Enel Reduces Dividend Payout Ratio to 40%, Freeing Up Funds to Reduce Debt
Enel SpA (ENEL), Italy’s biggest energy company, cut its dividend payout by a third to 40 percent of ordinary net income as it seeks to raise funds to cut debt, with recessions in its biggest markets weighing on revenue.
Net income fell to 4.15 billion euros ($5.47 billion) from 4.4 billion euros a year earlier, hurt by a windfall-profit tax imposed in Italy, the company said today in a statement. That missed the 4.3 billion-euro average estimate of 17 analysts surveyed by Bloomberg.
Enel has lost 28 percent in Milan trading in the past year as higher fuel costs and lower demand eroded profit. The Rome- based company, Europe’s most-indebted power utility, scrapped a 2012 interim dividend on Jan. 31 as it focused on refinancing borrowings. Net financial debt was 44.6 billion euros at the end of 2011, compared with 44.9 billion euros a year earlier.
“The weakened economic environment in the mature economies in which we operate is expected to persist, at least during the first part of 2012,” Chief Executive Officer Fulvio Conti said in the statement. “Although this shows signs of recovery from 2013 onwards.”
Enel proposed a dividend of 26 euro cents for 2011, of which 10 cents was paid as an interim dividend in November.
The company will probably announce cost-cutting measures and capital-spending cuts at its 2012-2016 strategy presentation in Rome today, Javier Garrido and Sarah Laitung, analysts at JPMorgan Chase & Co., said in a note to investors on Feb. 16.
Enel posted preliminary 2011 results on Jan. 31, including earnings before interest, tax, depreciation and amortization of 17.7 billion euros and sales of 79.5 billion euros.
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