Release Date: May 14, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• ACEA SpA (ACEJF) reported an 8% increase in revenues for Q1 2025 compared to the same period in 2024.

• The company's EBITDA grew by 7% year-over-year, adjusted for one-offs and perimeter changes.

• Net profit increased by 3% compared to Q1 2024, driven by strong operating performance.

• ACEA SpA (ACEJF) confirmed its 2025 guidance, indicating confidence in its financial outlook.

• The company achieved organic growth of 24 million due to increased water tariffs, improved commercial margins, and growth in public lighting investments.

Negative Points

• The cash flow for Q1 2025 was negative by 127 million, indicating financial strain.

• There was a significant working capital absorption of 163 million in the quarter.

• The company faces pressure on commercial margins due to increased competition and new market entrants.

• The net financial position increased by 123 million compared to 2024, indicating rising debt levels.

• ACEA SpA (ACEJF) anticipates higher operating costs in the coming quarters, which could impact profitability.

Q & A Highlights

• Warning! GuruFocus has detected 10 Warning Signs with ACEJF.

Q: Can you share your expectations about the process of extending the useful life of concessions for electricity distribution in Italy and its impact on ACEA? A: We are awaiting indications from the Ministry of Economy and Finance regarding the concession process, expected to conclude in June. Extending the concession to 20 years is crucial for ACEA, as it is a significant business area. We anticipate no issues in participating in this process, which is vital for ensuring the efficiency and resilience of our networks. (Respondent: Unidentified_1)

Q: Could you provide an update on the working capital absorption seen in Q1 and expectations for the year-end? A: We expect further absorption of working capital in the coming quarters, but anticipate normalization by year-end. The Q1 absorption was mainly due to the payment of tariffs accounted for in Q1 2024 and increased commercial receivables. (Respondent: Unidentified_1)

Q: Is the current guidance conservative given the higher-than-expected growth in Q1? A: We are not revising the guidance at this time. While Q1 results were strong, factors such as the progression of the PUN and commercial business margins could impact future performance. We will continue to monitor these factors. (Respondent: Unidentified_1)

Q: What is your opinion on the antitrust authority's negative opinion on the automatic renewal of electricity distribution concessions? A: We will not comment on the authority's opinion. However, extending the concessions is crucial for supporting consumption growth. We will assess opportunities in gas distribution on a case-by-case basis, focusing on synergies with our existing operations. (Respondent: Unidentified_1)