Dear Shareholders,

Following strong performance in 2018, also the first quarter of 2019 shows growing KPIs in the P&L, which leverage on the contribution of all main business areas.
Moreover, since these results only partially reflect the activities already launched in 2018 and those coming from new projects, the visibility of the 200 mn€ EBITDA target indicated in the Business Plan to 2022 is even stronger.

Significant organic factors drive Revenues

Firstly, we focused on factors that support the growth of the P&L topline. We achieved further expansion in the Energy market, where we reached a portfolio of almost 2.6 million customers, and we strengthened the Global Industrial Services segment in the Waste business, where we improved the penetration into some key Italian corporates operating in the food industry while gaining new international players active in Italy. Starting from the beginning of 2019, we have benefitted from the tariff increase set by ARERA in the distribution of gas and electricity. In the Waste business, nonetheless, the open dialogue with the Authority continues, as we actively participate in consultations for the definition of the new tariff, expected by the end of 2019, with the objective to see the recognition of the whole coverage of costs and a more appropriate rate of return on invested capital.

Innovation as engine of efficiency

The Efficiency topic remains pivotal in the growth path of EBITDA. In that regard, thanks to the incessant innovative effort, we completed the test phase on new-generation hydric depuration plants, creating the premises to see the technical quality of the water we deliver recognised in our revenues.

We leverage on Tenders and M&A to strengthen our competitive position

Despite delays, Tenders for awarding concessions continue. While we wait for the result of the tender for waste collection in Ravenna, we are preparing to participate to that in Modena. Concerning the Gas sector, we wait for the result of the tender in Udine, in which we took part in 2018.

The effort on the M&A side, which has always been a decisive growth lever to Hera, takes shape as an articulated series of operations. After the merger of CMV, the Ferrara multiutility, last week we acquired Cosea, operating in waste collection in 20 municipalities in the provinces of Bologna and Pistoia. While the merger planned between Herambiente Servizi Industriali and Waste Recycling will create the first Italian operator in the industrial waste business, we are considering the potential acquisition of a waste treatment business.

Organic investments with attractive returns remain the backbone of our Business Plan

To strengthen the capacity of our waste disposal plants is a priority of the Business Pan to 2022: we will do it mostly through organic investments. We have planned the expansion and cant of some landfills, following the sentence of the Council of State that has paved the way to development projects, by removing a number of obstacles. We have also planned the replacement of traditional gas metres with new smart meters, which will allow Hera to manage the network by fully exploiting digitisation potential: during first quarter 2019, we completed the process needed to achieve the certifications that next June will allow for the roll out plan aimed to the complete replacement of meters in use. Lastly, in the first quarter 2019 the first new biomethane plant in Sant’Agata, which produces 7 million cubic metres of gas per year, generating an EBITDA around 7 million euro, has begun contributing to the Group’s results. 

Stronger commitment to stakeholder engagement and shareholders return

Another important aspect is the stakeholder engagement, which has taken us in roadshow to the main international financial centres to present to investors the Business Plan to 2022. With the inclusion of the Hera shares in the Italian blue chips index, our efforts to keep an open relationship with the market and provide a quality flow of information have been growing. Hera also confirms the value creation for shareholders: on 30 April 2019, the Annual General Meeting approved the payment of a 10-cents dividend per share, which, compared to the 2017 dividend per share, shows a 5.3% increase.

First quarter 2019 results confirm that we are on track

The convincing results of first quarter 2019 – EBIT growing by 3.7% and Net Profit increasing by 3.1% – confirm we are on the right path to execute the Plan, by activating the broad range of levers and strategic projects that we have available.