Enel SpA, Italy’s largest utility, said first-half profit dropped 8.4 percent as shrinking power demand in its home country and Spain hurt earnings.
Net income fell to 1.68 billion euros ($2.22 billion) from 1.84 billion euros a year earlier, the Rome-based company said today in a statement. That beat the 1.53 billion-euro estimate of eight analysts in a Bloomberg survey. Revenue fell 1.3 percent to 40.2 billion euros.
“Such results allow us to confirm the year-end targets announced to investors in spite of the ongoing financial crisis in mature markets and uncertainty in the Spanish regulatory framework,” Chief Executive Officer Fulvio Conti said today in a statement.
Enel is struggling with lower energy consumption and falling prices in its main markets in Italy and Spain, where the economic recession is curbing demand. Electricity sold to end users in the first half of the year was 146.4 terawatt hours, down 6.5 percent from the same period a year earlier.
The company, which became Europe’s most-indebted power producer after buying Spain’s Endesa SA in 2007, is planning 4 billion euros of cost cuts in Italy and Spain and 6 billion euros of assets sales through 2017 to help cut debt to 37 billion euros next year. The company also plans to sell 5 billion euros of hybrid bonds by 2014. Net debt at the end of the period rose to 44.5 billion euros, up 3.6 percent from the end of the year.
Enel plans to battle stagnant profits in mature markets, where the economic crisis is curbing power demand, by shifting focus to faster-growing markets in Latin America and Eastern Europe. The company said “unfavorable economic conditions” are expected to continue in Italy and Spain through 2013, noting that a reversal may take place starting from the fourth quarter. A “growth scenario” is confirmed for some Latin American countries and Russia.
Enel currently sells electricity to 61 million clients in 40 countries, according to its website. The shares rose 2.4 percent to 2.56 euros, giving the company a market value of about 24.1 billion euros.