Enel Russia discloses 2015-2019 strategic plan

Published on Wednesday, 8 April 2015

Targets: 

  • EBITDA of 14.6 billion RUR in 2015, 17.1 billion RUR in 2016, 20.4 billion RUR in 2017 and 25.1 billion RUR in 2019
  • Net ordinary income of 4.3 billion RUR in 2015, 7.0 billion RUR in 2016, 10.5 billion RUR in 2017 and 15.5 billion RUR in 2019
  • Total CAPEX for 2015-2019: 41.3 billion RUR
  • Total free cash flow after dividends for 2015-2019: 30.1 billion RUR

 

Moscow, April 8th, 2015 - Today, Enel Russia published its strategic plan for 2015-2019 as approved by the Company’s Board of Directors.

“The ability to adapt to a rapidly changing global and domestic scenario, supported by a strict cost-efficiency discipline is key to the successful performance of any business. Enel Russia will continue to leverage on these capabilities by implementing a set of initiatives that will allow us to withstand the challenges for 2015 and return to growth from 2016 onwards”

– Carlo Palasciano, General Manager of Enel Russia

Market environment and guidelines 
The Company’s 2015-2019 strategic plan is aimed at securing financial stability to Enel Russia against the current unfavourable backdrop. After a challenging 2015 characterized by high inflation, a weak ruble and tariff containment by the government, the Company’s financial performance is expected to revert to a positive trend from 2016 onwards, supported by managerial actions focused on cost-efficiency measures and cash generation as well as the expected recovery of the economy and the likelihood of a more favourable regulatory framework. In the light of the above, Enel Russia has set the following priorities: 

  • continue with cost optimization initiatives for all kinds of expenses
  • strong focus on the reliability of cash-generating equipment
  • efficient management of fuel suppliers portfolio
  • ensure stable dividend distribution to its shareholders


Earnings outlook 
Throughout 2015-2019 Enel Russia will focus on improving the technical performance of its cash-generating coal and CCGT fleet, compensating for the gradual decline in output at conventional gas-fired units due to the impact from new entrants in the market. No new capacity additions are envisaged over the business plan period, with some minor decommissioning expected at Nevinnomysskaya and Sredneuralskaya power plants. 
On the costs side, the Company will continue to implement its costs efficiency strategy resulting in costs growing below the Consumer Price Index (CPI) over the next 5 years. 
The Enel Russia 2015-2019 strategy envisages EBITDA targets at 14.6 billion RUR in 2015, 17.1 billion RUR in 2016, 20.4 billion RUR in 2017 and 25.1 billion RUR in 2019. The reduction of 2015 EBITDA versus 2014 (18.4 billion RUR) is mainly due to lower free capacity (KOM) payments, coal price increase and higher fixed costs due to accelerating inflation. From 2016 onwards EBITDA is expected to grow continuously up to 2019 thanks to the expected improvement of spreads on the day-ahead market, higher CCGT capacity prices and cost efficiency projects. 
In line with EBITDA, net ordinary income of Enel Russia under the 2015-2019 strategic plan is expected to decline to 4.3 billion RUR in 2015 (vs. 7.1 billion RUR in 2014) and revert to growth from 2016 onwards, also supported by declining interest charges due to gradual debt repayment, reaching 7.0 billion RUR in 2016, 10.5 billion RUR in 2017 and 15.5 billion RUR in 2019. 

CAPEX and cash flows outlook 
Planned capital expenditures for 2015-2019 are expected to total approximately 41.3 billion RUR. The investment program has been optimized by increasing flexibility and streamlining project portfolio taking into account the current pricing environment. The current capex plan mainly addresses stay-in-business and mandatory investment projects, while the company will continue its work on the optimization of overall investments. 
The revision of capital expenditures as well as other optimization activities under the 2015-2019 business plan will support the company’s positive free cash flow under the current challenging market scenario. The cumulated free cash flow after dividends under the 40% dividend pay-out policy envisaged by the current business plan is expected to total approximately 30.1 billion RUR for 2015-2019.

An Enel Group subsidiary, PJSC Enel Russia operates the following power plants: Konakovskaya GRES, Nevinnomysskaya GRES, Sredneuralskaya GRES and Reftinskaya GRES. The company’s total gross installed electrical capacity is 9,428.7 MW (equivalent to 8,878.4 MW net installed capacity) and thermal capacity is 2.382 Gcal/h. PJSC Enel Russia’s authorised capital is 35,371,898,370 roubles, which is divided into ordinary shares with a par value of 1 rouble. The Enel Investment Holding B.V. share in the company’s authorised capital is 56.43%, PFR Partners Fund I Limited’s share is 19.03%, Prosperity Capital Management Limited’s share is 8.23%, VTB Bank’s share is 3.87% and other minority shareholders’ share is 12.44%. PJSC Enel Russia shares are listed in Level 1 MICEX quotation list. The company was established in Yekaterinburg on October 27th, 2004 as OJSC OGK-5. On July 7th, 2009 by the resolution of Annual General Shareholders’ Meeting the company was renamed OJSC Enel OGK-5 and on August 8th, 2014 the Federal Tax Service registered the new version of the company’s charter with the name OJSC Enel Russia. On June 25th, 2015 the company changed its legal type and was renamed PJSC Enel Russia.