Market context and guidance

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 scenario in which we operate is influenced by certain megatrends, such as development of the circular economy, energy transition (through decarbonisation and electrification), the drive towards technological innovation and digitalisation, as well as the constantly increasing emphasis on customer focus and progressive consolidation in the reference markets.

Sustainability & Circular Economy

- Central role of utilities in sustainability with particular focus on circular economy

- Protection of water resources and recyclingtransformation of waste into new resources

Energy transition

- Push toward decarbonization, phase-out of coal vs RES boost

- Electrification and new energy consumption related to emerging needs driven by the new European Green Deal

Innovation & Digital

- Digital and innovation as enablers for development along the entire value chain

- Technological enabling of new advanced services (e.g. predictive maintenance, smart meter)

Consolidation in reference markets

- Progressive consolidation of competition in select reference markets (e.g. Waste, Water)

- Opportunities for utilities to become leaders of target geographies or supply chains

Customer centricity

- "Paradigm shift" with customer value becoming more important

- Transition from "Commodity-Based" to "Service-Based"

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We operate in a complex area of reference together with national players and local utilities: Hera, Iren, and A2A. We are present in sectors that are highly regulated, 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, for all regulated sectors, is directed towards ensuring the usability and distribution of 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 objectives that take account of social issues, environmental protection and the efficient use of resources.

Moreover, 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 associated 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 performances. As regards the market, the sector’s top players are proceeding with a view to consolidation.

In addition to these structural trends, in 2020 the COVID-19 health emergency had repercussions on the legislative and regulatory situation. The action taken by the regulator was aimed at guaranteeing the continuity and availability of essential services, at the same time ensuring conditions of maximum safety and protection for public utility workers, in accordance with national legislation.

Energy: the National Energy Strategy adopted by the Italian government in 2017, together with the Integrated National Plan for Energy and Climate (PNIEC) definitively approved at the end of 2019, 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.

To respond to these changes, Acea is working on new initiatives, from developing renewables to e-mobility.

Environment: the market context in the area of Waste Management is showing a high “potential demand”, for example insofar as concerns landfill disposal, waste-to-energy, composting and the production of biogas. This sector is also favoured by the national regulatory framework, which envisages forms of incentive, and by the European Union indications on the Circular Economy (“Closing the Loop”), aimed at recycling and recovering materials, facilitating the development of a new system of plant engineering designed to close 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. The situation is therefore propitious for our growth strategy, also via acquisitions and with a view to positioning the Group as major operator in the treatment and recycling of paper and plastic.

Read more about our strategic initiatives.

For further information regarding market trends and the regulatory and tariff framework, reference is made to the 2020 consolidated financial statements

For further information regarding the sustainability context, reference is made to the 2020 Sustainability Report.

Business and Financial Outlook in 2021

The results achieved by the Acea Group at 31 December 2020 are better than the forecasts. The Group is determined to make major investments in infrastructure that, while maintaining the solidity of its consolidated financial structure, have a positive impact on the Group’s operating and economic performance.

The Group’s financial structure is solid for the years to come. At 31 December 2020, 81.1% of debt is fixed rate in order to ensure protection against any increases in interest rates as well as any financial or credit volatility. At 31 December 2020 the average duration of medium/long-term debt stood at 5.4 years. Note that the reduction of the average cost went from 2.15% of 31 December 2019 to 1.74% of 31 December 2020.

For the year 2021 Acea expects:

  • an increase in EBITDA between 6% and 8% compared to 2020;
  • investments of approximately € 900 million;
  • a net financial debt between € 3.85 and € 3.95 billion.

With regard to the Covid-19 state of emergency, the Acea Group immediately implemented all the necessary actions to ensure continuity in the services provided in the region, preserving quality and efficiency and at the same time ensuring the safety of its people through the adoption and implementation of the necessary prevention protocols. In addition, the high level of digitisation has allowed the implementation of an effective teleworking plan in all areas of the Group’s activities.

The response of Acea personnel, the characteristics of the businesses managed by the Group and its financial strength have made it possible to cope with the crisis situation with timely and effective actions that are evident in the period’s results.

2024 objectives

  2019 2020 2022 objective 2024 objective
EBITDA (mln Euro) 1,042 1,155 1,270 1,442
Net profit (mln Euro) 284 285 317 382
RAB (bln Euro) 4.2 4.8 5.3 5.9
NFP/EBITDA (multiple) 2.9x 3.05x 3.2x 3.0x