Enel Profit Falls on Writedowns With 2015 Targets on Track

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Enel SpA, Italy’s largest utility, said third-quarter profit declined 9.2 percent as impairments in Russia and eastern Europe outweighed gains in its home market and Latin America.

Net income decreased to 256 million euros ($276 million), the Rome-based company said Friday in a statement. Revenue climbed 2.2 percent from a year earlier to 18.4 billion euros.

Enel is selling some assets as it focuses on growth in markets including Latin America. Chief Executive Officer Francesco Starace seeks to raise 5 billion euros from disposals, including a planned sale of the company’s majority stake in a Slovakian power producer.

The utility’s nine-month net ordinary income surged 42 percent from a year earlier to 2.6 billion euros. That came amid the reversal of a 550 million euro provision for charges for nuclear waste disposal after legal changes in Slovakia.

“Resilience from our Italian and Iberian businesses as well as a good performance in Latin America and renewables have driven Enel results in the first nine months of 2015,” Starace said in a statement.

The reversal of the charge related to Slovenske Elektrarne AS helped push earnings before interest, tax, depreciation and amortization 12 percent higher to 4.2 billion euros in the third quarter.

“These results appear better than consensus at the bottom line, and on track to meet or slightly exceed full-year targets,” UBS analysts including Alberto Gandolfi said in a note to clients Friday

Shares Rise

Enel advanced 0.6 percent to 4.046 euros by 12:36 p.m. in Milan. The shares rose 10 percent this year, outperforming the Stoxx 600 Utilities Index, which has fallen 3.8 percent this year.

The company confirmed its 2015 financial targets, including net ordinary income of 3 billion euros, and said that net financial debt rose 5.3 percent to 39.4 billion euros as of Sept. 30, from 37.8 billion at the end of 2014.

Enel will present new targets in a strategy update on Nov. 18 following “disclosures on efficiency improvements that it expects to make in days,” Chief Financial Officer Alberto De Paoli said on a conference call. The utility will also provide more details on a planned disposal of Slovakian assets, which is on track to be finalized within the planned timeframe.

The boards of directors of Enel and Enel Green Power are examining the integration of Enel Green into Enel, the utility said.

Power Sales

Nine-month electricity sales fell 0.5 percent to 195 terawatt-hours, driven by weaker sales in the Iberian Peninsula, according to the statement. Power generation rose 1.5 percent to

213.7 terawatt-hours amid increased demand in Iberia and Latin America.

The increased power output came after better use of the generation fleet amid a 7 percent decline in capacity, mainly because of the closure of 6.6 gigawatts of thermal plants.

Enel said it will create a joint-stock company that could use its distribution grid in the Italian market to build a fiber-optic network for use by telecommunication operators.

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