Enel Boosts Dividends After Profit Rises on Cost Cuts, Disposals

Enel SpA (ENEL), Italy’s largest utility, said it will continue cost reductions and asset sales that helped boost 2013 profit by 10 percent and will allow a greater dividend payout to shareholders.

Adjusted net income increased to 3.12 billion euros ($4.32 billion) from 2.83 billion euros a year earlier, according to a company statement. That beat the 2.99 billion euro estimate of 26 analysts surveyed by Bloomberg. Enel said it will award a dividend of 0.13 euro cents a share and plans to increase the payout ratio to 50 percent in 2015 from 40 percent.

Enel offset falling sales from weak electricity demand in Europe through cost cutting and asset sales. The Rome-based company, which raised 1.3 billion euros from the sale of SeverEnergia to OAO Rosneft last year, said today it wants another 4.4 billion euros in asset sales by the end of the year.

“These results were posted despite the continuing adverse economic cycle in Italy and Spain,” Chief Executive Officer Fulvio Conti said today in a company statement. “Over the next five years we plan to continue our strategy focusing on debt reduction and cash generation.”

Enel said today it’s targeting adjusted net income of about 3 billion euros this year and around 4.5 billion euros in 2018. Net debt is seen falling to around 37 billion euros this year, rising to 39 billion euros in 2016 and then decreasing to 36 billion euros by 2018.

The company said it will reduce installed capacity in Europe and increase it in growth markets such as Chile, Colombia and Slovakia and in green energy. Overall net installed capacity will fall to 83,100 megawatts from 90,000 megawatts. Enel said it will also undertake minority buyouts.

Enel, which services about 61 million users in eight countries around the world, also said it plans to reduce investments in conventional power generation and increase them renewable energy.

To contact the reporter on this story: Alessandra Migliaccio in Rome at amigliaccio@bloomberg.net

To contact the editor responsible for this story: Will Kennedy at wkennedy3@bloomberg.net

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