In order to keep up with scenario changes, we have launched an important infrastructural investment plan which, without affecting the soundness of our financial structure, has an immediately positive impact on performance and EBITDA.

Market trends and context

The reference scenario in which we operate is influenced by certain mega trends, such as the development of the circular economy, decarbonisation, the smart city concept of smart cities also based on digitisation, the drive towards technological innovation, climate change and environmental impacts.

We also operate in highly regulated sectors, including in terms of tariffs. The reference regulatory context is extensive and articulated, according to the specific nature of the businesses managed (water, energy and environmental) but also the variety of areas in which the detailed legislative and regulatory provisions affecting our business intervene.

Finally, the technological scenario shows dynamism, with intense research and development by producers of technological services, as well as the pervasive application of these technologies in all the group's areas of operation.

Water sector: The Authority’s action aims, for all regulated sectors, is directed towards ensuring the usability and distribution of the services in a homogeneous manner throughout the national territory, defining suitable levels of service quality, drawing up certain and transparent tariff systems based on predefined criteria and enhancing the protection of user and consumer interests.
For service managers, development opportunities will therefore be closely linked to their ability to adopt advanced technological systems and efficient performance improvement models, together with general social objectives that take account of social issues, environmental protection and efficient use of resources. Additionally, the regulation by the Italian Regulatory Authority for Energy, Networks and Environment (ARERA) on the quality of the integrated water service more heavily rewards the efficiency of operators, with the introduction of a premium/penalty mechanism connected with performance standards.. For service managers, development opportunities will therefore be closely linked to the capacity to adopt evolved technological systems and efficient models, which can significantly improve

Energy: at the end of 2019, the National Energy Strategy adopted by the Italian government in 2017, together with the Integrated National Plan for Energy and Climate (PNIEC), defined certain key elements, including:

  • decarbonisation through a strong drive towards electrification and an increase in the percentage of consumption covered by renewable energy sources;
  • energy efficiency
  • the increase in energy security so as to guarantee the flexibility, adequacy and resilience of the electricity grid;
  • the development of technology and innovation in order to enable the “new downstream”, making the customer active and aware;
  • the full liberalisation of the market and consolidation of players.

Environment: the market context in the area of Waste Management is showing a high “potential demand”, for example, insofar as concerns waste-to-energy and composting. This sector is also favoured by the national regulatory framework, which envisages forms of incentive, and by the European Union indications regarding the Circular Economy (“Closing the Loop”), aimed at recycling and recovering materials, facilitating the development of a new system of plant engineering with a view to closing the infrastructural gap, particularly in the treatment of organic waste. The sector offers growth opportunities also due to the availability of new technologies (for example, composting) and the possible industrial integrations with other operators.

For further information regarding market trends and the regulatory and tariff framework, reference is made to the 2019 consolidated financial statements
For further information regarding the sustainability context, reference is made to the 2019 Sustainability Report.

2020 outlook

The results achieved in 2019 exceeded expectations and have allowed us to improve our earlier guidance.
For 2020, we expect to see:

  • an increase in EBITDA between 6% and 8% compared to 1.04 billion Euro posted in 2019, in line with the CAGR envisaged in the 2019-2022 business plan;
  • essentially no change in investments compared to both 793 million Euro in 2019 and the 2019-2022 Business Plan;
  • net debt by year-end between 3.45 and 3.55 billion Euro.

2022 objectives

 
2018
 
  2019 2020 objective 2022 objective
EBITDA (mln Euro) 933   1,042 1,083 1.270
Net profit (mln Euro) 271   284 283 362
RAB (bln Euro) 3.7   4.2 4.3 4.8
NFP/EBITDA (multiple) 2.8x   2.9x 3x 2.9x