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06 May 2021
Weak underlying performance
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Weak underlying performance
- Published:
06 May 2021 -
Author:
Palomo Manuel MP -
Pages:
10
EBITDA 1Q21 -13%, broadly in line with consensus
1Q21e EBITDA was weak, with almost every division negatively contributing to the company''s operational growth. Italy (+4%YoY) thanks once again to the Retail division (+14% on volumes and margins) was the only positive contributor. Performance in Latam (-16% YoY), Europe and North Africa (-3% YoY), Spain (-31% YoY) and North America (-41% YoY) were all negative. The lack of positive one-offs, the unfavourable FX scenario, the delayed revisions on Latam countries, the polar vortex in Texas and the anaemic recovery of activity in some areas have been the key causes of the weak operational performance in the quarter.
Net Profit 1Q21 -6%, also in line
NP was also weak in 1Q21, although stronger than at the operational level. The reasons why the bottom line was stronger than the EBITDA were as follows: 1) FX scenario positively impacting DandA (-2%); 2) positive impact from interest on CO2 regularisation in Spain and exclusion of the hybrid costs from the financial charges (-32%); and 3) significant decline in minorities due to minorities'' buyouts and poor operational performance (-28%).
Outlook reiterated, but supported by capital gains
Enel reiterated FY20 guidance (EUR18.7-19.3bn EBITDA and EUR5.4-5.6bn NP). The expected EUR1.7bn capital gain from the sale of Open Fiber is considered to be part of the ordinary NP, and should help Enel to achieve FY21 guidance and to launch new liability management measures.
Enel - Good ESG fit, at a price
Enel has strong potential to benefit from the EU Green Deal and we factor into our numbers a Capex plan in line with the one announced at the recent CMD. Nevertheless, we fear underlying earnings risk as a result of a less favourable scenario and lower returns impacting investments in renewables. We believe that Enel''s earnings profile is lower quality and more volatile than peers, as it largely relies on the stewardship model and we see current trading...