Enel Beats Debt Target Even as Sales and Power Production Fall

Enel SpA (ENEL) beat its debt target last year even as falling electricity demand in southern Europe continues to take a toll on Italy’s biggest utility.

Net debt shrank to 39.9 billion euros ($53.9 billion) at the end of December, beating an original forecast of 42 billion euros as asset disposals and hybrid bond sales strengthened the company’s financial position. Sales fell 5.2 percent to 80.5 billion euros. Chief Executive Officer Fulvio Conti predicted “positive effects” from cost-cutting measures also in 2014.

The CEO “is looking ahead instead of looking back, despite being in the worst possible markets right now: Spain and Italy,” Massimo Intropido, head of Milan-based financial research firm Ricerca Finanza, said by phone. “By improving profit and the company’s structure, he’s doing things that will give rewards in the future.”

Enel became Europe’s most indebted utility after taking over Endesa SA in 2007. The company, which raised 1.3 billion euros with the sale of its stake in SeverEnergia to Rosneft OAO last year, is targeting a total 6 billion euros in asset sales by the end of this year in order to reduce leverage.

Earnings before interest, tax, depreciation and amortization, or Ebitda, rose to 17 billion euros from a restated 15.8 billion euros a year earlier, boosted by the sale of Arctic Russia, the Rome-based company said today in a statement after markets closed. Debt fell 7 percent from 42.9 billion euros at the end of 2012. Analysts had forecast net debt of 41 billion euros at the end of 2013.

The shares rose 1 percent to 3.32 euros, giving Enel a market value of 31.3 billion euros.

The utility, which sells electricity to 61 million clients in 40 countries, is investing in developing markets to offset weaker performance in Italy and Spain where the economic crisis has curbed power demand. Enel generated a total 286.1 terawatt hours in 2013, down from 294.8 terawatt hours a year earlier.

To contact the reporters on this story: Chiara Vasarri in Rome at cvasarri@bloomberg.net; Alessandra Migliaccio in Rome at amigliaccio@bloomberg.net

To contact the editors responsible for this story: Jerrold Colten at jcolten@bloomberg.net; Will Kennedy at wkennedy3@bloomberg.net

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