The sharp increase in the price of energy commodities experienced in the third quarter of 2022 and the WACC cut made by the Regulator starting from January did not prevent Hera from achieving growth at the consolidated EBITDA level in the first nine months of 2022.
A policy of well-balanced diversification of the businesses in the portfolio and careful management of the risk profile enabled Hera to achieve sound operating performance even in an unfavourable scenario. Therefore, Hera could keep executing its investment plan, while also seizing additional opportunities through the purchase of significant quantities of gas in storage that guarantee the security of supply to customers for the current thermal year at predefined conditions.
Foresight in tackling the new scenario and confidence in the solidity of the business model: by leveraging these two strengths, Hera faced the challenges of fiscal year 2022, making progress in all financial KPIs.
The purchase of significant amounts of gas, to have adequate stocks available against the threatening energy crisis, was an intuition that has allowed the Group to keep its risk profile under control while continuing with the execution of the investment plan that underpins the continuous business growth.
The healthy results – achieved while maintaining a balanced leverage – make it possible to remunerate shareholders with a dividend of 12.5 euro cents per share, which represents a yield of about 5%.
In the second quarter of 2023, Hera gave fresh impetus to the growth already achieved in the first quarter, with first-half EBITDA showing an overall progress of 13.8%.
This result reflects the positive contribution of all business areas, while also having a significant sustainable connotation, given the continued development of the Decarbonisation activities.
In the first half of the year, the successful efforts to win new customers in the free market, the tenders awarded in the segments of last resort, STG and Consip, as well as the strong positioning in Decarbonisation services gave the Energy area a driving role in the Group’s growth.
In the new Business Plan to 2025 Hera expresses its commitment to make a concrete contribution to the path towards greater environmental sustainability, through a significant capital expenditure and investment plan of 3.8 billion euro in total.
The cumulative capex and investments over the 2021-2025 period, due to the careful allocation in different business areas, help fuel a strong growth of EBITDA, which is expected to reach 1.4 billion euro at the end of the Plan.
Half-year results confirm that Hera has a well-balanced asset portfolio and a clear long-term strategy. These elements allow the Group to navigate through a challenging scenario, such as the current one, without halting growth while confirming solidity.
Another evidence that emerges as Hera’s strength is the controlled risk profile in operational and financial management. On this basis it has been possible to absorb the impact of negative external elements, and, on this basis again, decisions have been taken to ensure the best possible conditions for future development, from higher investments to prudent provisioning.
Fiscal Year 2023 shows very healthy performance at operational level, with an EBITDA increase of 15% translating into a 17% EPS increase.
The strong EBITDA improvement reflects a “structural” component connected to organic growth and M&A – typical Hera’s development levers over time – which is complemented by a significant contribution from the markets of Last Resort and Energy Efficiency services under the Ecobonus incentives.
The Energy area played a driving role in the growth of the Group’s EBITDA, leveraging on a significant expansion of the customer base, which Hera proved to be able to manage while improving margins.
With the 2023-2027 Business Plan, Hera clearly defines the path to follow over the coming years. Even in the new, challenging scenario, Hera continues to leverage on a strategy that has been proven effective over time, with well-defined priorities in terms of value creation, sustainability and resiliency.
By deploying 4.4 billion euro in investments over the five-year Plan period, Hera will concentrate its resources on ensuring visible value creation while pursuing the goals of both sustainability and resilience to negative exogenous factors.
Based on preliminary results, the year 2023, the first of the Plan, shows a sharp acceleration in the EBITDA growth rate and a significant deleveraging.
Despite the pandemic scenario, 2020 proved to be a year of reassuring results in many regards. Behind the performance of financials, which exceeded forecasts, we boast a solid business model, a proven successful growth strategy, as well as a thorough execution of stakeholder-supporting policies that can be shaped by the needs of the moment.
Such an evidence provides higher visibility to the 2024 targets of the Business Plan and encourages the distribution of a dividend of 11 euro cents, meaning 0.5 cent higher than the amount originally indicated.
The first nine months of 2023 showed double-digit growth, moving from EBITDA to the P&L bottom line.
A set of clear features backs up the quality of the growth achieved over the period. Indeed, this was a cross-sectional growth, which involved operational, financial, and fiscal management, as well as all businesses across the multi-utility portfolio. Such growth can also be described as qualitative due to the high EBITDA component achieved in activities that contribute to the energy transition and circularity.
The Energy area goes on playing a driving role, in the wake of repeated and well-targeted achievements through commercial activities that often bring with them better margins. The outcome is that Hera can now leverage a solid base of 3.8 million customers.
Hera opens 2023 with reassuring results from the first quarter, not just for the entity but also for the quality of the progress achieved.
All typical drivers contributed to the 9.4% increase in EBITDA: organic growth, mainly supported by the expansion of the customer base in the Energy areas and the strong competitive positioning in Waste, as well as activities that promote the circular economy and M&A.
Operating cash flow generation covered increasing capex and the disbursement for acquisitions, while the depletion of stored gas reserves contributed to the debt reduction of 472 million euro.
The Business Plan driving Hera to 2026 includes investments for 4.12 billion euro, 7% more than the cumulated amount envisaged for the 2021-2025 period.
Organic investments are mainly focused right there where Hera already enjoys a solid competitive position: in the Networks, where the Group has proven to be able to seize the advantages of the regulatory system, and in Waste, where a strengthened asset base will intercept the attractive dynamics of demand. Being ready for catching the new PNRR opportunities and the increasing value-added services demand, the Company has several and well-managed levers to translate the increased investments into healthy returns. Therefore, EBITDA is expected to increase by almost 250 million euro over the five-year period covered by the Plan.
Despite an external context that proved to be extremely challenging due to the Covid-19 pandemic, in the first nine months of 2020 Hera managed to post higher results both at EBITDA level and at the P&L bottom line.
With a careful and responsible approach towards all stakeholders, Hera successfully faced and managed the risks related to the virus outbreak, thus neutralizing the impacts of the restrictions introduced to contain the health emergency.
The Hera Group’s continuous EBITDA growth path was not interrupted even by the very challenging external environment experienced in the first nine months of the current financial year.
EBITDA progressed by 20.4m€ (+2.4%), with the regulated businesses leveraging the service quality to offset the cut in regulated returns while the liberalised businesses were benefiting from careful management policies.
Despite the 6.7% reduction in Revenues, reflecting the pullback of energy commodity prices from past peaks, Hera achieved significant growth in the first half of 2023, with double-digit growth rates in EBITDA and EBIT.
Not only did all major P&L balances show improvement compared to H1 2022, but also all strategic business areas made a positive contribution to the 13.8% growth in consolidated EBITDA.
The Energy areas saw a very dynamic development (+30%), due to the strong expansion in the number of customers and the broad portfolio of services offered, with a robust contribution from Decarbonisation services.
With its sustainable approach to business, the multiutility nature and many circularity projects matching the Recovery Fund, Hera is well positioned to leverage the increasing sustainability demand coming from the policy makers and from the market itself.
Leveraging 98% of investments that are taxonomy-compliant, and for about two-thirds consistent with Shared Value criteria, Hera expects to give a strong “Green” boost to EBITDA growth.
Equity markets suffered heavy losses in the first half of this year, against a backdrop of geopolitical tensions, tightening monetary policies aimed to fight inflation, and deep uncertainty on the evolution of the real economy.
The performance of Hera’s shares could not remain immune to such daunting picture for equity investment, despite the Group’s resilient business model has proven to ensure solid fundamentals over the years, with continuous and sustainable growth over time.
In 2023, Hera achieved an EBITDA increase of 15.4%, in a framework featuring a 25.8% decline in Revenues, as energy commodity prices returned to levels closer to those before the outbreak of the conflict in Ukraine.
The EBITDA of Energy areas, which has determined 182.5 m€ of the total Group EBITDA progress of 199.7 m€, posted a significant increase (+40.6%), due to the fast expansion of the customer basis (+c.330,000) and the broadening of the services offered, including those in the Energy Efficiency business.
In the Waste area (+4.6%), where also the second bio-methane plant entered into operations, Hera recorded a growth both in prices and in volumes, while leveraging the successful integration of the activities of ACR Reggiani, after the acquisition of 60% of its capital in March 2023.
Over the five-year period, Hera will concentrate more than half (about 55%) of the 4.4 billion euro investment plan in regulated businesses (Networks and Waste collection), with the aim of enhancing the existing infrastructure and seizing the opportunities of the regulatory framework, thus generating returns with high visibility and keeping the risk profile low.
Over the Plan’s period, Energy will have available investments of about one billion euro. This area will benefit from a normalisation phase following the crisis in 2022, even in terms of lower absorption of working capital. Therefore, in Energy, Hera aims to provide a qualified offer of value-added services…
In the first nine months of the current fiscal year, Hera achieved an EBITDA growth of 15.1%, despite a 22.3% decrease in Total Revenues, due to falling energy commodity prices.
Energy areas, which explain 112.4 m€ of the total EBITDA progress of 132.0 m€, recorded a significant increase (+43.8%), leveraging on a fast growth of the customer basis (+310 thousand) and a wide range of services provided, including those successfully addressing the Decarbonisation issue.
In the Waste area (+4.8%), where one of the two Waste-to-Energy plants in revamping has not returned into operation yet, Hera leveraged higher treated volumes and prices, as well as the broader scope gained with the acquisition of ACR Reggiani.
In the challenging operating environment of first-half 2022, once again Hera proved that its business model can deliver continuous EBITDA growth.
The 3.3% progress in the half-year EBITDA was achieved by leveraging a careful search for the best opportunities within each business area and maintaining a low risk profile in managing each of them. In this way, valuable results were delivered in all businesses.
Over the five-year period, Hera will concentrate more than half of its 4.1-billion-euro investment plan on Networks, with the aim of leveraging on the existing infrastructure, a real strategic asset that will be strengthened and transformed to respond to the new challenges of Climate Change, while offering the Group visible returns with a low risk profile.
Hera will also allocate significant capital to Waste (29% of total investments), with this area expected to generate attractive returns that will drive the Group’s EBITDA growth. Hera will intercept a demand for increasing circularity, also in new vertical segments, by offering services that thoroughly meet the needs of business customers.
Today Hera stock trades at multiples way lower than the past. On the other hand, consensus target price is still close to 4 euro.
In light of results that confirm how the Company continues to deliver the profitable growth indicated in the Business Plan despite the risks posed by Covid-19, we are trying to understand the reasons behind market’s behaviour, which at the moment seems to remain indifferent to the huge undervaluation experienced by the share price.
While the major European stock markets are at their highs since the beginning of the year, Hera’s share price still has significant room for appreciation, as reflected by the large discount to the average target price of 3.4 euro of the analyst coverage.
Despite the good performance that the share price has put in compared to the 2022 year-end price of 2.53 euro, and despite the 5% yield of the 2022 dividend paid in June, Hera can offer further satisfaction to shareholders, according to Jens Klint Hansen, Hera’s Director in charge of Investor Relations, whom we interviewed.
Despite the rebound that started in the second decade of October, equity markets are still currently bearish, while showing significant losses compared to their levels at the beginning of the year. The general picture remains dominated by deep geopolitical tensions, a particularly severe energy crisis in Europe – where a coordinated reaction among the various EU countries has been lacking – and restrictive monetary policies which, although aimed at slowing inflation, make the profile of economic growth uncertain.
The new Plan to 2025 expresses a clear equity story, based on the growth acceleration of both EBITDA and Earnings per Share. It also leverages the high visibility of the factors that drive an increasingly green path.
Investors will have new elements to evaluate the Hera stock, starting from the 2025 targets, which also envisage a higher remuneration through dividends following higher expected earnings, while the financial profile remains solid.
Hera’s EBITDA growth path continued uninterrupted in 2022, with progress of 75.6 million euro that allowed the Group to reach a record level of 1,295 million euro, despite a much more challenging external scenario than was foreseeable at the beginning of the year.
The portfolio maintained a well-balanced structure, with the liberalised activities reaching 59% of the Group’s EBITDA.
All businesses performed well, as a result of continuous investments and wise management policies, although the extra-returns recognised in regulated activities were not able to fully offset the WACC cut of 22 million euro set by ARERA.
The rally that Hera’s shares have experienced since last October has only partly covered the wide appreciation room against the average target price of analysts in coverage – currently at 3.53 euro.
Preliminary results for the Year 2023, above market expectations, will provide further visibility on management’s actual ability not only to hit strategic targets, but to achieve them well in advance. The presentation of the new Plan, which gives stronger impulse to growth through a broad investment plan, will make the extent and quality of future cash generation even clearer, while risk profile remains under control.
After the presentation of the Business Plan to 2026 on 8 February 2023, with today’s release of FY22 results, Hera does provide investors with additional confirmation of the founding elements of its equity story.
To some extent, analysts have already built in their valuations the features of Hera’s continued growth, achieved by carefully managing the risks of the external scenario. As of 20 March 2023 – before the 2022 annual results are known – brokers have a mean target price of 3.24 euro, over 30% above recent trading prices.
The presentation of the 2023-2027 Business Plan, held on 24 January 2024, gave further boost to the uptrend that the Hera stock started in early October 2023. At recent prices around 3.3 euro, the share price has increased by more than 30% since last autumn’s low; nonetheless, an attractive gap of around 15.5% remains against the consensus target price.
Following the release of the new Plan, the brokers in the share coverage revised their estimates upwards and consequently updated their evaluations on higher levels. Therefore, despite the significant rise achieved by the share price in the meantime, there is still a large room to be filled, given the remaining undervaluation.
Hera starts 2023 on a growth path. All KPIs are up compared to the first quarter of 2022, while Net Financial Debt decreases
by €472.2 m, thus taking the Debt-to-EBITDA ratio down to 2.84x.
The Energy and Waste areas, which outperformed the Group average growth, have driven the 9.4% increase in EBITDA.
The quarterly results achieved indicate that Hera continues along the Business Plan’s growth path, by leveraging on its proven ability to manage the operating businesses with prudence and foresight, while riding the opportunities of the scenario…
In a stock market seeking direction, due to uncertainties about when central banks will end their tightening monetary policies, a bullish movement of Hera stock started in recent weeks.
Fuelling the rally, in addition to the healthy FY 2022 results, is the stock’s defensive profile, appreciated by portfolio managers in this de-risking phase, after the difficulties of several banking institutions emerged.
The last three months have seen an unfavourable scenario for equity investment: interest rates rising steadily, reaching 20-year peaks; the Chinese economy afflicted by persistent weakness; and, on 7 October, the outbreak of war in the Middle East, which exacerbated geopolitical tensions. The indices thus showed a volatile trend. The performance of Hera’s shares reflected this market sentiment: multiples have therefore not yet discounted the brokers’ upward revisions to estimates after half-year results.
As the end of the Central Banks’ aggressive cycle of interest rate rises approaches, the general market sentiment is starting to become less uncertain, especially looking ahead to 2024…
Despite the recovery from last October’s lows, the price level at which the Hera stock is trading indicates that there is still a considerable gap to fill compared to the FTSE MIB performance and the average share target price of the analyst coverage, today at 3.6 euro.
The release of the preliminary 2022 results will provide evidence on the profitability recovery in the Energy area in Q4, together with a declining leverage. Thus, the market will have new elements to update the valuation of Hera stock. Investors will also be able to draw reassuring elements on the solid profile of the future growth from the targets of the new Plan to 2026, set in continuity with past strategy.
Hera Business Solution (“HBS”), the cutting-edge offer of Hera Group dedicated to businesses, is here. The entire expertise gained by a leading Group in the efficient and circular management of all utility services is made accessible to clients. The offer promotes a new approach that supports clients with holistic assistance.
These new multi-service contracts for businesses go beyond the traditional supply, since they facilitate development towards circular economy models, by pursuing efficiency even in the use of services.
The new 2023-2027 Plan envisages a significant acceleration of growth compared to the previous Plan, whose horizon was 2026. The engine behind more dynamic development lies in higher investments planned over the five-year period. The EBITDA drivers take shape through the number of funds invested, but even through the quality of the selected projects, which offer more attractive returns, and the efficiencies Hera aims to gain in regulated businesses.
Cash conversion of EBITDA is very high: this allows more operating investments, M&A and dividend distribution to be financed, while keeping the leverage at the end of the Plan at an even more conservative level compared to that of the previous Plan.
Hera has achieved uninterrupted growth since inception in 2002 to date.
Embracing from the very beginning an innovative multi-business and multi-stakeholder model has proved to be a winning choice. Over time, Hera has executed a clear growth strategy, based on two pillars: on one hand fuelling organic development through the deployment of significant technical investments and the expansion of market shares in liberalised businesses, and on the other hand expanding externally through targeted M&A operations, always effectively integrated.
Leveraging on such approach, consistently applied over time, Hera has achieved great results even in the most challenging scenarios, creating value for the benefit of all stakeholders.
With the aim of addressing the challenge of the energy transition, Hera is looking for new skills through the recruitment of 300 resources that will be cultivated in a productive and stimulating workplace.
The process of selection and onboarding of these new resources that will be dedicated to the energy transition stands out for its innovative approach. In addition to accurately assessing the characteristics of the individual against those required by the role, such process provides the candidates with well-structured induction paths from the very first activities of training and induction.
In the coming years, Hera will continue to play a proactive role in the energy transition process, not only through responsible management of operations, but also by encouraging more sustainable consumption by its customers. The way forward will consist of leveraging the solid reputation that the Group has built in providing energy and value-added services.
The new scenarios provide Hera with a great opportunity: to ride the demand for greater environmental and economic sustainability of energy consumption, in line with what policy makers and customers themselves are asking for, both in the business and retail segments.
With a win-win approach, Hera has long chosen to strategically position increasing EBITDA shares in activities that contribute to strengthening the Group’s margins while offering tangible social and environmental benefits. Following this pioneering vision, Hera dedicated 2.5 billion investments to initiatives with higher impact and visible returns.
The significant results achieved – recognised by the ESG rating agencies as proven by its inclusion in prestigious sustainability indices – have made Hera an attractive reality in which specialised funds can invest.
For the second year in a row, Hera took first place in the ETicaNews ranking, which assesses the degree of integration of ESG policies of the top 100 Italian listed companies, with the aim of constructing the Integrated Governance Index (IGI).
Effectively and according to objective criteria, the IGI expresses the position of a company in ten key sustainability aspects that remain stable in the various editions and in an extraordinary area of investigation, which for 2022 was that of ESG Identity extended to the supply chain.
Hera took first place achieving an overall score of 82.35/100: a result that places the Group a good 20 points above the average of Italian blue chips.
To explain how the new Plan to 2025 signs a substantial change of pace compared to the Plans that Hera presented in the past, we focus on evidence emerging from the key targets.
From this exercise, some of the features that characterise the Group’s new strategic commitment for the coming years appear crystal clear: The average annual investments planned are in total 59% higher than those made in the last five years and 20% higher than those in the Plan to 2024, with a significant contribution from organic investments (+16%).
The AGM held on 27 April was a major event. Hera was one of the few Italian listed companies that again allowed its shareholders to be physically present at “Spazio Hera”, where the Meeting took place, even though this year, following the measures to avoid the pandemic, it was still possible to adopt a virtual format, with the vote expressed exclusively by proxy.
Promotion of a genuine and direct shareholder participation in the decisions on the Company’s life and future reveals a spirit reflected in all aspects of Hera’s history: from its commitment to the value creation for all stakeholders – trustfully executed, as 2022 results prove – to the way governance takes shape.
This year, shareholders have also appointed a total of 15 Directors, who will lead Hera over the next three years, demonstrating to embrace the previous Board of Directors’ guidance on the composition of the new administrative body.
Water is the most important resource on Earth. An essential resource to avoid social, political, and economic crisis. However, due to Climate Change, it is destined to become increasingly scarce while its demand is increasing, driven by continued population growth, further industrialisation, and more intensive use in agriculture. Such a structural deficit of supply over demand creates investment opportunities that the national Regulators tend to promote.
In Italy, Hera boasts a strong position in the integrated water cycle, being the second largest operator and the first in terms of service quality. A status that the Group has built with 2.5 billion euro of investments over the last 20 years…
Hera enjoys a leading competitive position in the Waste business in Italy. The new Plan to 2026 outlines a clear strategy: to leverage the Group’s existing widespread plant base and its ability to intercept annual waste volumes of over 6.7 million tonnes to increase its competitive advantage.
The idea is set in a context that is favourable from several points of view: the issue of protecting the environment through proper waste treatment and disposal is felt by citizens and is a legal responsibility for the companies that generate the waste. Both the new tariff framework for the treatment of municipal waste and the Italian government’s PNRR contain mechanisms that incentivise investment in the business, while the market price-trend has been positive for six years.
Dear Shareholders,
Two factors characterise our nine-month 2019 results, i.e. net profit that grows in the double-digits and KPIs that accelerate quarter after quarter. Such features confirm that our efforts to put into play a set of proactive initiatives and their successful execution allowed Hera to counter factors that could have conditioned its growth rate, such as the expected margin decline in last-resort businesses.
First-quarter results demonstrate Hera’s ability to post healthy growth rates in an improving scenario. The increase of 3.7% in EBITDA indicates that around 70% of the negative impacts related to Covid-19 and mild temperatures, which affected the first quarter of 2020, have been recovered. The Net Profit growth of 6.2% – therefore higher than that at EBITDA level – proves the positive contribution of both financial and fiscal management.
Strong cash flow generation allows for a 159-million-euro reduction in Net Financial Debt and makes Hera’s potential to fund additional growth through M&A even more visible.
Given the results achieved in these first months of the year, Hera’s competitiveness comes out even stronger. A key premise, also in view of the forthcoming tenders in regulated businesses.
The 3.3% progress achieved in the quarter at EBITDA level is evidence of Hera’s sound and visionary business-model approach, which was also able to leverage internal and external growth drivers, creating value and offsetting both the negative impacts of the macroeconomic scenario and the WACC cut set by the Regulator.
Despite the increase in net working capital due to the rise in energy prices and the pursuit of an intensive investment programme, Hera managed to maintain a solid financial structure, capable of supporting both customers in need, with bill payment in instalments, and the forthcoming distribution of dividend of 12-euro cent per share, confirming its growing shareholder remuneration policy.
A reassuring picture has emerged from first-quarter 2020 results, despite a tough scenario.
The results have been achieved in a context characterised by exceptionally mild winter temperatures and the restrictions imposed to control the Covid-19 outbreak; restrictions that did not prevent Hera from continuing to provide its services.
Shareholders remuneration has been confirmed, with 10 euro cents to be paid on 8 July 2020..
The Business Plan to 2024 fully intercepts the opportunities of the new economic policies, which promote energy transition and technological development. The new Plan declines these opportunities in a way that is consistent to the specific business model of the Group, with the aim of designing the next steps of a growth path that has continued uninterruptedly since 2002.
Strong of a 2020 that testifies the ability to grow resiliently even in challenging contexts, Hera is ready to confront the priorities of the external scenario. Counting on a true vocation for sustainability and on a solid financial capacity, in the new scenario the Company does not see discontinuity, but attractive opportunities.
Hera achieved significant half-yearly growth in terms of both size and quality.
A more favourable scenario than that of the first part of 2020, with regard to the effects of the pandemic and the climate, only partly explains the 10.4% progress in EBITDA: organic growth continued indeed, together with that driven by M&A. Comparison with pre-Covid levels of the first half of 2019 indicates even greater progress, in the order of 13.2%.
In liberalised areas, Hera has proven its ability in leveraging higher volumes as well as the incentives for energy efficiency included in the National Recovery and Resilience Plan, achieving significant returns, also in terms of sustainability.
In 2021, Hera achieved a 9% increase at EBITDA level, which exceeded expectations despite an external scenario still affected by COVID-19. A result that is also valuable from a qualitative point of view, given the wide range of organic factors that have fuelled the growth.
Thus, Hera has once again proven how crucial it is to have a multi-business portfolio to leverage, when one is an operator able to guess new trends in demand and promptly satisfy them. This is what happened, for instance, with the significant contribution that in 2021 energy efficiency and plastic recycling provided to Group’s 2021 EBITDA. The involvement in those businesses, moreover, confirms Hera’s active role in pursuing the environmental sustainability targets that Europe has set.
In the first half of 2020 Hera continues to growth organically, leveraging on a deep-rooted “culture of efficiency”, and promptly captures the synergies from recent acquisitions, which are proving to be absolutely strategic.
This way, in the first six months of the year we have already absorbed by a comfortable margin the amount of 30 million euro that represent the total Covid-19 impact on the P&L, as shown by the EBITDA growth of 2.5%.
In the next months, with the progressive easing of restrictions that were needed in Italy to contain the virus outbreak, we will be in a position to resume both investment and marketing activities. Hera will then be able to demonstrate the full potential for profitable growth embedded in a business portfolio that has always been managed in this forward-thinking perspective.
Within the frame of a scenario that looks challenging but provides plenty of opportunities, Hera sets its 2023 targets, leveraging on the Group strength that the healthy 2019 forecast results once again confirm. All indicators are on the rise compared to the previous Plan, with five-year cumulated dividends increasing by 20%.
Forecast 2019 results exceed expectations and indicate the achievement of several strategic targets well in advance. Starting from that strong premise, we began to build a Plan to 2023 with a growth exceeding that of the previous one.
The results of the first nine months of 2021 show a significant growth in terms of EBITDA, around 9.6%. A growth that is significant also for its strong organic component.
Leveraging on a proactive approach in non-regulated business, today Hera can fully benefit from the recovery in volumes compared to the period of restrictions imposed by the pandemic while it is reaping the attractive returns from the energy efficiency solutions developed under the incentive system provided by the National Recovery and Resilience Plan.
In the traditional Message to Shareholders, Hera’s Chairman confirms that the Company is ensuring continuity of the essential services provided to customers. He also comments on 2019 results that show significant growth, achieved keeping a limited risk profile.
Shareholders remuneration follows the Business Plan indications, with a proposed dividend per share of 10 euro cents.
In first-quarter 2021, Energy areas drove the EBITDA of Hera Group. Overall, EBITDA grew by 3.7%, against a scenario that proved to be less penalizing than that of the same period of 2020, in terms of both weather conditions and severity of anti-Covid restrictions.
Quarterly results provide a clear picture. On the one hand, Hera is constantly looking for new efficiencies, especially through innovation; on the other hand, it continues to expand its customer base in a selective way, by leveraging also on value-added services and high-impact activities for the implementation of circular economy. With such a model, Hera achieves healthy returns.
Once again, in the first quarter of 2022 Hera proved the resilience of its business model, by posting a 3.3% EBITDA growth compared to first-quarter 2021, despite the penalising context.
EBITDA achieved growth by leveraging on the contribution of all businesses, with Waste showing the strongest performance (+11.4%), driven by waste treatment activities. The 3.6% progress achieved in Networks EBITDA is even more valuable when considering the 70-bps cut in WACC set by the Regulator.
The performance in the first quarter of 2020 shows that Hera continues on the development growth path that has built over the years, by leveraging organic growth and the expansion achieved in its perimeter. This reflects a resilient business model and the M&A deals carried out in the past fiscal year; these two levers succeeded in offsetting the impacts from an exceptionally mild winter season and the Covid-19 emergency measures, which have especially affected the demand of energy and waste services.
Hera’s strategic review presents a clear path of sustainable development for the long term and a five-year Plan that allocates 3.2 bn€ investments to fuel growth.
Therefore, 2024 EBITDA is expected to reach 1.3 bn€, of which approximately 50% from Shared- Value projects.
Within the strategic framework expressed in the GROWTH acronym – Green, Resilience and Regeneration, Opportunities, Welfare, Technology, Humans – Hera has shaped a number of specific projects to achieve, in its multiutility business, the targets set in terms of circularity, carbon neutrality and technology innovation, in full compliance with the guidelines of the regulation and the objectives of international economic policies.
First-half 2021 results confirm that Hera is following the path indicated in the Business Plan, while consistently implementing a circular economy model and pursuing its commitment – attested by STBi – to reducing greenhouse gas emissions.
The strong growth that the Group achieved in 1H 2021 EBITDA derives more than 54% from the contribution of the Energy area, which sees a return to more normal operating conditions compared to the first half of 2020, as a result of less severe anti-Covid restrictions and more favourable weather conditions.
During 2021, Hera achieved significant growth in all key indicators of the Profit and Loss Account, from EBITDA, which increased by 9%, to Net Profit post minorities, which rose by 10.2%.
All business areas brought a positive contribution to consolidated EBITDA, with Energy and Waste leading the progress, increasing respectively by 14.9% and 13.1%.
In the five-year Plan, clear strategic direction and efficient capital allocation are two factors at the heart of the expected acceleration in EBITDA growth, on a journey that will lead Hera to create even 539 m€ of Shared Value.
The Plan includes a substantial capital expenditure in projects to enhance Hera infrastructure, in line with the aim of providing our asset base with both continuous innovation and consistently high standards in business continuity.
In the first half of 2020, amid the pandemic-induced emergency, Hera has fulfilled its commitments toward stakeholders: it has guaranteed continuity of customer service while safeguarding the health of its employees; it has remunerated its shareholders with the 10 euro cent dividend envisaged in the Business Plan; it has made its presence felt the areas in which it operates with material aid to healthcare facilities. It has also intervened to support customers in the most fragile situations and suppliers in temporary difficulties.
In 2020, Hera leveraged the benefits resulting both from the recent acquisitions and from the synergies already extracted in the first year of their management, to continue the growth path indicated in the Business Plan. Thus, the Group achieved a 3.5% increase at EBITDA level, despite the challenging environment due to the economic effects of the restrictions to fight the spread of Covid-19 and the extremely mild weather conditions. A strong cash generation allowed for a reduction in the Net Financial Debt at year-end, with a significant improvement of Hera’s financial profile.
The last few months of the year showed a recovery in the demand from industrial clients, thus proving that Hera’s business portfolio is well structured and can offer both resilience in uncertain times and growth opportunities when the macroeconomic scenario is improving.
The results of the first nine months of 2021 show that Hera is pursuing the targets indicated in its long-term strategy. Results delivered quarter after quarter prove consistency with these commitments and flexibility in their achievement even against changing contexts.
Results achieved in Q1 2019 prove Hera continuing growth, while showing a performance on track with the Business Plan.
Consolidated EBITDA grows by 2.5%, benefitting above all from the positive contribution of regulated businesses, where the tariff systems remunerates the efficiency and quality of Hera’s operational effort. The sound performance of EBITDA also reflects rising prices in special waste, continuous expansion in the customer base, as well as attractive margins in both power generation and default-gas segment.
Such factors offset the negative impact of certain drivers, among which: the margin reduction in the safeguarded-customer business, lower volumes due to above-average winter temperatures and early maintenance at the WTE plant in Padua.
In these early months of 2021, Hera’s share price has gained strength. And not only in absolute terms, with a rise of over 10%, but also because it has outperformed the index of the utility sector. In the last few trading sessions, the stock has even outperformed the FTSE MIB, which is heavily weighted towards stocks that allow the theme of future recovery to play out in a catch-up trade.
In early 2022, the stock market’s performance has been heavily affected by a combination of negative factors, whose future evolution is difficult to predict.
Geopolitical tensions, inflation, and rising interest rates, all weigh on the economic growth outlook.
In this context, Hera stock outperformed both the FTSE MIB and the Italian utilities index.
In a context of bullish stock markets, Hera can boast a number of Company-specific drivers.
During 2019, Hera’s stock rose following a continuing upwards path. It over-performed both the FTSE MIB and the FTSE Italy All-share Utility Index, despite both indices had a significantly positive rally since the start of the year.
Hera’s price remains well below its fair value, despite showing the features of a defensive stock, because of the uncertainties concerning the way Italy will exit the deepest phase of the crisis originated by the pandemic.
When the emergency related to the Covid-19 outbreak first hit Italy, Hera’s share price was at its record high of 4.5 euro, reached on 19 February 2020. The sell-off that generally involved all stock markets led Hera to experience a sharp correction, even though more limited compared to that experienced by the FTSE MIB index and the other multi-utilities.
The new Plan to 2024 clearly indicates both the extent and quality of the value that Hera Group can create: the targets set in the past have been exceeded for the fifth time in a row; the new objectives to 2024 and 2030, are more ambitious than the previous ones and even more closely linked to the new priorities of a Europe that is moving towards “zero emissions” and wants to make the economy even more circular; the prospect of steady growth in dividend per share is confirmed.
Are all elements that will help enhance investors’ perceptions of Hera’s strengths and prospects.
Hera’s share price has performed well since the beginning of 2021, also compared to the performance of benchmark indices.
Equity markets have maintained a positive tone even after the start of the normalisation of monetary policy that the Fed announced on 16 June, despite the volatility induced by inflationary fears and, more recently, by the growing infections due to variants of the virus.
In the last few months, Hera has strengthened its equity story in terms of sustainability, also leveraging on prestigious external recognition: after 2020’s inclusion in the Dow Jones Sustainability Index World, the score obtained with the ESG Evaluation by S&P Global Ratings on 21 July 2021 places the Company among the top 15 utilities internationally.
Hera’s share continues to benefit from the high quality of its fundamentals and the visible growth perspectives, given the presence in the Group portfolio of businesses that are regulated or enabling the circularity and the energy transition. As a result of these unique features and benefitting from proactive investor-engagement initiatives, Hera has strongly outperformed the sector index.
Hera’s equity story represents a safe harbour for investors. It represents a 20-year uninterrupted growth story, with strong protection against the risks of today’s scenario, which is characterised by many uncertainties: inflation, unstable energy prices, interest rates expected to rise, geo-political conflicts and ongoing pandemic.
Uncertainty and volatility are the key words that have dominated the equity markets in these times of Covid-19 pandemic. Long term sustainability and “green” agenda are the key words that have shaped the new monetary and fiscal policies in Europe.
Hera’s solid fundamentals, confirmed by half-year results, its authentic commitment to 2030 ESG goals, and the room for potential capital gain considering the mean target price of c.4 euro form the pillars of a robust investment case, which looks appealing, especially in the new scenario.
The solid results of fiscal year 2020 represent a milestone in Hera’s growth path considering the scenario in which they were achieved. Therefore, they provide an anchor of certainty in a context of stock markets suffering from a severe lack of visibility, especially on the timing of exit from anti-pandemic restrictions.
Investors can read in a very positive way these 2020 results, which surprise while overperforming the preliminary data released in January. Hera confirms its characteristics of a company capable of promptly intercepting economic growth by improving its cash generation.
The utilities sector is certainly not one of the sectors that investors have favoured during 2021; nevertheless, Hera shares have performed well since the beginning of the year, leveraging the generally positive tone of the stock markets and a number of Company-specific factors that have boosted the share price.
Over the period from 2018 year-end to 19 February 2020, Hera’s share price surged (+67%), overperforming both the industry index – which grew by 61% – and, to an even greater extent, the Italian Blue Chips index, which in the same period increased by 39%.
One of the megatrends that feature the evolution of our society is the concentration of global population in the cities. Increasing urbanization requires deep rethinking of the services that the utilities provide. This topic has been at the heart of last June’s event, “Re-inventing the city”, that has been organized by Hera in Bologna. To understand how Hera means to play this role, we talked to Enrico Piraccini, who is the Head of Development and Innovation at Hera.
Since its inception, Hera has had “Health and Safety in the workplace” among its founding principles. For this reason, over time it has defined specific strategies and implemented improvement plans that proved to be effective, as shown by the positive performance recorded over the years.
Especially in 2021, Hera achieved a significant decrease both in the frequency of accidents and in the number of days the employees were absent from work, reaching the best results in its history.
One of the typical features of companies that are leaders in their industry is the ability to consolidate their leadership over time through innovation.
Hera nurtures that intangible asset, the innovation, through continuous investment, by leveraging some specific strengths.
While we take a closer look at some of the new projects Hera is working on, we try to understand what are the specific factors that drive the Group’ s success in innovation, through some questions that we put to Mr. Salvatore Molè, Central Innovation Director of Hera Group.
The strict lockdown adopted in Italy led to a number of changes in marketing and customer-service activities. On the other hand, consumption has also changed.
Hera has put into play the proven experience of Hera Comm to deal with the new situation in such a way as to ensure together the safety of people and the continuity of service.
In these first months of the year Hera’s scope expanded, as a reflection of the deal completed with Ascopiave. The integration of EstEnergy is already bearing fruit.
Hera has designed its Business Plan to 2024 consistently with the external scenario, where international policy makers are indicating clear priorities in terms of environment, society, and innovation. Hera has outlined a dual path, both for the creation of Shared Value and for the industrial strategy, pursuing respectively the UN 2030 Agenda and the European policies – especially those featured in the “Next Generation EU” program. This approach allows Hera to make a concrete contribution to the achievement of major sustainability goals, while offering the perspective of attractive returns by fuelling Group growth.
The findings from the 2020 survey indicate that clients are generally “delighted” with the services they receive from Hera. Even in a difficult year, marked by the pandemic, Hera has found ways to interpret and anticipate the expectations of its customers. The digitalization has continuously enriched the customer experience, while new offers have paid increasing attention to the environment and the specific individual needs.
The good image that Hera has built over time – through the development of customer-centric offers – leads to high levels of satisfaction, favouring a virtuous circle. This promotes cross-selling, word of mouth and loyalty.
Hera’s strategy in the plastic recycling is crystal clear: strengthen its leadership through the expansion in new market segments, with the aim to transform rigid plastics in addition to the flexible ones that Aliplast currently treats and, at the same time, approach new business niches, as in the case of carbon fibres.
Aliplast Group – with an EBITDA doubling in 2021 vs. 2020 and reaching 36.5 million euro – will be a key driver of the 122-million-euro growth at EBITDA level that the Group targets in the Waste area by 2025.
In the age of great changes with global impact, technological progress is one of the most disruptive. It challenges business models, while requiring deep rethinking even of the more traditional activities in the industry.
Widespread use of new technologies is revolutionizing the way multi-utilities operate. It is deeply transforming services offered to customers and their own expectations.
Hera takes up the challenge to carry out significant changes by 2030.
For the first time, in its Business Plan presentation Hera also included eight goals to 2030.
For a better understanding of the relevance of this choice and the way it has been developed, we ask some questions to Mr. Massimo Vai, who is Strategy, Regulation and Local Bodies Central Director and Head of Strategic Planning at Hera.
Since 23rd November 2020, Hera is part of the selected group of 323 companies included in the Dow Jones Sustainability Index World, a basket consisting of listed companies that are in the top 10% of the ranking for their sector. The assessment, i.e., the process to operate the selection to be included in the index, is conducted by S&P Global on the basis of a detailed survey, composed by 540 questions and submitted to the leading 2,500 issuers in the world.
Given the high score achieved (87/100), Hera has also entered the selective Dow Jones Sustainability Index Europe, composed by European players that are real champions in sustainability performances. In Europe, the ESG awareness of both issuing companies and asset managers dedicated to Socially Responsible Investing have a more developed and consolidated tradition compared to other continents.
The energy efficiency business is experiencing an unprecedented expansion, given the incentive systems that the Italian government is providing, mostly in the private condominium market.
Hera has always been active in the market for private residential customers, large condominiums. Since the introduction of the 110% ecobonus, the Group has continued to position itself as a leading operator with consolidated experience in energy requalification work.
Hera’s Business Plan undergoing a stress test
Hera’s Investor Relations team has just completed the new version of the “Sensitivity Game”. Presented with the name of an intriguing game, it is actually a high-potential tool for analysts and investors that aim to test the impacts of different scenario assumptions on Hera’s future performance.