Enel (BIT:ENEI) S.p.A. (ENEL.MI) has reported a robust first quarter for 2024, with significant gains in EBITDA and net income, as well as progress in its efficiency and cost reduction programs. The company's EBITDA rose to €6.1 billion, marking a double-digit increase from the previous year, while net income surged by 45%. These financial improvements come alongside a growth in renewables production and capacity, with emissions-free production comprising over 80% of the total output.
Key Takeaways
- Enel's EBITDA increased to €6.1 billion, with a 45% rise in net income compared to the previous year.
- The company's efficiency program is on track, achieving €300 million in cost reductions.
- Growth was notable in grids and integrated businesses, with renewables production increasing by nearly 4 terawatt-hours and capacity by 4 gigawatts.
- Net debt was reported at €60.7 billion, including a €600 million negative currency movement impact.
- Enel is on track to meet its business plan targets and may potentially increase shareholder remuneration.
Company Outlook
- Enel anticipates a €70 billion balance to full-year EBITDA, with significant contributions from Europe, especially Italy and Iberia.
- In Latin America, resilient business deployment and EBITDA are expected, with Brazil's renewable plants contributing notably.
- The company projects a €350 million EBITDA increase from asset disposals on top of the guidance provided on Capital Market Day.
- Enel's cost baseline reduction is expected to save €600 million by 2024, potentially exceeding targets.
- A conversion rate of 60-65% for FFO in 2024 is anticipated, with financial expenses remaining low and in line with expectations.
Bearish Highlights
- The company missed its 2023 emissions target due to unforeseeable factors, such as coal maximization in Italy and the Russian-Ukrainian political crisis.
- Uncertainty persists regarding hydro conditions for the remainder of the year.
- Discussions on grids regulation in Spain are ongoing, with a new regulatory rate of return yet to be determined.
Bullish Highlights
- Enel's efficiency program is progressing better than expected, with €300 million in savings achieved in nine months.
- The company remains comfortable with its 2026 guidance, foreseeing no major disruptions.
- Positive trends are expected in Italy's retail activities, with a normalized churn rate and a growing customer base by year-end.
Misses
- Emissions targets for 2023 were not met due to factors beyond the company's control.
Q&A Highlights
- Enel's executive Stefano De Angelis indicated potential increases in dividends per share.
- The company is recovering from grid issues in Sao Paolo, Brazil, with first-quarter results aligning with expectations.
- Enel plans to renew its share buyback program at the upcoming AGM.
- The sale of grid assets in Italy will be reported as a capital gain, with no extraordinary dividend planned.
- No comments were made on M&A speculation in the UK, but a battery storage deal in Italy is expected to close by the first half of the year.
- Revenue from selling pipeline assets in the U.S. could contribute to the company's earnings.
Enel's first quarter of 2024 sets a positive tone for the year, with strong financial performance and strategic advancements in both its efficiency initiatives and renewable energy production. The company's commitment to meeting its business plan targets and potential for increased shareholder returns will be closely watched by investors and market analysts alike. The next earnings call is scheduled for July, where further updates and insights are expected.
InvestingPro Insights
Enel S.p.A. (ENEL.MI) has not only shown a strong first quarter in 2024 but also exhibits several promising indicators according to InvestingPro data and tips. The company's commitment to increasing shareholder value is reflected in its consistent dividend growth, with a noteworthy increase of 10.78% over the last twelve months as of Q1 2023. This aligns with the InvestingPro Tip that Enel has raised its dividend for 10 consecutive years and has maintained dividend payments for 25 consecutive years, underscoring its reliability as an income-generating investment.
The financial strength of Enel is also evident in its substantial market capitalization of 71.26 billion USD and a solid P/E ratio, which adjusted for the last twelve months as of Q4 2023, stands at 14.34. This favorable valuation metric is complemented by a PEG Ratio of just 0.17 for the same period, suggesting that the company is trading at a low price relative to its earnings growth—a point highlighted by one of the InvestingPro Tips.
For investors seeking stability, Enel's stock typically exhibits low price volatility, an attractive feature for those looking for more predictable returns. Additionally, with a dividend yield of 3.56% as of early 2024, Enel continues to reward its shareholders significantly.
InvestingPro users can delve deeper into the company's performance with additional InvestingPro Tips, which provide insights such as Enel's status as a prominent player in the Electric Utilities industry and an analysis of its short-term liquidity. There are 9 additional tips available on InvestingPro for Enel, which can further guide investment decisions.
For those interested in a comprehensive analysis of Enel S.p.A., consider exploring these insights on InvestingPro. Use the exclusive coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, and stay ahead with real-time data and expert analysis.
Full transcript - ENEL Societa per Azioni (ENLAY) Q1 2024:
Operator: Good day and thank you for standing by. Welcome to the Enel First Quarter 2024 Results Conference Call. At this time all participants are in listen-only mode. And now I would like to hand the conference over to our first speaker today, Monica Girardi. Please go ahead.
Monica Girardi: Thank you. Good evening to all of the people connected. Welcome to our first quarter 2024 results presentation which will be hosted by Enel CFO, Stefano De Angelis. Following the presentation, we will have the usual Q&A session. We ask those connected to the webcast to send questions only via email at investor.relations@enel.com. Before we start let me remind you that media is listening to both the presentation and the Q&A session. Thank you. And let me now hand over to the CFO.
Stefano De Angelis: Thank you, Monica, and good evening, everybody. Let’s start with the highlights of the period. The year kicked off with a strong performance with EBITDA up double-digit compared to last year and reaching €6.1 billion while net income increased by a sound 45%. These remarkable results were driven by a solid delivery across all businesses and geographies as I will detail later in my presentation. FFO is robust and accounts for €4.4 billion with an EBITDA conversion at around 70% supporting the positive evolution of credit metrics already observed in the second half of last year. The execution of our efficiency program is well on track, thanks to the no-frills approach we set preserving the value of the distinctive assets of the Group while firmly address any initiatives not in line with our core business and priorities. At the end of March, we reduced the addressable cost baseline by €300 million compared to the 2022 baseline. The solid operating performance, the strong FFO conversion and the progress is made on efficiency provide ample visibility on the evolution of the year and support on the 2024 targets. Let’s now dive into the operating delivery. I’m now on Page 3 with the main business KPIs. Let me just highlight some of the most remarkable KPIs achieved. The continued effort on grids extension and performances is visible with RAB per customer increasing by around €30. Renewables production is up by almost 4-terawatt hours, thanks to the improved hydrology in Italy and Chile, and the continued path towards energy transition with renewable capacity increasing 4 gigawatt compared to the first quarter of last year. As a consequence, emissions free production accounted for more than 80% of the total remarkably up versus the 70% of 2022, 2023, sorry, while renewables production on total increased by 12 percentage points. This progression on industrial performance resulted also in a positive impact on our customer segment as in 2024 we have been able to cover an increasing share of sales to B2C customers with the opportunity to improve our competitive position through the offer of an affordable cost of electricity to our customer and a more effective use of our industrial resources. The operating delivery translated into a strong growth in EBITDA and I’m now moving to Page 4. Ordinary EBITDA is up by 12% or more than 20% versus previous year excluding the impact of the asset we disposed last year. The operating growth resulted from a positive performance on the grids on the back of constructive regulatory updates and the strong results of the integrated business, thanks to the dynamics that I will comment later. I want to highlight that from a geographical perspective European countries represented the bulk of the growth with EBITDA in these regions up by 26% versus previous year. I will now move to the results analysis starting from the networks. Grids EBITDA increased by a sound 11% net of assets disposed in 2023. Italy benefited from the mentioned constructive regulatory updates both on inflation and work, and they projected increased CapEx allocation. Spain recorded a slight increase year on year led by the positive impact of previous year settlements associated with quality premium. In Latin America the performance was mainly driven by the tariff adjustment in Argentina only partially offset by the impact of inflation in the cost side. Worth to highlight that the €2.1 billion of EBITDA for the period include also €60 million associated with the Peruvian grid under disposal. Let’s now continue with the evolution of the integrated business and I’m on Page 6. The integrated business is strongly up year-on-year increasing around €900 million excluding the perimeter effect of the asset disposed in 2023. Renewables contributed the most, thanks to the mentioned improved hydrology mainly in Italy and Latin America. The growth from new capacity added along 2023. The removal of the clawback measure in Italy and the positive impact compared to last year of hydro shore positioning. Finally, again in Italy the progressive reduction in the mix of sales of the 2021 share. Another relevant topic is represented by the decrease of the thermal generation associated with the lower production from coal and gas plants as a consequence of the recovery of hydro in the end of the mandatory requirements on coal production in Italy. The customer segment increased by almost €400 million, thanks to an improved marginality of the free market segment in Europe mostly concentrated in Italy where it worth to mention that the customer bearing pricing in 2023 only started to be effective from the second quarter of last year. I will now dive into the evolution of global business slide in the next quarters of the year. I’m on Page 7. We had a strong start but it’s important to highlight that quarterly results included around €300 million which cannot be considered, which -- sorry, which have to be considered temporarily out of which €200 million as I mentioned before is associated with the contribution of Peru that was not included in our full year guidance when we presented the 2023 baseline. In the next months we expect Greece to have a linear evolution along the course supported by the existing regulatory frameworks. In the integrated business we will contribute for around €11 billion in the nine months on the back of a growing asset base and improved marginality of the renewable generation compared to last year on the back of an optimized and more integrated energy management. The segment is set in line with plan assumption that included a progressive and sustainable normalization in EBTDA. And lastly a reduced and expected EBTDA contribution from the thermal generation. The expected trends I mentioned are completely in line with actuals and with our bridge EBTDA presentation presented last November in the Market Day when we were targeting and explaining the 2026 EBTDA guidance. I will now provide an update on the cost reduction program that is on Page 8. The effort on cost reduction is visible across the Board and is rolling out better than expected. In just nine months we were able to address around €300 million savings compared to 2022 covering 30% of the €1 billion target show in November. Half of the cost reduction has been recorded at holding level where we have rationalized the D&A expenses. The other half is associated with projects across businesses and geographies such as, to give an example, in the U.S. where we have implemented a restructuring program at optimizing running and external costs in the region not related to the renewable generation management. Moving now into the earnings evolution on Slide 9. Ordinary Group net income increased by almost 45% versus last year. D&A are almost in line versus last year, while financial expenses decreased by €200 million year-on-year. In terms of mix in the financial expenses we have compared to last year, the charges on debt -- on gross debt are mostly in line also because we have reported basically the same level of net financial position in the last 12 months. In other financial expenses we have booked a positive effect of hedges that is a non-cash item so we will see this later when we will address the FFO that is expected to normalize over the next quarter if we will move back to the scenario that we projected in our Capital Market Day industrial plan. At the moment the result is related to the present situation of the interest rate and FX curve. Income taxes increased mainly on better economic results. And finally minorities reduced compared to previous years thanks to the geographical mix that is more skewed towards Italy. Cash flow that I have anticipated is on the next slide. I already represent the €4.4 billion result that is up by around €800 million versus the first quarter of last year, confirming our focus on improving Groups cash generation. Also in this case we will look at the moving part of the evolution in the first quarter. Working capital was €200 million negative, but improved €0.5 billion when comparing to last year on the back of the positive evolution of the underlying business. The reabsorption of the negative impact associated with government measures and the positive cash -- CapEx seasonality. Cash out for taxes was €0.2 billion broadly stable versus previous year, while financial charges were affected by the book increased in interest rate and sorry to make adjustment in the discussion, but last year the €0.5 billion interest expenses in terms of cash it’s not linear also because we had a one-off of €100 million related to the Brazilian M&A program. Worth to highlight that the results of 2024 was negatively impacted by the payment of the gas arbitration in this that were €0.5 billion. Excluding this extraordinary cash outflow FFO would have reached almost €5 billion. Let’s now move on the net debt slide on Page 11. Net debt came in at €60.7 billion, including €600 million of negative impact from currency movements, which have a no cash nature. As I said before, negative impact on debt partially positive impact on the P&L in terms of financial expenses both non-cash. Over the period CapEx was fully funded by the FFO regarding some positive difference that were €1.7 billion. Active portfolio management was positive for €0.2 billion on the back of the closing of the U.S. solar and geothermal deal that we closed at the beginning the early beginning of the year. No impact is accounted in EBITDA and ordinary figures for this quarter related to this segment of operation. Dividends cash out amounted to €2.4 billion as we pay the interim dividend in January. I want to stress that we have already signed deal of more than €6 billion that are still pending to be closed. On this we are confident that the bulk of those deals will be cashed in by the end of this semester. Taking into account the contribution of these deals the pro forma net debt would have stood at around €54 billion as already presented in the Capital Market Day and in the occasion of the full year 2023 results. And now some closing remarks. The strong result that we achieved in Q1 are supported by a resilient business model across all the countries of presence. We are well on track to deliver on all of our business plan pillars as we will continue to be selective on our capital allocation, maximizing returns and minimizing risks, discipline on costs and focus on financial and environmental sustainability. Our disposal plan is progressing as planned and we will be able to cash in the most of what announced I repeat again by the first semester. Finally, we confirm once again that the underlying evolution of the business is strongly supporting our plan targets and this implies an upside potential to the shareholder remuneration in terms of dividend per share. Totally in line with what anticipated at the Capital Market Day by our CEO. Thank you for your attention and move to the Q&A session.
A - Monica Girardi: Thank you Stefano. We are -- our analysts sent us a sound list of questions. We will try to be as efficient as we can packing up the topics. So one of the most popular is about guidance. The numbers in the first quarters look to be particularly strong. Can you provide the building blocks to bridge not only by GBL but also by region?
Stefano De Angelis: So we have -- remember that we have declined let me say the nine months as €11 billion as integrated business and €6 billion as grid. So we are talking about €70 billion of balance to full year EBITDA generation. When we look at the countries as per your question we have a similar distribution, but we have €12 billion coming from Europe and €5 billion coming from the rest of the world. Of the €12 billion coming from Europe we expect two-third approximately coming from Italy and really the rest coming from Iberia. When we look at Latin America we see that a resilient deployment of the business and of the EBITDA in Latin America with some expected contribution coming from the activation of the renewable plants in Brazil. And the U.S. adding up let me say some incremental growth compared to what we have already observed in the first quarter.
Monica Girardi: Second question is on the contribution from assets under disposals to the 2024 EBITDA?
Stefano De Angelis: Yeah. I’m sorry I have the microphone turned off. The bridge of the guidance this is important to remark that we provided in the presentation is net of the announced disposal and it’s completely in line with the Capital Market Day perimeter and targets. This is also because and in accordance to accounting standards the 2024 ordinary result we report the EBITDA from assets disposed until the date of the closing. As of today we have normalized Peru results in the first quarter for approximately €0.2 billion. If we consider the expected closing date of the entire country, remember that we have generation and distribution as two separate deals, we expect -- we may expect -- we may guide the €350 million EBITDA on top of the Capital Market Day guidance meaning €200 million that we have excluded in the bridge plus €100 billion or the number that we will present on top of the bridge of the €70 billion.
Monica Girardi: The third question is on the cost baseline reduction what is the projected level of savings to be achieved in 2024 and can you exceed the targeted reduction over the planned period?
Stefano De Angelis: What now we being OpEx we have in some case more visibility that we may have when there is other third parties involved. So I would say that today we have a very good level of visibility to reach for 2024 a €600 million results. But it’s a matter of fact that efficiency and cost effectiveness is regarding and continue effort so we will always try to do more. At the same time at this stage we will feel confident on the saving plan and it’s early but not unfeasible to increase the target for the current year and looking forward, so any update will come probably in November.
Monica Girardi: The fourth question is about the FFO and I would say generally the underlying moving parts including the working capital. Improved FFO conversion continues in the first quarter after the full year 2023, you guided for an expected 60%, 65% conversion do you still see this as a reference level for the full year?
Stefano De Angelis: Yes, for sure. Talking about FFO conversion is always difficult to have this discussion explanation along the year, because there are impacts of seasonality affecting especially the working capital and the tax settlements due date. We have managed and continue to manage our Group operation also trying to optimize and neutralize working capital and provisions swings. As an example take into account what I mentioned before that the Qatar arbitration in the first quarter have a negative impact on working capital of €0.5 billion because it was included into the EBITDA of 2023, but paid on January 2024. Another important point is that in the first quarter of each year and also in the third quarter of each year the FFO on EBITDA benefits from the recurring reduced tax cash out. So summarizing, we expect to confirm full year 2024 to be absolutely in line with the historical best conversion rate and as I already mentioned above 60%.
Monica Girardi: We stay on the same topic somehow looks like your target of cash flow neutrality is set to be reached. Can you anticipate an increase to the 2024 EPS up to 70% of earnings?
Stefano De Angelis: The financial sustainability is as you know a stable of our plan and we have at the same time anticipated a step up of dividend per share in case of cash flow neutrality and this is just applying a 70% payout ratio to the guided Group net income. So what I want to reaffirm is that we share a simple and predictable commitment on the shareholder return guidance. And during the Capital Market Day the CEO clearly stated that the industrial plan sets of results implied an annual increase in dividend per share and what I can tell you today that we are progressing well on executing this plan.
Monica Girardi: There is another question around the plan. Still comfortable with the 2026 guidance? Any relevant moving parts versus plan targets?
Stefano De Angelis: I would say no meaning any relevant moving parts. So, yes, we are comfortable. No we don’t see any major moving parts or discontinuities the plan that we are -- we -- that we share a plan that have no M&A, no extra ordinary operation, no extra disposal plan for what we have already basically achieved. So we are diligently executing on the strategy and I hope also from the external that the results are visible and appreciated.
Monica Girardi: And we have a couple of questions on our retail activities in Italy. Analysts asking what’s the associated churn of the first quarter and what are the main drivers that you project for the future?
Stefano De Angelis: Not a short answer, but it’s important to say that the churn trend in also the churn dynamics in the first quarter, but it’s not something that happened in this quarter are impacted by the 2023 turmoil in the energy market tariffs and energy bills continue to concern the consumer and small business customer base. The world market suffered from an extraordinary client’s proactivity in taking action to reduce the energy bills after the spikes in the first half of last year. The Italian authorities released reports the ARERA shows that the entire market experienced a spike of churn that according with the energy price trend is expected at the same time to normalize along 2024. Having said this, we are not on the wait and see mode. We have said, as we announced, a new management team and organization for the global retail activities. We have presented launched and we are commercialized a completely new offer and through a new sales channel strategy we have introduced customer-based management tools and proactive customer-based repositioning actions. In some cases, this is also important limited by the present regulation. And lastly, we have been awarded as announced a significant valuable share of the regulated customer bid or, sorry, the consumer customer bid by ARERA last February that will be effective from the 1st of July. Summarizing, our commercial strategy on new customer addition is already playing out and with the present market scenario we are confident to set a normalized churn rate and a positive customer base trend by the year end.
Monica Girardi: You probably partially already answered the next one which is about the competition. If we are observing a competition which is becoming more aggressive and how the offerings are evolving in Italy?
Stefano De Angelis: Yeah. As I said the energy price spike in 2023 boosted competition because really it created a windows of opportunity in tariffs and also taking benefits for the constraints that I mentioned before in proactive constraints and temporal lag in active customer-based management. What is important is already now the retail market is set with offerings that are at tariff prices that imply fair margin and more rational competition.
Monica Girardi: We move to another part of the integrated margin. First quarter hydro conditions really strong. How do you project them for the year? Do you project a big increase in hydro?
Stefano De Angelis: Yeah. The first quarter after a record low resources last year we experienced a regular high resources this year is starting from the end of the quarter. This is important to say because you saw a very huge spike in the comparison between 2024 and 2023, but this is related to the 2023 results. The very strong resources in hydro is something that starts to happen at the end of the quarter and in April is still on. Let me say this happened also in South America especially in Chile. This is not something that we have complete control, so we cannot take this as a fact that is an upside, definitely upside for the year. So, we will update in the next quarter, but it’s not 100% manageable from our side, because it depends from natural resources variability.
Monica Girardi: We received a question on financial expenses while the presentation was ongoing. I think you already answered to this one but just to make sure the message was clear. Financial expenses are low versus expectations. Is this underpinning a bit versus your estimate for the full year?
Stefano De Angelis: It’s important the question and it’s important to…
Monica Girardi: To repeat that…
Stefano De Angelis: to repeat and to also to guide you to look at the cash financial expenses, because the answer depends, if you focus on the cash, financial expenses impact meaning the FFO or the P&L impact meaning a targeted net income. The P&L financial expenses as I say were impacted by the mark-to-market on currency and interest rates hedges. The reversion of this accounting effect as I said will depend on the curves along 2024. In the FFO we have a more organic figure, so looking at cash financial expenses we don’t see any remarkable deviation from the trajectory underlined of our guidance for the full year.
Monica Girardi: I think we actually completed all of the questions related to the first quarter and the business, maybe just the last one. Analyst is asking what kind of exposure to the fiscal credit for the super bonus do you have in case of government retroactively apply extension from four years to 10 years?
Stefano De Angelis: We have -- we managed these topics last year. We have a very limited exposure on this both on the financial and on the economic side, so it’s not a relevant topic in our future projection and expectation.
Monica Girardi: Okay.
Stefano De Angelis: And as always we manage discontinuities each quarter, so it’s not something that worry us today considering what is the question.
Monica Girardi: Okay. We move to a little bit of various topics a bit unrelated to the numbers. The first one is, if we can share any news about the grids regulation in Spain?
Stefano De Angelis: Yes. In Spain, if we say about evolution, evolution will let me say start from December of 2024 if we look at the agenda of the Spanish regulator. As you have heard and as everybody’s discussing there is a very strong priority and this may be anticipated that is the definition of the regulatory rate of return for the next cycle that starts from 2026 to and will be applied until 2031. As there is a clear common need in the industry for a fair and reasonable return on capital and this have to come through a change of the existing rule scheme of calculation, but it’s something that again is a real common need in the industry. In addition, we expect a new framework to address another very relevant topic that is the upgrades incapacity quality and resiliency of the networks that support the future energy transition. In one word the scheme that we have discussed and we are applying in Italy. The preliminary discussion, because we are in this stage today are positive, but it’s clearly early to make any assessment and economic consideration at this stage.
Monica Girardi: We have a couple of questions related to the SLBs. People are asking if we can share a bit of framework of what happened in 2023 and what’s the financial impact associated with the step up in the coupon?
Stefano De Angelis: First of all, it’s important to remind that the Scope 1 emission achieved by the Enel Group in 2023 was well below the level in 2022. Not enough to meet the target set for last year. As you probably know, I expect that you know, the miss was completely due to non-predictable exogenous factor where a very relevant weight came from the ARERA coal maximization degree. That was -- the one that in Italy power utilities were required until September last year for quarter of the year to maximize the coal-based power generation in order to save gas and contribute to the energy system security. We were already aware of this trend when we were projecting our industrial plan so it’s 100% included in our projection. This step up related to 2023 target. At the same time, I want to stress that we want to continue to play a leading role in decarbonization. This is absolutely clear, but we will grant at the same time any let’s hope that this will not happen again if we consider the global impact of the Russian-Ukrainian political crisis, but we can have to grant also our mandate to secure the energy system in countries where we operate.
Monica Girardi: Okay. I think the last part of your answer is already covering the next question which was on the environmental strategy of Enel going forward. We can move on the next which is on the Brazilian grids and in particular on Sao Paolo if we can -- you can share how the situation is evolving?
Stefano De Angelis: Yeah. As you probably heard the situation is now recovering clearly. It was also a media crisis. Remember that this was related to an emergency registered in November last year for the extreme weather condition in both Sao Paolo and Rio de Janeiro. If we look at the results in the first quarter 2024 these are completely in line with the expectation both for financial results and industrial performances. At the same time, we have all the operation and organizational efforts devoted to improve technical and commercial KPIs, reinforce the resilience of the grids, strengthen the industrial capability with internal and external resources. In parallel we are also working on the corporate and institutional relations area and specific institution and communication plans have been launched to reinforce and give also evidence of the commitment of Enel Group in Brazil and especially in the grids operations.
Monica Girardi: A completely different topic. Analysts are asking about the AGM agenda. We saw that Enel will present to the AGM the renewal of the shared buyback program. What are the conditions to activate it?
Stefano De Angelis: First of all, it’s important to remind that the shared buyback program is the renewal of an existing and absolutely appropriate instruments to deal with different objectives that are declined in the proposal and there is no exception compared to the previous ones. If some conditions occur specific activation of the shared buyback program will be submitted to the Board of Directors and communicated to the market before execution.
Monica Girardi: We move to a set of questions Stefano on M&A. The first one is on the Peruvian disposals. If you can share an update on the timing on the disposal?
Stefano De Angelis: As I said before in the presentation, we have two different deals. We knew or we learned in my case that the distribution being a regulated -- strongly regulated asset that was the -- the deal that was signed before will be closed before the end of the quarter. It’s important that we do not make specific updates in the presentation but all the authorizations were granted in Peru. So the update is, all the authorizations are granted in Peru. We are now waiting the process -- the final process in China. The buyer is a Chinese company so they have their process there and so we expect in some weeks, let’s say, by June for sure, to have the deal finally closed. Distribution, generations that have been signed later will be closed earlier. I think it’s a matter of days.
Monica Girardi: Okay. The next one is on the U.K. Press speculates on a potential acquisition of grids in the U.K. Can you share any comment? What’s the underlying thinking here and can we expect other non-organic repositioning?
Stefano De Angelis: But as also the CEO, we do not comment on express speculation as I could say a code of conduct, because -- and we will never do it by the way, because this behavior is set to maximize the effectiveness of our position in any potential deal, relevant or not relevant. We came from a very tough disposal plan where we have on the other side a counterpart that we’re absolutely aware of our intention to sell, so for sure, we will not disclose any comments. Clearly staying in the mandatory requirements if something happens one day.
Monica Girardi: Okay. The next is on the battery storage. We continue on the deal closing topic. If we expect the battery storage deal in Italy still to be finalized by the first half of this year?
Stefano De Angelis: I think it will be the fastest track M&A project of the program. So, again, it’s -- I think that in June finally we will change part of the presentation and the speech, because we will have, let me say, finalized the most of the 2023 and also announced in 2024 M&A program. So again to be clear it will be -- it is completely in line and we expect to close as announced by the end of June or maybe sooner.
Monica Girardi: If I’m not mistaken we land -- we are landing to the last one and the last one is about the sale of grid assets in Italy. If we decided upon the accounting of the capital gain if it’s going to be in the ordinary figure and if we are envisaging the payment of an extraordinary dividend?
Stefano De Angelis: I think that the question may be answered, reminding that this deal not declined as for a clear reason was included in our M&A updated plan communicated in November. You remember that there was asset swap generally and it’s not a decision that we make on our account the operation. It’s -- let me say the accounting standard and also respecting what was the historical application of criteria and methodologies. What is really important to state that the deal was considered for the structure that we were discussing in November when we presented the plan and we have finalized at the signing date to be reported as a reported capital gain and nothing had changed compared to this -- to the structure of the operation, so something have to change in the structure operation is not a decision. The decision may change. I don’t think that it will change, there is no discussion that drive us to change, but what is important is not that we decide one day. In the plan we have no extraordinary relevant topics that is we may have one some million, because we sell some pipeline in the U.S., but I don’t consider this extraordinary this is part of the business.
Monica Girardi: Okay. So I think we have completed the list of questions that were sent by our analysts. So with this question we can end the call. The Investor Relation Department as always is available for any follow-up call from now on. Next stop July with the first half results. Thank you, everybody.
Stefano De Angelis: Thank you. thank you. Have a good night.
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