CORRECT: Enel Slashes Dividend on Lower Earnings, Policy Change

("Enel Slashes Dividend After EUR2.58 Billion Endesa Charge," at 0757 GMT, Wednesday, March 13, misstated in the headline and first paragraph that the dividend fell on an impairment charge. The drop was due to lower operating earnings and a change in the dividend payout policy. The correct version follows:)

By Liam Moloney

Italian utility Enel SpA (ENEL.MI) Wednesday said it slashed its 2012 dividend by 42% from a year earlier because of a decline the company's operating earnings, as a sharp recession hit its biggest markets, and a change in the firm's dividend payout policy.

Enel also said earnings before interest, tax, depreciation and amortization, or Ebitda, is expected to fall this year to about 16 billion euros ($20.8 billion) from the EUR16.74 billion of 2012 as recession continues to weigh on its key markets. Ebitda is a figure closely watched by analysts to determine the health of the underlying business.

The company said it plans to pay a dividend of EUR0.15 a share on 2012 earnings, compared with EUR0.26 the previous year. The 2011 dividend followed a payout policy of 60% of ordinary net profit, excluding special gains, while the 2012 dividend payout, which was confirmed Wednesday, was based on at least 40% of that figure.

It also said last year's net profit fell to EUR865 million--after taking a EUR2.58 billion impairment charge on its Spanish unit Endesa SA (ELE.MC)--from EUR4.11 billion in 2011.

"For the next five years, we confirm our current strategy, which is focused on protecting margins and cash flows in mature markets as well as development in growth markets and renewables," said Chief Executive Fulvio Conti.

The Rome-based company confirmed net debt fell to EUR42.95 billion at the end of December from EUR46.46 billion three months earlier. It released preliminary net debt at the start of February.

The utility also said it plans to sell assets worth about EUR6 billion, while it agreed to a hybrid bond sales program of around EUR5 billion by the end of 2015.

Last year, Enel decided to lower its dividend policy as part of its aim to retain as much cash as possible amid the economic slump in its biggest markets of Italy and Spain. These two countries are now facing one of their worst recessions since World War II.

Enel turned into Europe's most indebted utility after taking over rival Endesa in 2007.

The company's new 2013-2017 growth plan confirmed further reductions of its towering debt, as it estimates a net debt of EUR42 billion at the end of this year, dropping to EUR37 billion in 2014 and then to between EUR36 billion and EUR37 billion in 2017.

Enel is slated to comment in Rome on the results and the 2013-2017 plan at 0830 GMT.

Tuesday, shares closed at EUR2.78, giving Enel a market capitalization of about EUR26.39 billion, making it the second biggest company in the FTSE Mib Index.

Write to Liam Moloney at [e-mail]

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