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Enel May Beat 2010 Earnings Target, Picks October for Green IPO

Enel SpA Chief Executive Officer Fulvio Conti said Italy’s biggest utility is “well on its way” to beating its 2010 earnings forecast and considers October the “right time” for its renewable-energy unit to sell shares.

The utility said in March that this year’s earnings before interest, tax, depreciation and amortization will be 16 billion euros ($20 billion), unchanged from a year earlier. Enel also plans a 4 billion-euro initial public offering of its Green Power division, which manages wind, solar, biomass, hydro and geothermal power producers in 17 countries, to help repay debt.

The Italian government’s plans to cut subsidies for renewable-energy producers won’t affect Enel’s Green Power unit, two-thirds of which operates without state support, and won’t sway the IPO, Conti told reporters in Moscow today. The unit already has “solid cash flows” and can float “successfully even in the turbulent times that we are in now,” he said.

The IPO and a recovery in the Russian market, where the company forecasts growth in electricity demand of about 5 percent this year, will help Enel pare debt to a planned 45 billion euros by the end of this year from 51 billion euros in April. The Ebitda of Enel’s Russian utility unit OGK-5 is forecast to rise to 471 million euros next year and more than 1 billion euros in 2014. In 2007, the year Enel purchased OGK-5, the utility had Ebitda of 93 million euros.

OGK-5 Ownership

Enel, which owns 56.4 percent of OGK-5, doesn’t have any immediate plans to purchase more shares in the utility as the Russian government seeks to sell stakes in public companies to help cover a budget deficit, Conti said. The Russian state owns 26.4 percent of OGK-5.

“With 56 percent we do control and run the company,” Conti said. “It’s for the government to decide what to do with its stake. We’re happy and content with the way we are.”

Separately, Conti said he expects Enel’s purchase of Spain’s Endesa SA to close in September. Enel also expects Moscow-based OAO Gazprom to make a decision on buying a stake in one of its power assets in Italy this year, Marco Arcelli, head of gas projects at Enel, said at the Moscow briefing.

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