Financial Targets |
|
|
|
|
|
Earnings growth |
2020 |
2021 |
2022 |
2023 |
2020-23 CAGR |
EBITDA (RUB bn) |
9.9[2] |
7.5 |
10.6 |
12.4 |
+7.7% |
Net ordinary income (RUB bn) |
4.6* |
3.0 |
3.3 |
3.9 |
-5.2% |
Shareholders remuneration |
|
|
|
|
|
Dividend distributed during the year (RUB bn) |
3.0 |
- |
3.0 |
5.2 |
- |
Dividend per share (RUB) |
0.085 |
- |
0.085 |
0.146 |
- |
“Throughout 2020 Enel Russia was focused on ensuring continuous business operations and on completing its ongoing construction projects, always keeping in mind business transformation, operational efficiency improvement and shareholders remuneration as key priorities. The Company’s Strategic plan presented today is based on new market assumptions in a context of “new normality”, creating additional challenges in 2021, a “pivotal year” in our strategic transition period. This forces us to reconsider our business approach to ensure a proper balance between all our strategic pillars. In this connection we propose to postpone the distribution of 3 bn RUB dividends planned for 2021 to 2023, offering increased return in that year.”
– Stephane Zweguintzow, General Director of Enel Russia
Moscow, February 17th, 2021 - Enel Russia (hereinafter the “Company”) is presenting its 2021-2023 Strategic plan today to the financial markets and media.
Main drivers & events of 2020
The year was marked by the COVID-19 pandemic, which created significant challenges to the Company, and forced it to operate in a completely different environment, compared to the previous years. The Company implemented a set of actions against COVID-19 pandemics, which altogether allowed to offset its impact on day-to-day activities and work processes on our gas power plants.
On the other hand, the construction of our wind farms was affected by a number of “force majeure” events caused by the COVID-19 pandemic.
On a positive side our gas power plants modernization projects are on track and on time.
The Company is considering on a case-by-case basis participation in new tenders, with a specific focus on fitting the “low carbon” with “high efficiency” strategy.
Key directions of strategic repositioning for 2021-2023
The Company reaffirms its long-term strategy to balance the interests of internal and external stakeholders in terms of growth opportunities, financial solidity of the business and shareholders remuneration.
Our strategic pillars Diversification of technology profile towards lower carbon footprint as well as Focus on efficiency of gas power plants contribute to the UN Sustainable Development Goals (SDGs): SDG 7 (Affordable and Clean Energy) and 13 (Climate Action). Enel Russia contributes to other SDGs by promoting a sustainable business model and employing sustainable behaviors.
The new 2021-2023 Strategic plan
The main changes in installed capacity envisaged in the 2021-2023 plan include:
The Company has updated its previous outlook on utility sector and macroeconomic trends in a more conservative manner, considering the drop in power demand and spot prices, as well as volatility in GDP growth and exchange rates which occurred during 2020.
For the current Strategic plan period, the Company has developed cautious assumptions on output of gas units with gradual increase of wind power units, following one-by-one launch of our wind power plants, altogether resulting in a moderate positive trend of power output.
Total capex for 2021-2023 amounts to 36.7 bn RUB being slightly below the previous plan (a 7% decrease from 39.4 bn RUB for 2020-2022) and covering the initiatives, which are strategic for the Russian energy sector and crucial for the Company in terms of diversification of its assets base, following exit from coal generation. Main focus is devoted to finalization of greenfield renewable projects, with majority of them to be finalized within the plan, as well as activities on brownfield modernization projects with majority of them to be finalized beyond the plan. More specifically:
Taking into account the increased volatility of exchange rate dynamics, the Company outlines the hedging activities that it has traditionally been following, which results in more than 95% of CAPEX being linked to RUB.
On operational efficiency side, the Company plans to further optimize the processes in order to smooth drop in margin in 2021 and speed up the recovery from 2022. An important part of such initiatives is devoted to continued programs of performance optimization & digitalization, namely:
EBITDA is expected to reach 12.4 bn RUB in 2023, growing with a CAGR of 29% during the plan period from 7.5 bn RUB planned for 2021. Notably, the impact of renewable projects to the Company’s EBITDA is planned to reach 39% by the end of the Strategic plan period. The structural change of the Company’s composition of gross margin and EBITDA with gradual increase in guaranteed capacity payments throughout the period, following the expiration of old thermal Capacity Supply Agreements (CSAs) in 2020, will be accomplished by a more sustainable generation mix.
Net income is planned to stand at 3.9 bn RUB in 2023, showing a CAGR of 15% vs. an estimate of 3 bn RUB expected for 2021, despite being impacted by increasing financial expenses under the dedicated project of financing facilities for construction of wind farms.
Net debt continues its gradual increase, following the CAPEX needs of the projects, and reaching around 42.2 bn RUB in 2023. The largest one-off increase is planned for 2021, with Net Debt increasing to 30.5 bn RUB, mainly driven by the acceleration of investments to support business profile transformation.
Value creation to shareholders
The 2021-2023 Strategic plan envisages a balance between the Company’s financial stability, growth opportunities, and shareholders remuneration. Taking into account the situation of “force majeure”, recognized on one of our projects, combined with adverse market developments during 2020, the main task for 2021 is to keep financial stability. The Company confirms that it will distribute 3 bn RUB dividend for 2020 results, however, it will be done in 2023 instead of 2021.
Responsibility to our shareholders and investors remains our topmost priority. After passing the 2021 “pivotal year”, in this period of strategic repositioning and earnings volatility, we expect to distribute 3 bn RUB in 2022 for results of 2021 and ~ 5.2 bn RUB in 2023, which attributes to 65% of Net Ordinary Income of 2022 plus 3 bn RUB shifted from 2021, altogether resulting in almost 0.15 Rub Dividend per Share.
DISCLAIMER
This press-release contains certain statements that are neither reported financial results nor other historical information (“forward-looking statements”). These forward-looking statements are based on Enel Russia’s current expectations and projections about future events. Because these forward-looking statements are subject to risks and uncertainties, actual future results may differ materially from those expressed in or implied by these statements due to any number of different factors, many of which are beyond the ability of Enel Russia to control or estimate precisely, including changes in the regulatory environment, future market developments, fluctuations in the price and availability of fuel and other risks. You are cautioned not to place undue reliance on the forward-looking statements contained herein, which are made only as of the date of this press release. Enel Russia does not undertake any obligation to publicly release any revisions to any forward-looking statements to reflect events or circumstances after the date of this press release.