'A convincing invitation to invest' is how Enel CEO Francesco Starace defined the Group's new 2015-2019 Business Plan, which was presented on 19 March in London. The plan is the result of a new way of viewing the role and development of the company, which is tailored to the global changes taking place and is focused on producing value from the Group's strong points that have emerged from the results obtained last year.
The operational and financial objectives set out for 2014 have been reached despite the tricky macroeconomic environment and the lack of growth in mature markets. Thanks to the reorganisation of both the Group's structure and a number of subsidiaries, the latter of which were mostly implemented in the second part of 2014, and the sale of non-strategic assets, Enel attained the goals outlined to the market and investors by developing green energy and growing in emerging markets, increasing the number of its customers and continuing the technological and digital development of its distribution networks.
Its debt targets was reached thanks to the plan launched in previous years. 'Now we are looking forward in accordance with the guidelines set up by the new business plan, which has a greater focus on ensuring its sustainability by additional cash flows generated by business growth,' said Enel CFO Alberto De Paoli, adding that the Group's five-year plan takes into account the 'ongoing changes in our industry. Traditionally ten years was the normal time span for planning, but today investments take place over shorter periods and in a highly volatile environmental, so a five-year period is more suitable'.
Enel has strong points that make it unique in the global energy sector, as it's one of the largest Groups in the world and has a technological and geographical diversification that has few parallels in the industry. In order to capitalise these strong points, according to Starace, the Group has 'done away with weak points that were mostly connected to our complex organisation and a structure that was no longer suitable for the industry'. Starace also highlighted four strategic development guidelines:
- Operational excellence that optimises capital location and reduces the cash cost, while also improving supplies and technologies;
- Industrial growth 'that has to be granular, with smaller and more numerous plants', and is scalable over the course of time so that it can adjust to changes and to the needs produced by changes to different environment;
- Asset replacement with an active management of the portfolio in order to free up resources and enable investments that can seize further growth opportunities;
- The new dividend policy is part of Enel's new strategy that originates from the awareness, according to Starace, that it's 'difficult for a company to have successful strategy if investors don't agree with it'. That means that they should be rewarded through short-term certainty and potential for significant medium-term growth.
The Business Plan offers a number of benefits for Enel shares, 'but the main one is having a more agile and sleek company that is better suited to facing the big changes taking place around us and to interpreting the needs that are emerging in the energy sector across the world'.
'Growth is possible provided that two errors that have been made by almost all companies in the energy sector are avoided,' said Starace. 'The first is building huge generation plants that are no longer suitable for the world we live in. The second is building plants without knowing the price at which the energy that they generate will be sold, which has become possible practically everywhere in the world.'
The current trend of population growth and increase of energy consumption in emerging nations call for the build the generation, transmission and network infrastructure. Development of technology in mature economies is changing everyday life and the energy industry, and this means turning digitalisation and high-tech innovation should into added value for the entire supply chain. In Latin America, Africa and Europe the Enel Group is already providing an answer to these questions, and the 2015-2019 Business Plan is the road map for sustainability, competitiveness and growth.