Enel 2019 – 2021 Strategic Plan: decarbonisation and customers to boost growth and value creation

Global macro trends such as decarbonisation, coupled with electrification, urbanisation, and digitalisation are shaping the world of energy into a new ecosystem that is progressively transforming utilities’ traditional business model. Renewables, network infrastructures and new energy services are cornerstones of the sector’s transformation and, at the same time, of Enel’s sustainable and innovation-driven strategy, which has customers as its core. Enel’s new strategic plan is designed to maximise the opportunities created by the energy transition and to minimise the risks associated with unpredictability.

·         Industrial Growth: the Group is expected to deploy 27.5 billion euros of gross capex over the plan period, resulting in 3.2 billion euro incremental ordinary EBITDA, fueled by the full spectrum of investments in the three categories of Asset Development, Customers and Asset Management

·         Decarbonisation, in particular, paves the way for value creation, with renewables expected to generate a total of 1 billion euros of incremental EBITDA between 2018 and 2021; investments focused on markets with an integrated presence and on mature economies, enabling the Group to improve profitability and achieve its decarbonisation objectives. In 2021, 62% of Enel Group’s power production is set to be emission-free, vs. 48% estimated in 2018

·         Operational Efficiency: 1.2 billion euros of cumulated benefits from efficiencies planned by 2021, mainly from digitalisation

·         Simplification: Enel will continue to increase its economic interest in subsidiaries, advancing their integration into the Group and streamlining its portfolio via asset rotation, further optimising the overall return as well as risk profile

·         Human capital: SDGs commitment relaunched to 2030. Shared Value approach to communities and people embedded in Group’s core business processes; specific additional targets introduced for SDG 9 (Industry, Innovation and Infrastructure) and 11 (Sustainable Cities and Communities)

·         Improved return on invested capital supporting dividend growth: investments skewed towards higher returns activities, efficiencies and focus on portfolio optimisation are expected to yield 400 basis points value creation on 6.2% WACC in 2021, with an over 1.5 times increase on 2018 yields

·         Shareholder remuneration: dividend pay-out confirmed at 70% of Group net ordinary income from 2019 onwards with a CAGR of the implicit dividend per share (“DPS”) of around +12%; a minimum DPS is extended for the first time over the next three years, ensuring a CAGR of around +9%

Francesco Starace, CEO and General Manager of Enel said: “Since 2015 we have delivered on all of our targets through a significant improvement in cash flow generation, which, combined with an acceleration on growth, has allowed us to increase our shareholder remuneration, raising DPS from 0.16 to 0.28 euros per share in 2018,  and expand our pay-out ratio that is set to remain stable at 70% over the plan period.

Renewables and network operations drove our investment strategy that is focused on a shorter time to market and a higher degree of flexibility to better cope with the progressive transformation of the industry.

A sound industrial growth and the efficiency programmes implemented so far have enabled us to progressively increase our ordinary EBITDA to 16.2 billion euros by end 2018, a level we committed to reach back in 2015 and that we constantly confirmed. Moreover, in the last three years, around 8 billion euros were recycled through our active portfolio management, using funds to further simplify the company’s structure and to pursue acquisitions, the most recent being Eletropaulo that increased our customer base by another 7 million, reinforcing Enel’s worldwide leadership in distribution networks.

Today’s Enel is a more sustainable, efficient, profitable and lower risk organisation.

The transformation under way in our industry is presenting challenges but also opening new opportunities. We are well positioned to create value in this transformation. Enel’s strategy is at this stage inherently sustainable, having embedded Shared Value concepts and Open Innovation practices in all its core business processes.

The solidity of our 2019-2021 plan allows us to improve our ordinary EBITDA targets for 2019 and 2020 and introduce new upward targets for 2021. The robustness of this strategy will translate, for the first time, into a minimum dividend per share over the full length of our plan. We remain confident and motivated in pursuing our growth trajectory for the foreseeable future.

Enel Piano Strategico 2019-2021 ENG 2

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