Release Date: November 14, 2024

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

Positive Points

• ACEA SpA (ACEJF) reported a revenue increase to EUR 3.1 billion, with a 7% growth in regulated business revenues compared to the previous year.

• EBITDA grew by 12% year-over-year, driven by the water business, grids, and tariff growth.

• Net profit, excluding one-off items, increased by 31% to EUR 165 million, attributed to effective financial management.

• The company improved its net financial position to EBITDA ratio from 3.49 times to 3.39 times, indicating better financial health.

• ACEA SpA (ACEJF) has revised its EBITDA guidance upwards, expecting a 7-9% increase over 2023, reflecting confidence in future performance.

Negative Points

• Operating cash flow was negative at EUR 16 million, primarily due to capital absorption from investments.

• The environment segment saw a decline in net revenues by EUR 11 million, impacted by lower revenues from liquid treatment.

• The energy production segment experienced a 15% revenue drop due to lower production and reduced rainfall affecting hydroelectric plants.

• The company's total cash flow decreased by EUR 386 million, leading to an increase in net debt.

• ACEA SpA (ACEJF) faces potential challenges in maintaining growth in non-regulated businesses due to competitive pressures and climate impacts.

Q & A Highlights

• Warning! GuruFocus has detected 9 Warning Signs with ACEJF.

Q: How will the new tariffs impact ACEA's working capital in the coming months, and what are the expectations for 2025? A: The new tariffs, approved by Arera, are expected to increase revenues in regulated businesses, which will be reflected in the working capital. Once fully operational in 2025, the volume of settlements is expected to decrease. The company plans to use resources from asset disposals to strengthen investments in regulated businesses. (Respondent: CFO)

Q: What are the expectations for the waste business recovery in the next quarters? A: The waste business is expected to recover margins in 2025, with the San Vittore plant becoming operational again and the development of a fourth line. The company plans to strengthen its business in other areas to increase current volumes. (Respondent: CFO)

Q: Can you provide an update on the high voltage grid disposal and expected capital gain? A: The closing of the high voltage grid disposal is expected in the first half of 2025, generating 247 million euros in available resources. The exact capital gain will depend on regulatory confirmations and adjustments at the time of closing. (Respondent: CFO)