Enel SpA (EN)

QUOTE AND NEWS
Bloomberg  Jul 16  Comment 
CEZ AS has a duty to assess a possible bid for Enel SpA’s Slovak unit, which is being offered for sale by the Italian utility, the Czech trade minister said.
Bloomberg  May 8  Comment 
Enel Profit Declines on Rising Euro, Weak Electricity Demand Enel SpA, Italy’s biggest utility, said first-quarter profit fell 8 percent as weak electricity demand in Europe...
Wall Street Journal  Mar 31  Comment 
An Italian court sentenced the chief executive of the country's biggest company by market value to a three-year prison term for an "environmental disaster" when he was CEO at utility Enel SpA.
Wall Street Journal  Mar 12  Comment 
European utilities E. ON SE and Enel SpA lowered their annual dividends as the subsidy-led boom in renewable energy hit earnings.
Reuters  Mar 26  Comment 
* Says lack of clarity in emissions trading scheme hurting energy firms
Bloomberg  Mar 21  Comment 
Enel CEO Battles European Slump With Growth in Latin America Enel SpA Chief Executive Officer Fulvio Conti plans to battle three years of stagnant profits at Italy’s...




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Enel (BIT:ENEL, NASDAQ:ENLAY) an abbreviated form of Ente Nazionale per l'Energia eLettrica, is a multinational producer and marketer of electricity (from both renewable and non renewable/fossil fuel sources) and natural gas. Although it is also active in the North American and Latin markets most of its business comes from Italy and Spain where it is or controls the country's largest energy company. Internationally a lot of its influence comes from controlling or minor stakes in leading regional companies (66% of Slovenske elektarne in Slovakia (which has an 81% market share of electricity production in that country), 5% of France's Powernext, 10% market share in Romania, one of the leading foreign operators in Russia).[1] Currently 30-35% of Enel is owned by people or comapanies directly related to the Italian government. Because of anti monopoly and free market related policies introduced in the 1990's the company has less control than it used to have over Italy's energy market (was forced to relinquish control of distribution networks, power plants and a power grid). It has operations in 17 countries (all of North America, parts of Eastern and Western Europe (all major countries except Germany and the UK), and parts of South & Latin America (the Endesa acquisition deepened its market access there) as well as Morocco) and market exposure in another 44. It serves over 60 million people. In Italy the Sales division has a 28% market share making it the electricity sales leader and 11% of natural gas sales (2nd).

Formerly one of its largest European competitors Endesa (10 million customers in Spain and another 10 million abroad) renewable and fossil fuel electricity producer, was taken over (92%) in early 2009 immediately increasing its business in Spain by 25-30 percent. The acquisition also further diversified its market share globally as Endesa also operates outside of Europe in places like Argentina, Peru and Chile.

Company Overview

Through International Division it has partnered with the world's largest utility company Électricité de France to develop third generation nuclear plants (compared to all nuclear plants in operation today (since the first 3rd generation one isn't expected to be operational until 2013)[2] third generation has better fuel technology, thermal efficiency, longer operational life and 100-1000 times lower core damage frequencies) and market electricity. Enel benefits from its integration focussed, group management structure (its international division is highly devoted to that aspect).
Because of Enel's size and involvement in the research and production of clean energy it can be considered less risky than other large energy companies in that in the event of a price increase/demand decrease of gas and other fossil fuels a complementary rise in nonrenewable energy demand could buffer at least some of the negative impacts on the company.

Divisions of the company

  • Sales - markets and produces electricity and sells gas in Italy (has 28% of the electricity, 11% of the gas market). It works through subsidiaries Enel Energia (electricity & natural gas) Enel Servizio Elettrico and Vallenergie (electricity on the enhanced protection market).
  • Renewable Energy - manages power generating stations that rely on renewable sources such as biomass, wind and nuclear. Although all of the division's operations have to do with renewables it is not the only part of Enel that produces energy using renewables as fuel (
  • Generation and energy management - oversees all power generating operations including those involving fossil fuels.
  • Iberia and Latin America - Focussed on growth opportunities and coordinates operations in Spain, Portugal and Latin America and the regions surrounding then.
  • International - Strategizes on how to better integrate foreign operations and looks for growth opportunities especially through foreign takeovers.
  • Engineering and Innovation - Involved in research and the development and construction of power generating assets.
  • Infrastructure and Networks - Engaged in the marketing of electricity and gas.

Minor divisions

  • Parent company - holds contracts with companies (Atel), manages the treasury and labor relations.
  • Services provides administrative, IT, training and other similar services to the other divisions.

Employees 2009 81,208 (44.34% at infrastructure and Iberia & Latin America) 1hfy10 80,220 (56.4% at infrastructure and Iberia & Latin America)

Business & Financials

Revenue in 2009 was €64,035 million up 4.66% from 2008. Most of the increase came from the Iberia and Latin America division which went from being the 3rd highest source of revenue in 2008 to the largest in 2009. Revenue from that division was bolstered by the company increasing its stake in Endesa (which operates in Spain and Portugal) by 25.01% (only about 8% of shares remain outstanding).[3] A number of companies were either bought or sold which affected revenue however as a whole debt rose due to the billion dollar acquisition of 25% of Endesa. Companies sold include ones with operations in Italy, Russia and Greece. Enel's unique automated meter system has gained popularity; a project was started in 2009 to install 13 million meters in Spain.
In Italy the average national uniform rate of electricity fell 26.8% in 2009 and demand for gas dropped 8% due to the domestic economy slowdown.[1] Almost all of the increase in electricity sales in Iberia and Latin America came from Endesa's operations there. Capital expenditure in the Sales division (up 10%) was in intangible products.
Financial data in €
Year (ended December) Operating Revenue (millions) Gross Operating Margin (ebitda) Group Net Income (millions) Group Net Profit Margin
2010[4] 73,377 17,500 4,400 6.0%
2009 64,035 16,044 6,390 9.98%
2008 61,184 14,318 6,034 6.85%
% Change 4.66 12.05 4.24 3.13

Energy produced and transported

In total 2009 as compared to 2008 Enel experienced an overall increase in every operational category.
Net electricity produced up 5.8% (despite a 12.8% decrease in Italy (Italy accounts for 31.4% of all Enel's electricity production) it was balanced by 17.1% increase abroad), Electricity transported by Enel's distribution network up 0.2% (despite a 6.3% fall in Italy balanced by 12.5% increase abroad), electricity sold up 6.4% (despite a 7.1% decrease in Italy counteracted by 20.3% rise abroad), gas sold up half a percent (up 36% abroad but down 8.8% in Italy). The changes are reflected in the financial data for its Sales division (operational income down 91.3%) as compared to the ones with international exposure (every other division had either light changes or strong growth in revenue and income).[5]
  • 1000 mil kWh = TWh, gas 1m3 = 10.83 kWh[6]
  • Altogether in 2009 267.8 TWh electricity generated, 394.3 TWh electricity transported, 287.7 TWh electricity sold, 8.6 billion m3 natural gas sold.

Equity in other companies

During 2009 Enel increased its stake in many other companies, many less than an 11% interest away from being considered an associate/subsidiary (over 50% owned).

% Interest held by Enel[1] SeverEnergia Enel Rete Gas Elica 2 LaGeo Elcogas Dicogexsa Tecnatom Terme Cesi Idrosicilia
2008 0 99.88 30 28.4 27.4 31.5 30.2 26.8 25.9 40
2009 19.6 19.9 30 36.2 40.9 47 45 40 25.9 40

Renewable Energy

Business in the US and Canada centers around clean energy production and associated technologies. Subsidiary Enel Green Power is one of only a couple companies in the area that makes use of wind, geothermal, hydroelectric and biomass technology. It also supports and works with Geronimo Wind Energy in wind pipeline projects. There are also wind projects in South America and Latin America. Enel Green Power's hydroelectric, geothermal and solar technologies have enabled it to be a leader in Italy (produces 2637 MW, 11.7 TWh of renewable energy in the country, over half of its global production).[1] About 11.51% of total power generation internationally is from renewables (7296 of 62531 kWh).[1] The comany's increased stake in Endesa consequently gave it control of Bosnia and Herzegovia alternative energy company Energis.

References

  1. 1.0 1.1 1.2 1.3 1.4 Annual Report 2009 (2010).
  2. 3rd-generation nuclear power plant to debut in 2013 (2010-03-22).
  3. Enel’s Endesa Deal to Focus Strategy on Latin America (2009-02-23).
  4. ENEL 2010 Financial Results (2011).
  5. [1]
  6. [2]
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