Earnings call transcript: Enel’s Q1 2024 growth driven by renewables

Enel has reported its Q1 2024 earnings, showcasing robust growth driven primarily by its renewable energy segment. The company’s ordinary EBITDA increased by over 2 billion euros year-on-year, reaching 22.8 billion euros. Net income rose by 10% to 7.1 billion euros, while the net debt-to-EBITDA ratio improved to 2.4x from 2.7x. According to InvestingPro data, the company maintains a "GREAT" overall financial health score of 3.12 out of 5, with particularly strong momentum metrics. Despite these positive financial results, Enel’s stock faced a decline, closing at 98.97 euros, down by 5.73%.

Key Takeaways

• Renewable energy production increased by 8% year-on-year.
• Net income grew by 10%, reaching 7.1 billion euros.
• The company proposed a dividend of 0.47 euros per share, yielding 7%.
• Enel acquired 1.6 GW of assets in Spain and Australia.

Company Performance

Enel’s Q1 2024 performance highlights the company’s strong focus on renewable energy, with an 8% increase in renewable production. This shift is part of a broader strategy to enhance emission-free generation, which now constitutes 83% of Enel’s total production. The company’s integrated business model and strategic acquisitions in Spain and Australia have bolstered its competitive position, particularly in the renewables sector.

Financial Highlights

• Ordinary EBITDA: 22.8 billion euros (up over 2 billion euros year-on-year)
• Reported EBITDA: 24.1 billion euros
• Net Income: 7.1 billion euros (10% increase)
• Proposed Dividend: 0.47 euros per share (70% payout, 7% yield)

Market Reaction

Despite the strong financial performance, Enel’s stock price fell by 5.73% to 98.97 euros. This decline comes amid broader market volatility and may reflect investor concerns about potential risks in the energy sector. InvestingPro analysis shows the stock has experienced significant volatility, with a beta of 1.01, indicating movement largely in line with the market. The stock trades near its 52-week high of 8.03 USD, showing resilience despite recent market turbulence.

Outlook & Guidance

Looking forward, Enel anticipates a 3% growth in EBITDA for 2025 from the 2024 baseline. The company plans to continue focusing on regulated markets and storage, with expectations for normalized hydro conditions in 2025. Enel also maintains its dividend policy, with potential increases on the horizon. InvestingPro data reveals a solid dividend growth rate of 7.5% and an impressive 5-year revenue CAGR of 5%, suggesting sustainable long-term growth potential. For detailed analysis and forecasts, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.

Executive Commentary

CEO Flavio Catania emphasized the company’s strategic focus, stating, "We have been able to restore growth financial solidity to capture future and more profitable growth opportunities." CFO Stefano Garganjes highlighted the resilience provided by Enel’s integrated strategy, ensuring "margin sustainability in the long term."

Risks and Challenges

• Continued market volatility affecting stock performance.
• Regulatory changes in key markets could impact operations.
• Potential geopolitical tensions affecting global energy supply chains.
• Fluctuations in renewable energy production due to weather conditions.
• Economic challenges in Latin American markets, despite stabilization efforts.

Q&A

Analysts inquired about distribution concession renewals and the impact of US executive orders. Enel’s management reassured stakeholders that no significant impacts are expected from these factors, and they anticipate retail market normalization with stable working capital.

Full transcript - Envair Electrodyne BO (ENEL) Q4 2024:

Omar, Moderator/Host, Enel: Good evening to all the people connected. Welcome to the full year 2024 result presentation, which will be hosted by Enel’s CEO, Flavio Catania and the CFO, Stefano Garganjes. Following the presentation, we will have the usual Q and A session. We ask those connected to the webcast to send question only via email at investor.relations@nl.com. Before we start, let me remind you that Medya is listening to both the presentation and the Q and A session.

Thank you. And now, let me hand over to the CEO.

Flavio Catania, CEO, Enel: Thank you, Omar. Welcome to everybody. We’re starting with our focus on rebuilding and constructive dialogue with the institution that is already showing positive and visible outcome. The resulting improvement of regulatory frameworks will support our industrial plant delivery and confirm the value creation of our capital allocation. Group delivery in all 24 was feasible and based on a solid performance and allowed us to meet all the targets.

The result was achieved due to the higher higher contribution of Iberia, U. S. And LatAm at integrated margin level. I’ll just say follow with detail later on in the presentation. The leverage has been successfully executed and its completion improves our balance sheet flexibility for a more profitable growth.

Lastly, in light of the result achieved, we’ll propose to the next AGM a dividend per share equal to 47¢ for all 24 implying around 70% payout and 7% dividend yield at the current price. What to remind before is confirmed at the 46¢ per share over the plan period. As additional shareholder remuneration, the Board of Directors has the share buyback program for a maximum 500,000,000 shares and amount up to $555,000,000,000. The program will be proposed to the next AGM and the shares acquired will be consequently cancelled. Now we’ll have a look at the O20 for delivery.

The next slide you see last year the Group recorded an outstanding financial performance and growth across all businesses. EBITDA reached SEK22.8 billion, landing at the top of the guidance range. On the back of a less volatile environment, restoring the full growth potential. Net income came in at 7,100,000,000.0, increasing by 10% versus the previous year. EBITDA and net income are the outcome of our managerial action implemented in the non domestic market, where the new capital allocation approach is increasing asset based profitability.

Net debt EBITDA ratio lowered to 2.4 versus 2.7 times of last year on the back of an improved performance and the deleverage completion. Now we move, we see the progresses of our advocacy action in the next slide. Supported regulatory frameworks are the main driver to attract investment for the energy transition. Therefore, we reinforced our advocacy action and over the past months we’ve started to record notable achievements. In Italy, for example, the first and most relevant outcome was the renewable of the distribution concession.

Also on the renewable side, the new supportive measures have been introduced in the ferries decree. In Spain, where we’re working to ensure the regulatory framework will be supportive of investment into energy transition. From LATAM, discussion have been positive so far and the renewal of the concession in Brazil is expected by the end of this year. Now I will dive into capital allocation on the next slide. Our capital allocation has been designed to maximize our term profile while reducing risk and consequently improve the performance of the Group.

Investment were deployed in line with our strategy with networks accounting for more than 50%, five zero, fourteen point one four % higher than previous year. As a consequence, operating KPIs improved. RAP reached more than SEK 45,000,000,000. Renewable production on total increased by 8% year on year, while the share of emission free stood at 83%. Therefore, our customer side renewable coverage on fixed sales reached 83% from 65% in all ’23.

Now we’ll see the progress in M and A activities. As announced during the Capital Market Day, we’ll leverage different models in order to create value and reach the level of desired returns. In the recent months, we catch two battlefield opportunities. The first one is it has been 600 megawatt of hydro asset in Spain and the second one over one gig on renewable asset in Australia through our joint ventures in the region and exploiting the stewardship business model in this case. These two deals prove we are moving to less risky technologies and countries, delivering on what are not.

Now, it’s time to the second pillar of our strategy. Let’s talk about our efficiency program in the next slide. So far we reached around 800,000,000 savings compared to all 22 and we’re more than halfway through the improved plan target of 1,500,000,000.0 and I remember you, we updated it last November. Actually, this achievement is a clear evidence of our persistent focus on optimization of processes and activities without compromising our operation, which continued to deliver a strong performance. Now it’s time of financial and environmental sustainability.

In O24, our financial performance continued to be solid and the net debt on EBITDA reached 2.4 times well below the peers average. This level of leverage give us over 10,000,000,000 additional financial flexibility on top of the 43,000,000,000 investment announced in CND, including the buyback which I’ll comment in detail later on. To capture all of these, the future and profitable growth opportunities and to maximize the value for our shareholder. On environmental sustainability, absolute innovation continued to decrease in line with all 30 goals. Finally, shareholder remuneration on slide nine.

The resiliency of our business model and the efforts of our advocacy actions as well as the positive operating performance allowed us to achieve solid economic and financial results. As I mentioned before, we propose to the next AGM a dividend per share of 47¢ for $0.24 implying a payout of around 70% and the new share buyback program aimed at improving shareholder remuneration. A further option on top of the organic and inorganic opportunities and part of the 10,000,000,000 additional flexibility mentioned before. This option could be evaluated also at subsidiaries level. I leave the floor to Stefano now for the financial performance details.

Stefano Garganjes, CFO, Enel: Thank you, Flavio, and welcome to everybody. The pragmatic back to basic and financially disciplined approach we adopted in the last two years drove to a consistent positive delivery in the core in customer KPIs and financial performance across all businesses. Emission free generation is growing with financial results boosted by a remodel energy management already fully enforced in Italy. In our domestic market, the supply business normalized after the chance storm we fall upon in 2023, thanks to a mandatory broad review of our retail customers’ offer portfolio. Last but not least, a pragmatic and factored advocacy supported a constructive regulatory framework that allows to increase investments and in parallel the value generated in the network business.

As a result, 2024 ordinary EBITDA reached SEK22.8 billion, increasing more than SEK2 billion versus previous year on a like for like basis. This like for like comparison is not to give a different and positive perspective to the 2024 reported EBITDA that was higher compared to the ordinary result, reaching SEK 24,100,000,000.0 on the positive returns of the executed disposal plan, generating significant cash capital gains. But recurring long term growth leverages on the organic performance of the core business. From a geographical perspective, this portfolio rationalization is visible with EBITDA coming from Europe and U. S, accounting for almost 80% of the total.

Finally, in 2024, net debt on EBITDA landed at 2.4 times, a sector benchmark, providing ample balance sheet flexibility moving forward. After this broad overview of the 2024 results, I will speak up focusing just on the main topics of the business, starting from the networks. As we commented in the presentation, REIT’s EBITDA reached almost SEK 8,000,000,000, up by 8% year on year on a like for like basis, confirming the positive growth pathway observed along 2024. On top of the positive and consistent trend in Europe, it is worth mentioning that the LatAmelibetida stabilization was achieved in a tough macroeconomic and political environment, where the positive contribution from investments, tariff indexation and LNG volumes distributed to our customers have been offset by the local currencies devaluation offset

Omar, Moderator/Host, Enel: in

Stefano Garganjes, CFO, Enel: the period and this account for EUR 200,000,000.0. And now we move to the evolution of our integrated business and I am on Slide 13. Integrated business EBITDA increased by SEK 1,900,000,000.0 year on year net of perimeter, driven by the normalization of relevant business dynamics that restore a segment performance that is current with our asset portfolio mix in terms of value generation also looking forward. As a consequence, renewables regarded the strong performance across all regions recovering around EUR 2,700,000,000.0 versus last year. Flexible generation, I would say, are moving to normal.

As effect, minus 21 terawatt hour reduction in coal and gas was mostly driven by the end of mandatory requirements. Finally, retail EBITDA deflected the mentioned downward price campaign in Italy. Starting from 2025, we expect a more linear evolution of the performance with prices dynamics fully embedded in groups and assumptions. I will now provide an update on our energy management and hedging strategy in the domestic market, meaning Italy. Slide 14 describes how the new integrated sourcing sales management model supports ample visibility and resiliency on future evolution of the earnings.

Compared to the past, we move from an approach focused on the forefront financial edge of the industrial open position on generation and gas contracts to an end to end integrated and flexible approach focused on the value potential of our large and resilient residential and small medium business customer base. Thanks to this new approach, the new opportunity is set to be naturally matched with the sales and more resilient customer base with financial pre edge as a lever to help implement value to optionality. This allows us to maintain a predictable fair profitability, which guarantee to our customers a sustainable price despite a persistent volatility on power price scenario. As you can see from the chart, 2025 is also fully ahead and for 2026, we already covered 85% of the expected generation. The contracted price of these volumes are declined or above the market day market scenario.

More EV days for 2025, we forecasted €114 megawatt hour and we edged at €117. While for 2026, the average prices of today of the hedging volumes is €140 compared with the scenario at 111. And now we will move on Slide 15, talking about the earnings evolution. Ordinary group debt income came in at NOK 7,100,000,000.0 above the guidance provided on the back of the positive results of our operation and additional contribution also from the asset disposed in 2024, mostly excluded from the guidance provided to the market. Financial expenses reduced by 100,000,000 at profit and loss level, but this is worth to highlight that cash financial expenses declined by around $400,000,000 5 hundred million dollars has no cash effects in uptake and other non monetary items generated in relevant and volatile impact, both on P and L and net debt on an accounting measure.

While the reduction in charges on debt is mainly driven by the 4,000,000,000 reduction in gross debt, I would like to highlight also a higher contribution from associates, mainly due to the positive performance of Globeske Electragment, whose stakes will be deconsolidated by 2025 after the exercise of the production by EPH at the end of twenty twenty four. Finally, reported net income stood at 7,000,000,000, almost in line with the ordinary net income and doubling versus the average results achieved in twenty twenty one, twenty twenty three. Let’s now move to the slide related to the FFO. In 2024, we confirmed the strong results achieved in 2023 in terms of cash EBITDA with an FFO once normalized for cash out, not organically related to the 2024 operational performance standing at EUR 14,600,000,000.0, exceeding 25% of the group’s net debt and reflecting a solid monetization of two thirds of our EBITDA. EBITDA.

As highlights, I want to mention, first of all, the Qatar arbitration that was mostly related to twenty twenty one, twenty twenty two operation was booked in 2023, but financially impacted 2024 working capital change. That wouldn’t be neutral excluding just these items. Another important highlights is a provision where we include 300,000,000 non cash item related to the twenty twenty one, twenty twenty four additional regional hydro fees in Italy, which, as you could remind from the Capital Market Day, we have already potentially included in the ban assumption. On this matter, we maintain our solid position that these amount are not due before concession the following. The tax payment was impacted by the 2023 tax balance paid in q three twenty twenty four due to the significant difference, we are in Italy from in this topic, between 2022 taxable income versus 2023.

Financial expenses as said before benefited from that reduction as cash do not follow the accounting principle. Let’s now move to the debt evolution of Slide 17. Cash flow generated by the operation was dedicated to fund EUR 11,000,000,000 of CapEx, including EUR 1,100,000,000.0 of grants already cashed in. Additionally, our partnership model contributed for SEK 2,000,000,000 with cash inflows from the best project in Italy and solar projects in Spain. Finally, dividends paid stood at EUR 5,400,000,000.0.

Thanks to the strong focus on cash generation and the completion of the 2022 disposal plan, we have been able to reduce net debt by more than 4,000,000,000 vessels last year, reaching a remarkable balance sheet solidity with net debt on EBITDA ratio at around 2.4 times. Now, having already started the new fiscal year before our CEO closing remarks, I share the year on year derivative reconciliation. And this is the last time having completed, as I already said, disposal plan set in 2022 on Page 18. In order to compare organically full year results with the 2025 guidance show at November, but can they provide the rebased EBITDA net income for 2024? Like for like EBITDA 2024 is EUR 22,400,000,000.0 adjusted for Peru and Lombardy asset disposal.

This year, as you may see, the difference are not the same as that in the past, let’s say that are minimum. Net income baseline is €6.6 billion, where on top of the Peru and number the assets, we adjusted 2024 net income for the contribution of Sloebeskeletrada that amounts €0.3 billion positive. On these last items, Sloebeske, is worth to remind that on that side, we recorded the payment of more than 1,000,000,000 intercompany loan at the January. This will have a positive impact on rating agencies adjusted net debt. As a result of the normalization I’ve mentioned, in 2025, we expect a 3% growth versus the 90% EBITDA secured in the last time scenario presented last November in the Capital Market Day.

Topic, I hand over to the CEO for his closing remarks.

Flavio Catania, CEO, Enel: Thank you, Stefano. The economic and financial results are clear evidence of our delivery abilities. The increased focus on advocacy actions across all countries provide full visibility on the implementation of our capital allocation strategy. The continued effort of improving Group’s profitability allow us to confirm all twenty five full year guidance. Through our action, we have been able to restore growth financial solidity to capture future and more profitable growth opportunity and guarantee an attractive shareholders remuneration via current dividend policy and the new Sherpa DAQ program.

I take the opportunity to announce Wilmar our CMD to the beginning of twenty twenty six. It will be more efficient and aligned with standard market practice. Finally, we’ll continue to focus on growth’s profitability to lock in marginality and guarantees a safe harbor to our shareholders. Thank you for your attention and now let’s now move to the Q and A.

Omar, Moderator/Host, Enel: Thanks to our CEO. Let’s now open the Q and A session. We received a lot of questions for the call. We have summarized them by topics. Let’s start with the most strategic question that will be answered by our CEO.

The first one, distribution concession renewal. How will concession fee be calculated? Any indication on the potential amount?

Flavio Catania, CEO, Enel: Well, all the technicalities are still under discussion and the amount of the fee is subject to the final decision of the government and the authorities. In terms of amount, it will not be negligible in my opinion and will be included for sure and I won’t point out this element in our wrap. Thank you.

Omar, Moderator/Host, Enel: Is there any news on the renewal of the hydro concession in Italy?

Flavio Catania, CEO, Enel: First of all, let me say our concession are set to expire in April 29. So we expect the process will take a longer time to start and it will involve both regional and national authorities. In any case, this is one of our priorities and our intention is to implement the focus in this sense. But we aren’t in a hurry and it is not the right time to speed up the process. So let me say, trust in

Omar, Moderator/Host, Enel: us. Final question on concession. When do you expect the situation in South America will be solved?

Flavio Catania, CEO, Enel: You know, we have already in the presentation said about our expectation in South America, especially in Brazil, even because the plan for improved the network resilience is well on track. Our expectation, the renewable is by the end of the year. Moreover, while we expect the updater regulatory framework in Argentina where we are having this discussion even there, we are having a positive discussion in all the country in the South America. Thank

Omar, Moderator/Host, Enel: you. The deleverage completion resulted in higher balance sheet flexibility, more appetite for M and A?

Flavio Catania, CEO, Enel: I repeat it again. On M and A, we only look at accretive deal. And when we talk about accretive and we now see and do other things at the beginning, It’s important to understand this and we intend to buy asset and especially in developed countries with a stable environment and profitable returns. I said many time I want to point out again we are not interested in the large M and A deals. Now we have room in our balance sheet but we don’t want to buy at any price and we look at the right opportunity.

Otherwise, we prefer to buy our shares also at the subsidiaries level as I said in the presentation.

Omar, Moderator/Host, Enel: So shareholder remuneration upside, you increased DPS to per share. It’s trying to think about this is the new floor. No.

Flavio Catania, CEO, Enel: As I said before, the current dividend policy is clear and foresees at Euro €46 as a floor and we have already changed before. We can change every year with the possibility for DPS to increase up to the 70% payout. Indeed, this year it has been

Stefano Garganjes, CFO, Enel: $0.57

Flavio Catania, CEO, Enel: Obviously, the share buyback program is a further option to approach shareholder remuneration and EPS growth naturally. And in this case, I think we cover our expectation for our shareholder including me. Right.

Omar, Moderator/Host, Enel: Recently, there have been news around government measures to reduce the price of electricity for foreign consumers. What’s your view?

Flavio Catania, CEO, Enel: But today there is a strong discussion in Italy. We have a constant dialogue with authorities and all the parties involved in this discussion. Measure like the price cap applied in the past in Spain have demonstrated that to be not effective and it has been abandoned in this country. And this we have already the real proof proof it’s not concrete concrete way. One of the most effective instead measure has been already included by the government in the free x degree, where there is a possibility to sell electricity for twenty years with PPAs at the fixed price.

This could be a benefit both for customer, the operators. And this reduce naturally the price of energy. I suggest, let me say also not following only the energy price evolution for defining the result of our company, because for integrated players the profitability is not strictly linked to the price of electricity. And I’ll give you some example. The first one is the good performance in all 24, driven by contribution of non domestic countries like Iberia, for example, which had had a lower power price but higher integrated margins compared to Italy.

The second example is Italy. In 2022, results were power prices were at their highest, but the economic performance was the worst ever recorded. This is the reality. This is not only general discussion.

Omar, Moderator/Host, Enel: Last one for the CEO. What’s the impact on your development strategy in U. S. After the executive order from Trump administration?

Flavio Catania, CEO, Enel: Now there are not impacts expected. In The US, we don’t target to add the new capacity in the short term from from grapevine, this for short. And all the production, the existing production in the country is baked by long term to deal with a very rated company, big corporate, making big company. And our potential new investment for the company will be evaluated only if the condition are supported. Furthermore, in this area we believe a Bradford renewable asset are more convenient and potentially more profitably than Brentford wants.

Thank you.

Omar, Moderator/Host, Enel: Thanks. Let’s move to CFO questions. Stefano, could you please share with us a bit of technicalities on distribution concession renewal? Any upside on CapEx versus the plan presented in November?

Stefano Garganjes, CFO, Enel: But as of now, it’s too early to go in-depth on all the moving parts as the process is at an early stage and most of the technicalities will be discussed in the next months. Technically speaking, let’s say that there are three main items. The first is the size of the extraordinary investment plan and its definition. Second, the amount of the lump sum payment by the current concessionary and recognized as rem. And third, the incentives in terms of regulatory remuneration.

For the extra the early plan and the premium for the additional investment, we don’t expect any significant change considering that any distribution has anticipated this approach and the existing plan about resiliency for example represents a benchmark. So we have already a regulation for this. What we mind that we already increased from EUR 12,000,000,000 to EUR 16,000,000,000 the capital allocated to Italian grids over the current period that the additional investment as I said have already included some projects for the networks up late. Moving to the one off RAB payment, it is already established in the budget law, but it will be defined according to a wider framework taking to account also the sustainability of the network charges in the build on the energy system. By the way, remind you that the capital market, the investment plan already includes a portion of this item that was based on our expectation, a portion of this.

Omar, Moderator/Host, Enel: Thank you, Stefano. Geothermal concession, they have been renewed on SEK3 billion CapEx to be spent on those assets. Are investments additional compared to plan?

Stefano Garganjes, CFO, Enel: Yes, no. Yes, no. Sorry. The 3,000,000,000 CapEx are spread over, let’s say, decades. And so the next 2025 or 2027 plan already included these investments because the discussion with the Tuscany region was already in place.

The gap is planned provides also for additional capacity, but this is also in the medium and long term. So don’t expect like the other topic, let me say, a spike in the gap is related. This is more something that is in continuity compared to the past.

Omar, Moderator/Host, Enel: Thank you. Guidance. So EBITDA and net income guidance for 2025 has been confirmed despite strong 2024 results. Could you please detail the building block for 2025 guidance for both EBITDA and net income?

Stefano Garganjes, CFO, Enel: Yes, in the presentation, we showed that there will be a perimeter effect, and this is unfortunately something that is happening in the last two years. So starting from full year 2024 baseline of twenty two point four, the BD block, let’s say in this way, we see today are the following. For bids, we see around 800,000,000 EBITDA increase where Italy is expected to progress at the 10% low run rates that we have already offset also in the 2024 results. And there is a variant is mostly in line with the 2024 trend that means, let me say, a very small growth expected that’s still this year because as you know the final regulation is under definition. So the CapEx plan as we have already shared will be revised according to the content of the new regulatory framework.

Lastly, LATAM is coming back to growth in our projection thanks to a slightly better macro environment and supportive regulatory updates on not only tariff in the session but the work, let me say again regulatory framework that will allow a first upward in capital expenditures. In the integrated margin, we expect a further consolidation of the renewable generation contribution to EBITDA that will leverage on additional capacity that is now focused on regulated market and mass, meaning storage. This positive trend will be mostly offset by the trading position and energy market normalization and the thermal generation that is progressively flat and is more and more dedicated to ancillary generation and regulated revenues. Finally, the dividend will be mostly light in twenty twenty four seven alpha performance where economics already reflected the mentioned effort on customer portfolio normalization. Lastly, again, in this financial space, we are observing a slight positive room for additional profitability.

Omar, Moderator/Host, Enel: Thank you, Stefan. Hydro. 2024 has been strong in term of hydro outputs. What’s your expectation for 2025? What’s the current level of reservoir in Italy?

Flavio Catania, CEO, Enel: Yeah. Not

Stefano Garganjes, CFO, Enel: In 2024, the audio output has been stronger across all region excluding, probably as you see in the in the balloting, a tough second half twenty twenty four in Colombia. For 2025, what we expect in Europe is light but drier year versus 2024, but in light with the historical average. While in LatAmo, we are forecasting a normalized trend. What does it mean? That is a higher production in Colombia where the the risk has been normalized across last month, and a slightly lower production in Chile.

In any case, all these trends at the moment are in line with the plan assumption because it’s something that we have already assumed as projection for the years in industrial plan.

Omar, Moderator/Host, Enel: Thank you. Let’s move to retail. Sharna was high double digit in 2024. How is it progressing after the implementation of the new commercial strategy? Again,

Stefano Garganjes, CFO, Enel: the situation is normalized, but I understand there is a very strong focus on this, but we have already told several times that the situation has already normalized. Because at the end of the day, we have completely reshaped our commercial offering to the current market price curve, moving to a more sustainable price for the final customers compared to the 2022 and first half of twenty twenty three offerings. The chart consequently is naturally, let’s say, reducing, but the retail market is in a new normal after the 2022, ’20 ’20 ’3 spikes with a higher competition, but on the other hand, also wider market size after the full laborization. So net net, this is not negative scenario because the market, the buy has increased with the liberalization. So some competition some additional competition was expected.

Thank you, Stefano. Retail margins.

Omar, Moderator/Host, Enel: Looking at your number, it seems that unitary margin for Italy is much higher than Spain. What’s driving the higher marginality? It’s sustainable in the long term.

Stefano Garganjes, CFO, Enel: But here we have to be very careful because,

Flavio Catania, CEO, Enel: you know, there is

Stefano Garganjes, CFO, Enel: also some political thoughts on this. But, again, the the average you have to divide the margin between wholesale and retail ones. Average average commercial margin, both either in Spain, are similar. The main difference between the two countries here, but the underlying, we’ll say, dynamics that are different. We know exactly why this happened because of the very heavy weight of gas generation in Italy when compared to to Spain.

The the the nuclear absence in Italy were compared to Spain is something that we perfectly know. The integrated strategy, by the way, allows us to ensure margin sustainability in the long term in this way, both in Spain, in Italy, meaning where we have a very strong and solid integrated position.

Omar, Moderator/Host, Enel: Thank you. Last one from the WACC. Working capital was NOK 500,000,000 negative in 2024. What’s the expectation for this year? Any one off to be considered?

Any impact expected from the elimination of system charges for non residential customers?

Stefano Garganjes, CFO, Enel: But let’s avoid any hypothesis on this last point because system charges that are being eliminated is just a small portion of probably the market and the investors remember what happened some years ago. So nothing comparable. Generally, working capital dynamics are impacted by several organic and nonorganic items, including also, as you see, for example, the tax payment in Italy, the Gadara arbitration, numerous one off with sometimes also non cash impact. As for 2024, we normally achieve a neutral organic working capital change because, as I said before, if you exclude the the Cadar payment in early January twenty twenty four, the working capital, but it was strongly negative along the the waters. And as I told in September and July, don’t worry because this will move to to zero, let’s say, to a more balance of this this happen.

At the same time, be aware of the aforementioned dynamics we always include the implant assumption above exactly to absorb potential one off that that happens. This do not mean that we have potential one offs in the plan, but we have, let’s say, the coverage in terms of working capital for some potential one off. Thank

Omar, Moderator/Host, Enel: you. Thanks to our CEO and CFO. There are no more questions. So Q and A session is over. We cover all the main topic.

If something is missed, the IR team is available for follow-up after the call. Thanks, everybody.

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