Enel Profit to Beat Estimates as Conti Rules Out Asset Sales
Earnings before interest, tax, depreciation and amortization will near 17 billion euros ($22 billion), Conti said at Enel’s head office in Rome. The company forecast 16 billion euros in March and analysts estimated 16.6 billion euros, according to the median of 26 forecasts compiled by Bloomberg.
“The year looks terrific,” Conti, 62, said in an interview yesterday. “We have strong cash flow, expanded business and synergies extracted from Endesa which” will help us end the year positively, he said.
Conti said Enel will meet a target to cut debt 6 billion euros to 45 billion euros after completing the initial public offering of Enel Green Power, its renewable energy unit, and selling Spanish gas distribution assets and a stake in a Bulgarian coal-fired plant. The strength of cash flow means no more disposals are planned for 2011, he said.
Conti said he aims to make “at least” 3 billion euros from the sale of Green Power shares, likely to take place in the second half of October. “We won’t need further disposals beyond what has already been announced to maintain our solidity.”
Enel’s revenue has been boosted by the strength of energy prices in Italy and increased sales from Endesa plants in Latin America and Spain. The company bought Spain’s second-largest utility in 2007.
The shares fell 7 cents, or 1.8 percent, to 3.87 euros at the close of Milan trading. Enel has dropped 4.4 percent this year, outperforming an 11.5 percent decline in Europe’s STOXX 600 Utilities Index. Enel trades at a price-earnings ratio of 8.40, below the 8.90 for the index.
“Earnings visibility is not reflected in the stock multiple,” Morgan Stanley, which rates the stock “overweight,” said in a note last week. “Italian price declines have not materialized and Enel has sold forward 2011 and 2012 production at 70 euros to 75 euros a megawatt-hour.”
Strong cash flow will support debt reduction, it said.
Power prices in Italy for delivery next year are 68.05 euros a megawatt-hour, according to broker data compiled by Bloomberg. That’s 37 percent higher than in Germany, Europe’s largest power market.
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