9M 2019 results speed up the growth of key indicators of the P&L. Hera is swiftly proceeding along the route designed in the Business Plan to 2022.
|9 M 2019
(data in mn€)
(+6.0% vs. 31 Dec. 2018)
- Progress so far is of mostly organic nature. The benefits of the significant M&A deal with Ascopiave will be effective only beginning 2020, when the process can be completed following the Antitrust approval.
- The 5.0% increase in consolidated EBITDA benefits from the positive contribution of regulated businesses. The structure of the tariff system effectively recognises Hera’s service quality and continuous search for efficiency, especially in the Water business. Satisfactory operating performance also derives from sizeable expansion in the number of customers, growing prices in special waste and larger availability of the asset base in the third quarter of the current fiscal year.
The increase of 714.8 mn€ in Group Revenues, at a pace of +16.4% compared to the first nine months of 2018, reflects primarily organic factors:
- higher trading (386 mn€),
- increase in proceeds from the sale of gas and electricity (63 mn€), mostly as a result of higher commodity prices,
- rising volumes in the sale of gas and electricity (66 mm€),
- higher revenues from power generation (27 mn€),
- in addition to growing aqueduct revenues in the Water area (8.1 mn€).
Changes in consolidation scope provide an overall contribution of 18.1 mn€ to the expansion of Revenues. The main M&A deals that provided an incremental contribution in 2019 were Sangroservizi and CMV in the Energy business; ATR in the Networks business; Cosea Ambiente, Pistoia Ambiente and the Gaggio Montano plant in the Waste business.
Consolidated EBITDA shows a 37.2 mn€ increase, as a result of the positive contribution of all main business areas.
The Gas area recorded a very healthy performance, with EBITDA increasing by +7.9%, driven by the 69.7% increase in volumes sold; the customer base grew by +3.7%, led by 52,400 new customers. In addition to the contribution of the newly-acquired companies that provided the Group scope with 27,200 new clients, Hera’s Gas business also benefitted from the increased number of customers in the last-resort and default markets, as well as the net additions deriving from an effective marketing campaign.
The Water area also shows a strong growth rate (+7.4%), leveraging on the contribution of new connections, additional synergies and efficiency, awarded by the regulation. The +2.0% increase in the Waste area reflects higher prices in the treatment of special waste, the contribution of the new biomethane plant that entered into operations at the end of 2018, as well as the contribution from Aliplast activities and higher revenues from the development of differentiated collection. Those factors offset the 6.7% reduction in the volumes of treated waste and lower electricity revenues. In the third quarter, a sizeable strengthening in the asset base was beneficial to this area, following the acquisition, in September, of Pistoia Ambiente, which manages the landfill of Serravalle Pistoiese, and the inauguration of the new plant of non-hazardous waste in Cordenons, in the Pordenone province.
The Electricity area records a slight EBITDA contraction (-3.1%), mainly due to the expected margin decline in the safeguard business. Nevertheless, the fact remains that a good expansion in the number of customers was achieved, as they reached 1.2 million, with an overall increase of +12.7%. Volumes sold grew by +7.3%. Moreover, the regulated part of the business benefitted from a 30-bps increase in WACC, a consequence of the ARERA regulatory review in effect from 1st January 2019.
Lastly, the Other Services area shows a strong increase in its EBITDA (+32.4%), mainly due to higher revenues and margins in public lightings, a business in which Hera carefully makes sustainable investments, as in the case of gradually replacing traditional lighting systems with led bulbs (to date having replaced 22% of total light points).
|MOL (mn€)||9 M 2019||9 M 2018||Change|
Consolidated EBIT grows by +7.7%, a more dynamic pace compared to that of EBITDA (+5.0%), having absorbed a +2.2% increase in the item “Depreciation and Provisions”. On the one hand, the Depreciation increase reflects both the new investments entered into operations and the application of IFRS16, on the other hand Provisions to the loan loss fund declined, especially in sales companies.
The area of financial management shows a net result of -67.1 mn€ (+1.6 mn€ vs. the same period of 2018), essentially due to a reduction of 2.0 mn€ in dividends from a subsidiary and higher charges (+2.7 mn€) for the application of the IFRS 16 on operating leases.
The fiscal management area proves Hera’s successful efforts in fiscal optimisation allowed by the legislation in force, with a tax rate dropping from 30.1% to 28.5%, mainly leveraging on the incentives on utility 4.0 investments.
Lastly, Net Profit post Minorities posts a 22.1 mn€ increase, reaching 230.8 mn€.
In the first nine months of 2019 Hera invested 331.0 mn€ net of capital grants, an increase of 43.7 mn€ over the investments made in the same period of 2018.
Net Financial Debt moves from 2,585.6 mn€ at Y2018 to 2,740.7 mn€ as at 30 September 2019, with a slight change, mainly due to the application of the IFRS16 on operating leases and -to a lesser extent- to the M&A deals closed in the meantime.