Enel Group is presenting its 2016–2019 strategic plan to the financial markets

In the eight months since the last plan was presented, significant progress has been made against the objectives set out at the time:

Operational Efficiency – Of the 10% reduction in cash costs targeted for 2014-2019, the Group is on track to deliver a 3% reduction in 2015.

Industrial Growth – 80% of the EBITDA growth for 2015 was confirmed in the Group’s nine month results to September 2015. Through current capex commitments, 65% of the cumulative 2017 EBITDA target has already been addressed.

Active Portfolio Management – A 5 billion euro capital recycling programme was set out in March for the 2015-2019 period. By the end of 2015, a total of 1.9 billion euro disposals is expected to be finalised, while a further 2 billion euros is under execution.

Shareholder remuneration – The Group is on track to deliver a minimum dividend of 0.16 euros per share for 2015.

This progress has been delivered despite a deterioration in the macro-economic environment, with downgrades to GDP forecasts globally, adverse currency movements in many of the Group’s key markets, and downward pressure on commodity and power prices. In this context, the implementation of the new organisational model has enabled greater flexibility in the allocation of capital during 2015, allowing for further improvements in capex and opex efficiencies, and was a key enabler of the Group’s delivery ahead of schedule.

On top of the faster than expected progress to date across the four strategic pillars presented in March, the new plan therefore incorporates a fifth pillar – Group Simplification – which is expected to be value enhancing for Enel and its shareholders.

Upgraded efficiencies: targeting savings of 1.8 billion euros over the 2014-2019 period, with an opex reduction of 1 billion euros, and decrease in maintenance capex by 0.8 billion euros, leveraging global scale and business flexibility

Shorter time to EBITDA and increase in growth capex by 2.7 billion euros to drive industrial growth, generating cumulative growth EBITDA from 6.7 to 7.2 billion euros over the 2015-2019 period. The Group expects to generate 7.2 billion euros of cumulative growth EBITDA over the 2015-2019 period, with growth in:

- The Renewables business line, in which new capacity planned for the period is expected to allow the Group’s generation mix to reach over 50% from clean sources by 2019;

- The Networks business, where an additional 21 million second generation smart meters are expected to be installed over the period;

- Retail, where the Group is targeting a 15% increase in free market customers and 20% in energy sold over the period.

Further simplification of Group’s corporate structure to enhance value creation; proposed integration of EGP and reorganisation of LatAm operations underway

Active portfolio management: increased capital recycling target from 5 billion euros to about 6 billion euros

Dividend policy confirmed: minimum 0.16 euro DPS in 2015 and minimum 0.18 euro DPS in 2016; payout ratio 65% by 2018

Francesco Starace, CEO and General Manager of the Enel Group, commented: “The utilities sector is facing a very fast pace of change, and the flexibility inherent in Enel's business model allows us to position ourselves accordingly, accelerating the execution of our strategy. The plan we put in place in March, supported by the organisational improvements we have implemented over the last 18 months, pointed in the right direction. The good execution along these lines allows us to accelerate on efficiency gains and in the growth trajectory. Enel is leading the energy transition, with a clear vision for driving total shareholder returns, capturing the opportunities in the evolving energy sector.”