Italian global electricity and gas manufacturer and distributor Enel S.p.A. (MIL:ENEL) closed the first quarter reporting a net profit of 983 million euros ($1.068 billion), a 4.7% increase from 939 million euros in first-quarter 2016, “due to a decline in net financial expenses and a reduction in minority interests, which more than offset the contraction in EBIT,” the company says.
The net ordinary income was 943 million euros, an 18.6% increase on a year-over-year basis.
In the first quarter, the operating income was 2.525 billion euros, a 5.4% decrease year over year, mainly as a consequence of a 13% increase year over year in total costs that totaled 17.091 billion euros for the quarter in question.
The company’s total revenue came in at 19.366 billion euros, 8.4% higher than one year ago because of “an increase in revenues from the sale of electricity to end users and from the transport of electricity,” reports the company. “An increase in electricity trading and the sale of fuels” also raised revenue. A weaker euro toward local currencies helped Enel report higher revenue on a year-over-year basis.
Italy contributed 53.1% to the group’s total first quarter 2017 revenues, the Iberian area contributed nearly 27%, Latin America business 16.8%, the European and North African area 3.3%, North and Central America 0.9% and the Sub-Saharan African and Asian business area  0.1%.
Thanks to an increase in the demand for electricity and rising energy prices, Italy and Spain – with their mature markets – were the two business areas that contributed the most to the company’s first quarter bottom line. During the quarter the temporary shutdown of several nuclear plants in France caused a contraction in the income generated by the European segment. Apart from Columbia, the contribution was positive to the first quarter income in terms of increased demand for electricity from the South American countries.
In the first quarter, Enel generated cash flow of $1.740 million from its operations, an 11% increase from the same item of the comparable quarter of 2016. The total funds used for capital expenditure were 1.453 million euros. The free cash flow generated by the company during the quarter was 287 million euros.
During the quarter cash flow of 2.075 billion euros came in from new long-term borrowings while the funds used by the company for the repayment of old borrowings amounted to 3.233 billion euros. The company closed the first quarter of 2017 with a net financial debt of approximately 39.3 billion euros, up 4.6% from the previous quarter mainly due to the payment of the interim dividend for 2016 and the purchase of Celg Distribuição S.A. (the Brazilian distribution company) while the amount of cash on hand and securities was 5.602 billion euros as of March 31, 2016.
Francesco Starace, Enel CEO and general manager, commented on the first-quarter results: "The first three months of this year have also confirmed the validity of our plans to boost efficiency and our efforts to increase cash flow in support of investment in growth. The performance in the quarter results makes us confident in the effectiveness of our actions, in line with our strategy, whose intrinsic flexibility enables us to adapt to the complexity of the environments in which we operate and will allow us to continue to create value for all our stakeholders. We will continue to work tirelessly to this end, and we confirm our year-end targets.”
Enel is trading at 4.566 euros on Borsa Italiana, up 0.09% from the previous trading day, with a price-book (P/B) ratio of 1.33 and a price-sales (P/S) ratio of 0.67.
The company has a volume of 10.17 billion shares outstanding, of which 7.58 billion is float.
Among the top mutual fund holders, Europacific Growth Fund stands out with 93,109,100 shares, or approximately 0.9%, of the company’s total outstanding shares, valued 389,940,910 euros as of Dec. 31, 2016.
Disclosure: I have no positions in Enel.
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