14 Декабря 2017 | четверг | 16:03
Energoterra

Enel Russia strategic plan 2018-202 renewing growth

Ноября 30, 2017

Successful delivery on company’s strategic pillars helped to improve 2017 financial forecast and bottom-line targets for upcoming years.

 
Carlo Palasciano Villamagna, General Director of Enel Russia, said: “We are pleased to present our updated Strategic Plan for 2018-2020 following the sound progress achieved on all our strategic pillars. In 2018-2020, we expect macro and sector trends to remain stable, broadly in line with our previous plan. Our
decision to invest in renewables will diversify our Company’s technological profile as well as ensuring new revenue streams after the end of thermal DPMs after 2020. In line with last year’s improved dividend policy, a 60% payout will be applicable to 2017 net ordinary income, whose forecast has been upgraded based on
current performance. The 65% dividend payout envisaged for 2018-2020 further confirms our confidence in the soundness of our strategy.”
 
The 2018-2020 plan is based on the same key pillars outlined in the previous plan, while taking into account macro and sector scenario adjustments for the current economic situation, in particular:
- further tariff containment due to lower level of inflation
- stronger rouble supported by stabilisation of the Russian economy
- excess capacity in the system, putting pressure on pricing, until the end of 2018, with stabilisation
expected from 2019 onwards as electricity consumption growth is expected to exceed capacity
additions.
 
In 2017 the Company delivered on each of the key pillars envisaged by the previous 2017-2019 plan:
 
• Overall cost optimisation – fixed costs remaining flat versus 2016, while thermal capex was in
line with the plan;
• Focus on efficiency of thermal fleet – higher equipment availability with key cash generating
units covered by insurance from business interruption;
• Debt structure optimisation – decreased exposure to EUR/RUB exchange rate fluctuations, as
well as favorable Russian Central bank rate dynamics, all resulting in halved financial expenses;
• Shift in technology profile – 291MW of renewable capacity awarded within the framework of 2017
governmental tender, while Reftinskaya coal power plant sale re-launched;
• Shareholder remuneration – 55% dividend payout upon 2016 results in line with upgraded
dividend policy, with 60% payout applicable to 2017 results.
All abovementioned key pillars come in a close link with the Company’s sustainable approach, driving longterm
shared value for its stakeholders.
 
Throughout 2018-2020, the Company will focus on ensuring the reliability of its generating fleet, compensating for the gradual decline in output of its conventional gas-fired units due to the impact of new entrants on the market.
Enel Russia will be working during the plan period on the construction of two wind farms for a total capacity of 291 MW, whose commissioning is planned between the end of 2020 and the end of 2021. Otherwise, no capacity addition or decommissioning is envisaged with all existing facilities being selected for 2018-2021 at the Russian long-term capacity auction (KOM).
 
OUTLOOK
 
During 2017 the Company posted solid financial results largely through accelerated returns on its two combined-cycle units (CCGT) that received capacity payments while entering their seventh year of operation, the key factor contributing to the Company’s sustainable performance for the upcoming years.
From 2018 onwards, the company expects limited volatility of its gross margin through a high portion of capacity earnings, while the pricing environment is expected to remain challenging in some regions due to  tail of new entrants in the system. On the costs side, Enel Russia plans to roll forward cost optimisation
initiatives and keep the growth of fixed costs below inflation, all helping to compensate lower electricity spreads. As a result of these factors, the Enel Russia 2018-2020 strategy envisages the following EBITDA targets:
- 16.4 billion RUB in 2018,
- 16.9 billion RUB in 2019,
- 18.5 billion RUB in 2020.
The Company is targeting 8.3 billion RUB of net ordinary income in 2017, an 88% increase vs 2016. From 2018 onwards, the bottom-line will be supported by EBITDA growth and a reduction in net financial charges, due to scheduled debt repayment while the interest incurred on project financing during the construction
phase on the two wind farms is capitalized. In addition, portfolio optimisation, as well as more favourable interest rates on RUB-denominated debt on the back of economy stabilisation, also contribute to the increase in net income. As a result, net income is expected to reach:
- 7.3 billion RUB in 2018,
- 7.9 billion RUB in 2019,
- 9.1 billion RUB in 2020.
 
 
 
Key change in investment profile relates to new growth capex dedicated to wind capacity construction.
Total capex in 2018-2020 is expected at 38.0 billion RUB, in particular:
- 20.3 billion RUB for green projects;
- 17.8 billion RUB of thermal capex addressing equipment reliability, environmental and stay-inbusiness
projects, also including new initiatives in digitalisation for 0.4 billion RUB.
 
Considering new growth capex and current dividend policy, the Company has negative free cash flow before dividends of 3.7 billion RUB cumulated during 2018-2020. Taking into account 14.8 billion RUB of dividends – a substantial part of free cash flow from thermal facilities – the Company is posting 18.6 billion RUB of net cash outflow.
Net debt will increase from 19.8 billion RUB planned for end-2017 up to 38.4 billion RUB by end of 2020.
 
 
 
The Company confirms its dividend policy with a 65% pay-out ratio for 2018 and 2019, with the same payout ratio applied to 2020, based on IFRS net ordinary income.
 
 
Контакты
Адрес: 115114 Россия,
620137 г. Екатеринбург, ул. Студенческая, д. 1 корп. 3
Тел. / факс  (343) 345-09-72
г. Москва, 1-й Дербеневский переулок, д. 5 тел. (495) 287-98-51
E-mail: info@energyland.info
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