Enel Profit Rises on Latin America Demand, Renewables Growth

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Enel SpA, Italy’s largest utility, said first-half profit rose 3.4 percent as higher electricity demand in Latin America along with growth in renewables helped offset weaker sales in its home market.

Net ordinary income increased to 1.6 billion euros ($1.8 billion), the Rome-based company said Thursday in a statement. That beat the 1.51 billion-euro average estimate of nine analysts in a Bloomberg survey. Revenue rose 4.2 percent to 37.6 billion euros.

Enel is selling some assets as it focuses on growth opportunities such as those in Latin America. Chief Executive Officer Francesco Starace aims to raise 5 billion euros from disposals, including a planned sale of the company’s majority stake in a Slovakian power producer. Enel is reorganizing in Latin America to separate its Chilean assets from the rest of the region.

“The corporate simplification process in Latin America is continuing as scheduled, while the overall renewable business is growing strongly,” Starace said in the statement.

Enel declined 0.5 percent to 4.232 euros as of 4:15 p.m. in Milan. The shares rose 15 percent this year.

First-half electricity sales fell 2 percent to 127.7 terawatt-hours, driven by weaker demand in Italy, according to the statement. Power generation rose 2.8 percent to 139.6 terawatt-hours, mainly because of output in Iberia and Latin America.

Net debt increased 7 percent from the end of 2014 to 39.8 billion euros.

Latin America

Higher revenue in Latin America and in the renewables division helped offset weaker sales in Italy, where power demand contracted 0.3 percent from the previous year. Latin American and Spanish power demand rose 2.5 percent and 1.9 percent, respectively, the company said in a presentation on the website.

Ordinary earnings before interest, taxes, depreciation and amortization were little changed at 7.7 billion euros due to declines in eastern Europe and Italy, Enel said.

“The positive momentum that started since the new management took over has extended into the second quarter,” Elchin Mammadov, a utilities analyst at Bloomberg Intelligence in London, said by e-mail Thursday. “Strong results in Spanish, LatAm and renewables businesses were expected. Investments made in the past also began to pay off. Looking ahead, heavy losses in Italy and eastern Europe remain a concern.”

Enel Green

Endesa SA, the Spanish utility controlled by Enel, said on Tuesday that first-half net income rose 17 percent to 870 million euros amid higher demand and prices, as well as an improved economic outlook for the country.

Enel Green Power on Wednesday reported first-half earnings that beat analyst estimates, mainly driven by expansion of installed wind power capacity in the Americas. Renewable energy accounts for about a third of Enel’s total power generation.

Enel, which owns a 66 percent stake in Slovak affiliate Slovenske Elektrarne, will exit the business in two steps, the company said in the presentation. A minority stake will be sold by the end of the year, with the final exit expected after completion of two nuclear units, the company said.

Slovakia’s government, which holds the remaining 34 percent in the country’s biggest power generator, has vowed to obstruct any sale of Enel’s holding to a third party until the company finishes building the Mochovce nuclear power plant.