Message from the CEO
Focus on first-quarter 2020 results

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.

Operating investments continue, while the Group’s financial profile remains solid, leveraging on continued cash generation.

The contribution from EstEnergy – consolidated starting from 1st January 2020, following the agreement reached with Ascopiave late December 2019 – proves to be essential, as it drove the performance of two business areas, Gas and Electricity.

Moreover, in the Waste area Hera continues to benefit from the asset portfolio and the sales structure built in the last few years in the industrial segment of this business.

In the first three months of 2020, Hera could counterbalance the negative impacts of the mild winter season and the weaker demand from certain industrial customers resulting from the lockdown, by leveraging on:

  • the decisive contribution made by the M&A deals concluded in 2019, first the one with Ascopiave,
  • the sound organic growth, which enjoyed the positive contribution of all the main business areas.

In the first quarter of 2020, Group Revenues were 2,055.8 m€. The net increase of 115.4 m€ (+5.9% vs. Q1 2019) mainly reflects the positive impact of a larger consolidation scope (+220 m€).

Consolidated EBITDA shows an increase of 18.4 m€ (+5.6%) compared to the first quarter of 2019, mostly driven from the performance of three areas, Electricity, Gas and Waste.

The Electricity area achieved the strongest EBITDA growth (+16.2%), mainly due to the consolidation from 1 January 2020 of EstEnergy activities and the effective marketing campaign, which allowed Hera to reach 1,303.7 thousand customers as at 31 March 2020 compared to 1,110.9 thousands customers a year earlier.

The Gas area was also on the rise. Its EBITDA increases by 6.5%, with volumes sold up 41.1% and the number of customers increasing by 38%, mainly as a result of the entry of EstEnergy into the Group perimeter.
The performance achieved in both the energy services areas are even more appreciable when considering that their quarterly results counterbalanced the negative impacts deriving from the mild winter temperatures and the halt in manufacturing imposed in Italy starting from March to limit the Covid-19 outbreak.

The Waste area, where EBITDA rose by 4.3%, benefitted from several factors: a 5.0% increase in treated volumes, the uptrend of special-waste prices and the higher revenues from differentiated urban collection. Such positive drivers more than compensated for the end of energy incentives of certain plants and wiped off the impacts of the stoppage of manufacturing production in Italy.

In the Water Cycle area, EBITDA declines by 2.9%, despite a slight increase in the number of customers (+0.3%), mostly because of lower revenues for aqueduct and new connections.

Lastly, the Other Services show a stable EBITDA, with sound margins in telecommunications services that offset lower margins in public lighting.

The 3.3% increase in consolidated EBIT, which is below that of EBITDA (+5.6%), reflects higher depreciation, mainly due to the enlargement of the scope of consolidation, as well as the prudent increase in provisions to credit loss fund.

The area of financial management shows a 7.6 m€ rise in net result, compared to 1Q 2019 (+36.1%). The increase is mainly due to the consolidation of EstEnergy.

In the fiscal management area, tax rate improves, reaching the 28.8% level (vs. 29.5% in Q1 2019), as a result of the fiscal optimisation exploited within the existing law framework. Group Net Profit is 124.4 m€, in line with that of the first three months of 2019 (124.2 m€).

Net Financial Debt, equal to 3,229.1 m€, is down compared to 3,274.2 m€ as at 2019 year-end. Strong cash flow generation, mainly fuelled by the consolidation of EstEnergy, has funded 91.5 m€ operating capex (vs. 92.6 m€ in Q1 2019) and 27.2 m€ financial investments. Hera’s financial structure remains very strong, with an average debt maturity exceeding 6 years and more than 60% of the stock expiring beyond 2025.

Stefano Venier
Stefano Venier
13 May 2020

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