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Iren — Investor Presentation 2023
May 11, 2023
4243_iss_2023-05-11_d72dc6cc-4b55-4185-a5e1-0968f00f529a.pdf
Investor Presentation
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Q1 2023 RESULTS
May 11th, 2023
Key Highlights
EBITDA on track with full-year guidance, driven by the recovery of the Market BU's profitability despite severe volumes contraction
Organic growth, led by strong investments, offset by inflation still not captured in tariffs
Effectiveness in extracting value from M&A transactions
The recent rating upgrade validated the continuous financial discipline
FY 2023 Guidance confirmed
KEY FINANCIALS
NETWORKS WASTE MARKET EBITDA -
NET PROFIT NFP CLOSING REMARKS HIGHLIGHTS ESG ENERGY ANNEXES
On track on all sustainable key indicators
Market profitability recovery offset by severe energy volumes contraction
EBITDA EVOLUTION
NETWORKS WASTE MARKET EBITDA -
NET PROFIT NFP CLOSING REMARKS ENERGY ANNEXES
Emerging costs & others
-11€M
NETWORKS NETWORKS RAB expansion offset by inflation-impacted operational costs
- 7% RAB expansion led by Water and Electricity businesses
- Higher operational costs due to inflation, which will be recovered in tariffs in the coming years
- +31% investments increase mainly linked to wastewater revamping and the modernisation of Gas and Electricity networks
- Consolidation in Water networks underway (AMTER, Acquaenna)
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HIGHLIGHTS
KEY FINANCIALS
NETWORKS WASTE MARKET EBITDA -
REMARKS ESG ENERGY ANNEXES
- Treatment & Disposal: favourable contribution from WTEs supported by higher PUN price, counterbalanced by lower energy volumes sold (-3%), heat price and lower recyclable waste prices
- Inflation offset by efficiencies
- Collection: positively affected by SEI Toscana consolidation (from July '22)
- Doubling of investments to support the phase-in of 3 new plants in Q2 2023
WASTE MANAGED WTEs ENERGY SOLD (GWh) 605 689 186 234 Q1 '22 Q1 '23 Urban waste Other waste 791 923 +17% +26% +14% (kTon) 167 166 112 106 Q1 '22 Q1 '23 Heat Electricity 279 271 -3% -6% -1% NET PROFIT NFP CLOSING REMARKS ESG ENERGY ANNEXES
HIGHLIGHTS
KEY FINANCIALS
Lower volumes affecting energy profitability across the board
- Contracted heat volumes due to mild temperatures and energy savings, combined with reduced margins (Q1 '22 positively affected by price volatility linked to energy crisis)
- Higher prices on Hydroeletric production; volumes in line with last year given persistent drought
- Lower thermoelectric volumes (-870GWh) as a result of a continuous turbine outage and the severe reduction in MSD contribution, partially offset by a positive clean spark spread
- Solid contribution from energy efficiency activities
NETWORKS ENERGY
* Q1 '22 reported a one off for +6€M
HIGHLIGHTS
KEY FINANCIALS
NETWORKS MARKET Progressive recovery of customers' portfolio value
*Q1 2022 includes volumes related to opportunistic transactions on wholsale market
- Supply profitability recovery from the exceptionally low level of prior year more than offset reduced gas volumes linked to mild temperatures
- Electricity volumes down following the change in client mix shifting focus from business to retail clients to minimize exposure to price and volumes volatility
- In April 2023, completed rebalancing of retail contracts towards fixed contributions and variable commodity prices
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EBITDA to Group Net Profit reconciliation
| (€M) | ||||
|---|---|---|---|---|
| Q1 '22 | Q1 '23 | Δ | Δ% | |
| EBITDA | 363 | 368 | 6 | 1.6% |
| D&A | -122 | -140 | ||
| Provisions to bad debt | -14 | -16 | ||
| Other provisions and write-downs | -2 | -2 | ||
| EBIT | 225 | 210 | -15 | -6.5% |
| Financial charges | -17 | -19 | ||
| Companies consolidated at equity method | 3 | 1 | ||
| Others | 1 | 0 | ||
| EBT | 213 | 193 | -20 | -9.5% |
| Taxes | -86 | -49 | ||
| Minorities | -9 | -9 | ||
| Group net profit | 118 | 135 | 17 | 14.6% |
- Higher depreciation as a result of new acquisitions and industrial investments (still not captured by tariffs) carried-out during the period
- Provisions to bad debt in line with last year
Q1 2022 impacted by "Contributo di solidarietà" decree (24€M)
KEY FINANCIALS
NETWORKS WASTE MARKET EBITDA -
REMARKS ESG ENERGY ANNEXES
Net Financial Position Evolution (Q1 2023 vs FY2022)
∼350€M of temporary Net Debt impact: 130M€ of Superbonus 110% and 225 €M of changes in WC expected to be reabsorbed in the next quarters
FINANCIALS
KEY
NETWORKS WASTE MARKET EBITDA - REMARKS HIGHLIGHTS ESG ENERGY ANNEXES
Closing Remarks
- Continued growth based on recovery of Market profitability
- Full availability of thermo facilities since the beginning of May
- INDUSTRIALS
- Expected BP achievement in 2023: - Phase-in of 3 new waste
treatment plants
- 70MW of new solar capacity
-
PPP proposal on expired Hydro concessions
-
~350€M of changes in WC expected to be reabsorbed in the next quarters
- The sale of a minority stake of Gas Networks is ongoing and will be closed within 2023
- Strong commitment to preserve the NFP/Ebitda ratio and our newly upgraded rating
EBITDA +6% vs. FY 2022 GROSS CAPEX: ~1.2B€* NFP/EBITDA: ~3.3x
*Includes third party investments and contributions
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KEY FINANCIALS
NETWORKS WASTE MARKET EBITDA -
FINANCIALS
NET PROFIT NFP CLOSING REMARKS HIGHLIGHTS ESG ENERGY ANNEXES
ANNEXES
Q1 2023 Business units' results
| NETWORKS | ||||
|---|---|---|---|---|
| €M | Q1 '22 | Q1 '23 | Δ | Δ% |
| Revenues | 257 | 292 | 35 | 20% |
| Ebitda | 95 | 96 | 1 | 2% |
| Electricity | 19 | 19 | 0 | -2% |
| Gas | 21 | 21 | 0 | -1% |
| Water | 55 | 56 | 2 | 4% |
| Ebit | 48 | 45 | -3 | -7% |
| Gross Capex | 64 | 83 | 19 | 31% |
| ENERGY | MARKET | |||||
|---|---|---|---|---|---|---|
| €M | Q1 '22 | Q1 '23 | Δ | Δ% | ||
| Revenues | 1,295 | 1,009 | -286 | -22% | ||
| Ebitda | 165 | 134 | -31 | -19% | ||
| Hydro&Renewables | 6 | 16 | 10 | (*) | ||
| Thermo/Coge, DH | 149 | 101 | -48 | -32% | ||
| Energy efficiency | 10 | 17 | 7 | 72% | ||
| Ebit | 128 | 93 | -35 | -27% | ||
| Gross Capex | 17 | 24 | 7 | 39% |
| WASTE | ||||
|---|---|---|---|---|
| €M | Q1 '22 | Q1 '23 | Δ | Δ% |
| Revenues | 244 | 302 | 58 | 24% |
| Ebitda | 65 | 68 | 3 | 4% |
| Collection | 13 | 19 | 6 | 41% |
| Treatment & disposal | 52 | 49 | -3 | -5% |
| Ebit | 37 | 29 | -8 | -22% |
| Gross Capex | 23 | 47 | 24 | (*) |
| €M | Q1 '22 | Q1 '23 | Δ | Δ% | |
|---|---|---|---|---|---|
| Revenues | 1,941 | 1,557 | -384 | -20% | |
| Ebitda | 38 | 70 | 32 | 83% | |
| Electricity | -15 | 6 | 21 | (*) | |
| Gas | 49 | 62 | 13 | 29% | |
| Iren Plus & others | 4 | 2 | -2 | -62% | |
| Ebit | 14 | 43 | 29 | (*) | |
| Gross Capex | 23 | 18 | -4 | -19% | |
(*) Variation greater than 100%
KEY FINANCIALS
REMARKS HIGHLIGHTS ESG ENERGY ANNEXES
NETWORKS WASTE MARKET EBITDA -
Financials
94% of gross debt at fixed interest rate
- Average long-term debt duration of about 5.0 years vs 5.4 years in Q1 '22
- Increase in the average cost of debt (1.8% vs. 1.7% in Q1 '22)
KEY FINANCIALS
75% of the Iren total debt is composed of green and assimilated instruments
| BBB | Outlook Stable |
|---|---|
| BBB | Outlook Stable |
NETWORKS WASTE MARKET EBITDA - REMARKS HIGHLIGHTS ESG ENERGY ANNEXES
Industrial KPIs
| Q1 '22 | Q1 '23 | Δ% | ||
|---|---|---|---|---|
| Electricity distributed (GWh) | 935 | 900 | -3% | |
| Gas distributed (mcm) | 533 | 442 | -19% | |
| Water distributed (mcm) | 42 | 43 | - | |
| Waste collected (Kton) | 390 | 480 | +23% | |
| Waste treated (Kton) | 627 | 673 | +7% | |
| Renewable production (GWh) | 154 | 179 | +16% | |
| Hydro production (GWh) | 116 | 139 | +20% | |
| Solar production (GWh) | 38 | 40 | +5% |
Scenario
| Q1 '22 | Q1 '23 | Δ% | |
|---|---|---|---|
| PSV €/000 scm |
103,7 | 60,6 | -42% |
| PUN (€/Mwh) |
248 | 157 | -37% |
| CO2 €/Ton |
83 | 87 | +5% |
| Green Cert. Hydro (€/Mwh) |
42,9 | 0 | -100% |
Disclaimer
The Manager in charge of drawing up the corporate accounting documents and the Chief Financial Officer of IREN S.p.A., Ms. Anna Tanganelli, hereby declares, pursuant to paragraph 2 of article 154 bis of the Consolidated Finance Act (Legislative Decree No 58/1998), that the accounting information contained in this presentation is consistent with the accounting documents, records and books.
This document was prepared by IREN mainly for use during meetings with investors and financial analysts. This document does not constitute an offer to sell or a solicitation to buy or subscribe shares and neither this entire document or any portion of it may constitute a basis or provide a reference for any contract or commitment.
Some of the information contained in this document may contain projected data or estimates that are based on current expectations and on opinions developed by IREN and are based on current plans, estimates, projections and projects. Consequently, it is recommended that they be viewed as indicative only.
Projected data and estimates entail risks and uncertainties. There are a number of factors that could produce significant differences between projected results and actual results. In addition, results may be affected by trends that are often difficult to anticipate, are generally beyond IREN's control and could produce results and developments that are substantially different from those explicitly or implicitly described or computed in the abovementioned projected data and estimates. The non-exhaustive list that follows being provided merely by way of example, these risks include: significant changes in the global business scenario, fluctuations in the prices of certain commodities, changes in the market's competitive conditions and changes in the general regulatory framework.
Notice is also given that projected data are valid only on the date they are produced. Except for those cases in which the applicable statutes require otherwise, IREN assumes no obligation to provide updates of the abovementioned estimates and projected data.
NETWORKS WASTE MARKET EBITDA -