Enel SpA (ENEL), Italy’s biggest utility, dropped the most in 2 1/2 years in Milan trading after cutting dividend payouts by a third to reduce debt as recessions in its biggest markets weighed on revenue.
Enel fell as much as 8.3 percent to 2.79 euros, the most since June 2009. The shares traded at 2.86 euros at 9:45 a.m. local time, taking their decline over the past year to 32 percent.
The dividend payout for 2012 will be at least 40 percent of ordinary net income, down from a previous target of 60 percent. Net income fell 5.5 percent to 4.15 billion euros ($5.47 billion), hurt by a windfall-profit tax imposed in Italy, the company said today. That missed the 4.3 billion-euro average estimate of 16 analysts surveyed by Bloomberg.
Enel’s largest markets are Italy and Spain, where the European debt crisis is forcing governments to cut spending, holding back economic growth. The Rome-based company expects weak power demand in Italy throughout 2012 at a time when increased solar-panel installations are boosting supply.
“The weakened economic environment in the mature economies in which we operate is expected to persist, at least during the first part of 2012,” Chief Executive Officer Fulvio Conti said in a statement. “Although this shows signs of recovery from 2013 onwards.”
The company, Europe’s most-indebted power utility, scrapped a 2012 interim dividend on Jan. 31 as it focused on refinancing borrowings. Net financial debt was 44.6 billion euros at the end of 2011, compared with 44.9 billion euros a year earlier. The company is targeting a decrease to 30 billion euros by 2016.
Enel proposed a dividend of 26 euro cents for 2011, of which 10 cents were paid as an interim payout in November. It's discontinuing the payment of interim dividends from 2012.
The company said today it’s forecasting ordinary net income of 3.4 billion euros in 2012, 3.9 billion euros in 2014 and 5 billion euros in 2016.
Total capital expenditure for 2012-2016 will amount to about 27 billion euros, a reduction of about 4 billion euros compared with the 2011-2015 business plan.
To contact the reporter on this story: Nadine Skoczylas in Rome at firstname.lastname@example.org