Enel SpA, Italy’s biggest utility, said first-quarter profit fell 8 percent as weak electricity demand in Europe and a strengthening euro weighed on earnings.
Adjusted net income decreased to 782 million euros ($1.1 billion) from 852 million euros a year earlier, the company said in a statement. That beat the 750 million euro mean of eight analyst estimates compiled by Bloomberg. Enel is targeting adjusted net income of about 3 billion euros this year.
The Rome-based company is fighting weak electricity demand in its core markets of Italy and Spain with cost cuts and asset sales. Chief Executive Officer Fulvio Conti, who raised 1.3 billion euros from the sale of SeverEnergia to OAO Rosneft in 2013, said in March Enel would undertake another 4.4 billion euros of asset sales by the end of this year.
The results “confirm the validity of the group’s strategy of geographic and technological diversification, as well as the managerial actions mostly taken to enhance efficiency and reduce costs,” Conti said in the statement.
Enel shares gained as much as 2.9 percent to 4.13 euros and traded at 4.12 euros as of 1.07 p.m. in Milan.
Earnings were also eroded by the euro’s strengthening against other currencies in markets including Russia and Latin America where Enel operates.
Conti, whose term as CEO expires at the end of this month, is set to be replaced by Francesco Starace, currently the CEO of renewables unit Enel Green Power.
The utility, which sells electricity to 61 million clients in 40 countries, is also investing in developing markets to offset its weaker performance in Europe where the economic crisis has curbed power demand. Enel generated a total 68 terawatt hours in the quarter, down 3 percent from the same period a year ago.
Generation may improve in the second-half of the year as economic recovery in Europe spurs electricity demand, Chief Financial Officer Luigi Ferraris said today in an interview to Bloomberg Television.
Net debt rose 4.6 percent at the end of March to 41.5 billion euros from the end of December. The company has a net debt target of about 37 billion euros this year.
First-quarter earnings before interest, tax, depreciation and amortization, or Ebitda, reached 4 billion euros, compared with an estimate of 3.9 billion euros.