARY INCOME in the first quarter of 2016 amounted to 795 million euros, down 15 million euros (-1.9%) compared with the same period of 2015.
The financial position shows net capital employed as of March 31st, 2016, of 88,836 million euros (89,296 million euros as of December 31st, 2015).
This amount is funded by:
flow but also to the positive impact of developments in the exchange rate of a number of the currencies (mainly the US dollar) in which part of the above debt is denominated. As of March 31st, 2016, the debt/equity ratio came to 0.70 (0.73 as of December 31st, 2015).
| Capital expenditure (millions of euros) |
2016 | 2015 | Change |
|---|---|---|---|
| Italy | 298 | 257 | 16.0% |
| Iberian Peninsula | 170 | 154 | 10.4% |
| Latin America | 227 | 320 | -29.1% |
| Eastern Europe | 47 | 36 | 30.6% |
| Renewable Energy | 800 | 475 | 68.4% |
| Other | 5 | 11 | -54.5% |
| TOTAL | 1,547 | 1,253 | 23.5% |
The following table provides a breakdown of capital expenditure by business area:
*****
| 2016 | 2015 | Change | |
|---|---|---|---|
| Electricity sales (TWh) | 68.0 | 66.5 | 2.3% |
| Gas sales (billions of m3 ) |
3.8 | 3.3 | 15.2% |
| Electricity generated (TWh) | 66.0 | 71.9 | -8.2% |
| Electricity distributed (TWh) | 105.6 | 106.1 | -0.5% |
| Employees (no.) | 67,958 | 67,914 | +0.1% |
The Enel Group confirms its long-term objective of achieving carbon neutrality by 2050. It is expected that renewables generation will contribute nearly half of the Group estimated total capacity of 83 GW by 2019.
As of March 31st, 2016, Enel Group employees numbered 67,958 (67,914 as of December 31st, 2015). The change in the quarter (+44) is entirely attributable to the net balance of new hires and terminations.
The strategic plan, an updated version of which was presented in November 2015, is focused on:
In the first quarter of 2016, significant progress was achieved in the pursuit of each of the above targets of the strategic plan.
In the remainder of 2016, in line with plan targets, the Enel Group is expected to:
Based on the key targets outlined above, the following table sets out the performance and financial targets on which the 2016-2019 strategic plan is founded.
| 2016 | 2017 | CAGR 15-19 | ||
|---|---|---|---|---|
| Recurring EBITDA | Billions of euros | ~14.7 | ~15.5 | ~4% |
| Net ordinary income | Billions of euros | ~3.1 | ~3.4 | ~10% |
| Minimum dividend | euro/share | 0.18 | ~17% | |
| Pay-out | % | 55 | 60 | ~7% |
| FFO / Net financial debt | % | 23 | 26 | ~6% |
March 25th, 2016: Enel and its subsidiary Enel Green Power ("EGP") executed the deed of demerger concerning the partial non-proportional demerger of EGP in favour of Enel. The demerger took effect at the last moment of March 31st, 2016. Accordingly, as from April 1st, 2016, the shares of EGP were delisted from the Italian and Spanish markets.
The demerger was supported with the issue of 763,322,151 new ordinary Enel shares with a par value of 1 euro each to be allotted to EGP shareholders other than Enel, with a consequent increase in the share capital of Enel to 10,166,679,946 euros from 9,403,357,795 euros. Trading in those shares began on April 1st, 2016.
With the completion of the demerger, EGP's share capital became fully owned by Enel and was reduced to 272,000,000 euros from 1,000,000,000 euros, represented by 1,360,000,000 ordinary shares with a par value of 0.20 euros each.
March 30th, 2016: Enel's subsidiary EGP announced has been awarded the right to sign contracts for 15 year energy supply and 20-year green certificate supply with three photovoltaic projects for a total capacity of around 1 GW in Mexico. The plants, whose entry into service is expected in 2018 and whose completion will require an investment of about 1 billion US dollars, will generate more than 2 TWh of renewable electricity per year.
April 4th, 2016: Enel announced that it had begun work, through its subsidiary Enel Green Power Brasil Participações, on the construction of Lapa, a solar facility composed of two plants with a combined installed capacity of 158 MW, located in the state of Bahia, in North-eastern Brazil. The plant will be able to generate nearly 340 GWh per year. The completion of the plant, expected by the end of 2017, will require an investment of about 175 million US dollars.
April 8th, 2016: Enel announced that it had begun work, through its subsidiary Enel Green Power North America, on the construction of Cimarron Bend, a 400 MW wind farm located in Clark County, Kansas. Once fully operational, the plant will be able to generate about 1.8 TWh per year. The completion of the plant, expected by the end of 2017, will require an investment of about 610 million US dollars.
April 18th, 2016: Enel announced that it had begun work, through its subsidiary Enel Green Power Brasil Participações, on the construction of the Cristalândia wind farm, located in the state of Bahia. Once completed, the facility will have an installed capacity of 90 MW and will be able to generate more than 350 GWh per year. The completion of the plant, expected by the end of 2017, will require Enel to invest about 190 million US dollars.
May 5th, 2016: Enel announced that it had begun work, through its subsidiary Enel Green Power North America, on the construction in the United States of the Aurora photovoltaic facility, in Minnesota, made up of 16 photovoltaic plants with a total installed capacity of 150 MW. The Aurora plant, in which Enel will invest about 290 million US dollars, is expected to be completed by the end of 2016 and will be able to generate more than 120 million kWh per year.
May 5th, 2016: Enel's subsidiary Empresa Nacional de Electricidad (Endesa Chile) announced that it had signed three electricity supply contracts with Anglo American Sur involving estimated annual consumption of about 2 TWh. The supply of power will begin in January 2021 and the contracts have a term of ten
years. The price provided for in the agreement is in line with market conditions for similar long-term contracts.
More details on these events are available in the associated press releases, which are published on the Enel website at the following address:https://www.enel.com/en-gb/Pages/hub-media.aspx
*****
At 9:30 CET of May 10th, 2016, a conference call will be held to present the results for the first quarter of 2016 to financial analysts and institutional investors. Journalists are also invited to listen in on the call. Documentation relating to the conference call will be available on Enel's website (www.enel.com) in the Investor section from the beginning of the call.
The condensed income statement, statement of comprehensive income, condensed balance sheet and condensed cash flow statement for the Enel Group are attached below. A descriptive summary of the alternative performance indicators used in this press release is also attached.
The officer responsible for the preparation of the corporate financial reports, Alberto De Paoli, certifies, pursuant to Article 154-bis, paragraph 2, of the Consolidated Law on Financial Intermediation, that the accounting information contained in this press release corresponds with that contained in the accounting documentation, books and records.
Article 154-ter, paragraph 5, of the Consolidated Financial Intermediation Act, as recently amended by Legislative Decree 25/2016, no longer requires issuers to publish an interim financial report at the close of the first and third quarters of the year. The new rules give Italian stock market regulator Consob the power to issue a regulation requiring issuers, following an impact analysis, to publish periodic financial information in addition to the annual and semi-annual financial reports. In view of the foregoing, pending a possible modification of the regulatory framework by Consob, Enel intends to continue voluntarily publishing an interim financial report at the close of the first and third quarters of each year in order to satisfy investor expectations and conform to consolidated best practice in the main financial markets, while also taking due account of the quarterly reporting requirements of a number of major listed subsidiaries.
There were no changes in accounting standards that had an impact on the accounts that would need to be reported here. Unless otherwise specified, the balance sheet figures as of March 31st, 2016, exclude assets and liabilities held for sale, which regard Slovenské elektrárne and other residual assets that on the basis of the status of negotiations for their sale to third parties meet the requirements of IFRS 5 for such classification. In the first three months of 2016, the disposal of Hydro Dolomiti Enel and Compostilla, which had been classified as held for sale as of December 31st, 2015, were completed.
The operating segment figures have been constructed on the basis of the organisational structure of the Enel Group in place in the first quarter of 2016, which is entirely analogous to that used for reporting purposes in 2015. The organisational structure was modified on April 8th, 2016, partly in relation to the full integration of Enel Green Power. More specifically, the main organisational changes include:
In the coming months, the new organisation will be implemented progressively in the Group's Countries, beginning with Italy, with the consequent adjustment of operating segment.
*****
This press release uses a number of "alternative performance indicators" not envisaged in the IFRS-EU accounting standards in order to facilitate the assessment of the Group's performance and financial position. In accordance with recommendation CESR/05-178b published on November 3rd , 2005, the criteria used to calculate these indicators are described below.
All Enel press releases are also available in smartphone and tablet versions. You can download the Enel Corporate App at Apple Store and Google Play.
| Millions of euro | 1st Quarter | |
|---|---|---|
| 2016 | 2015 | |
| Total revenues | 17,872 | 19,970 |
| Total costs (1) | 15,122 | 17,427 |
| Net income/(expense) from commodity contracts measured at fair value | (80) | 82 |
| Operating income | 2,670 | 2,625 |
| Financial income | 1,592 | 1,946 |
| Financial expense | 2,444 | 2,713 |
| Total financial income/(expense) | (852) | (767) |
| Share of gains/(losses) on investments accounted for using the equity method |
35 | 24 |
| Income before taxes | 1,853 | 1,882 |
| Income taxes | 548 | 703 |
| Income from continuing operations | 1,305 | 1,179 |
| Net income from discontinued operations | - | - |
| Net income for the period (shareholders of the Parent Company and non controlling interests) |
1,305 | 1,179 |
| Attributable to shareholders of the Parent Company | 939 | 810 |
| Attributable to non-controlling interests | 366 | 369 |
| Net earnings attributable to shareholders of the Parent Company per share (euro) (2) |
0.10 | 0.09 |
(1) Of which depreciation, amortization and impairment losses at March 31, 2016 for €1,347 million (€1,398 million at March 31, 2015) (2) Diluted earnings per share are equal to basic earnings per share.
| Millions of euro | 1st Quarter | |
|---|---|---|
| 2016 | 2015 | |
| Net income for the period | 1,305 | 1,179 |
| Other comprehensive income recyclable to profit or loss: | ||
| - Effective portion of change in the fair value of cash flow hedges | (649) | (179) |
| - Income recognized in equity by companies accounted for using the equity method | (26) | (6) |
| - Change in the fair value of financial investments available for sale | 3 | 39 |
| - Change in translation reserve | 83 | 1,095 |
| Income/(Loss) recognized directly in equity | (589) | 949 |
| Comprehensive income for the period | 716 | 2,128 |
| Attributable to: | ||
| - shareholders of the Parent Company | 309 | 1,204 |
| - non-controlling interests | 407 | 924 |
Millions of euro
| at Mar, 31, 2016 | at Dec, 31, 2015 | |
|---|---|---|
| ASSETS | ||
| Non-current assets | ||
| - Property, plant and equipment and intangible assets | 89,077 | 88,686 |
| - Goodwill | 13,807 | 13,824 |
| - Equity investments accounted for using the equity method | 613 | 607 |
| - Other non-current assets (1) | 13,446 | 13,880 |
| Total non-current assets | 116,943 | 116,997 |
| Current assets | ||
| - Inventories | 2,678 | 2,904 |
| - Trade receivables | 14,034 | 12,797 |
| - Cash and cash equivalents | 6,279 | 10,639 |
| - Other current assets (2) | 11,295 | 10,988 |
| Total current assets | 34,286 | 37,328 |
| Assets held for sale | 6,824 | 6,854 |
| TOTAL ASSETS | 158,053 | 161,179 |
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||
| - Equity attributable to the shareholders of the Parent Company | 34,750 | 32,376 |
| - Equity attributable to non-controlling interests | 17,442 | 19,375 |
| Total shareholders'equity | 52,192 | 51,751 |
| Non-current liabilities | ||
| - Long-term loans | 43,689 | 44,872 |
| - Provisions and deferred tax liabilities | 16,267 | 16,453 |
| - Other non-current liabilities | 3,915 | 3,067 |
| Total non-current liabilities | 63,871 | 64,392 |
| Current liabilities | ||
| - Short-term loans and current portion of long-term loans | 4,458 | 7,888 |
| - Trade payables | 11,883 | 11,775 |
| - Other current liabilities (3) | 20,008 | 20,009 |
| Total current liabilities | 36,349 | 39,672 |
| Liabilities held for sale | 5,641 | 5,364 |
| TOTAL LIABILITIES | 105,861 | 109,428 |
|---|---|---|
| TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | 158,053 | 161,179 |
(1) Of which long-term financial receivables and other securities at March 31, 2016 for €2,103 million (€2,173 million at December 31, 2015) and €451 million (€162 million at December 31, 2015), respectively.
(2) Of which current portion of long-term financial receivables, short-term financial receivables and other securities at March 31, 2016 for €672 million (€769 million at December 31, 2015), €2,005 million (€1,471 million at December 31, 2015) and €29 million (€1 million at December 31, 2015), respectively.
(3) Of which short-term financial payables at March 31, 2016 for €36 million (none at December 31, 2015).
| Millions of euro | 1st Quarter | |
|---|---|---|
| 2016 | 2015 | |
| Income before taxes for the period | 1,853 | 1,882 |
| Adjustments for: | ||
| Amortization and impairment losses of tangible and intangible assets | 1,200 | 1,225 |
| Financial (income)/expense | 632 | 634 |
| Interest income or expense and other financial income or expense collected or paid | (768) | (1,066) |
| Exchange rate adjustments of foreign currency assets and liabilities (including cash and cash equivalents) | 255 | 1,074 |
| Changes in net current assets: | ||
| - Inventories | 183 | 93 |
| - Trade receivables | (1,307) | (1,596) |
| - Trade payables | 163 | (950) |
| Other changes | (644) | (820) |
| Cash flows from operating activities (a) | 1,567 | 476 |
| Investments in property, plant and equipment and in intangible assets | (1,650) | (1,340) |
| Investments in entities (or business units) less cash and cash equivalents acquired | - | (17) |
| Disposals of entities (or business unit) less cash and cash equivalents sold | 326 | - |
| (Increase)/Decrease in other investing activities | 23 | 99 |
| Cash flows from investing/disinvesting activities (b) | (1,301) | (1,258) |
| Financial debt (new long-term borrowing) | 827 | 2,090 |
| Financial debt (repayments and other net changes) | (5,163) | (4,383) |
| Operation on non-controlling interest | (196) | 301 |
| Dividends and interim dividends paid | (236) | (278) |
| Cash flows from financing activities (c) | (4,768) | (2,270) |
| Impact of exchange rate fluctuations on cash and cash equivalents (d) | 36 | 185 |
| Increase/(Decrease) in cash and cash equivalents (a+b+c+d) | (4,466) | (2,867) |
| Cash and cash equivalents at beginning of the period (1) | 10,790 | 13,255 |
| Cash and cash equivalents at the end of the period (2) | 6,324 | 10,388 |
(1) O
f which cash and cash equivalents equal to €10,639 million at January 1, 2016 (€13,088 million at January 1, 2015), short-term
17
securities equal to €1 million at January 1, 2016 (€140 million at January 1, 2015) and cash and cash equivalents pertaining to "Assets held for sale" in the amount of €150 million at January 1, 2016 (€27 million at January 1, 2015).
(2) O f which cash and cash equivalents equal to €6,279 million at March 31, 2016 (€10,349 million at March 31, 2015), short-term securities equal to €29 million at March 31, 2016 (€25 million at March 31, 2015) and cash and cash equivalents pertaining to "Assets held for sale" in the amount of €16 million at March 31, 2016 (€14 million at March 31, 2015).
| Fine Comunicato n.0116-47 | Numero di Pagine: 20 |
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