Enel Net Profit Drops 26% on Economic Slump in Italy, Spain

By Liam Moloney

Italian utility Enel SpA (ENEL.MI) Tuesday said first-quarter net profit fell 26% on the year as recessions in its key Italian and Spanish markets took their toll, although the drop was smaller than expected thanks to strong renewable energy earnings.

The results are in line with the company's 2013 targets, said Chief Executive Fulvio Conti in a statement.

Net profit slipped to 852 million euros ($1.12 billion) compared with EUR1.15 billion in the first quarter of last year, Enel said. The year-on-year drop was amplified by a gain last year on the sale of a 5.1% stake in Terna SpA (TRN.MI).

The Rome-based utility said earnings before interest, taxes, depreciation and amortization--a figure closely watched by analysts to determine the health of the underlying business--dropped 4.2% to EUR4.08 billion, from EUR4.26 billion in the first three months of last year. Revenue slipped 1.5% to EUR20.89 billion over the same period.

A Dow Jones Newswires survey of six analysts estimated average net profit of EUR784 million, Ebitda of EUR3.98 billion and revenue of EUR20.74 billion.

Net debt rose to EUR43.29 billion at the end of March, from EUR42.95 billion on Dec. 31.

Enel's board of directors has approved the sale of a hybrid bond worth up to EUR5 billion by 2014, which was previously announced in March, the company said. The hybrid bonds can be sold to retail and institutional investors.

Enel has spent the last few years focusing on servicing a huge debt pile amassed after its 2007 takeover of Spanish rival Endesa SA (ELE.MC). At the same time, it has been grappling with lower demand for electricity due to the continent's economic slowdown, which has particularly hit Italy and Spain.

Enel is scheduled to hold a conference call on the results at 1600 GMT, Tuesday.

Enel shares closed up 1.6% to EUR2.98, giving it a market capitalization of about EUR27.6 billion. Enel shares were in line with Italy's benchmark FTSE Mib Index.

Write to Liam Moloney at [e-mail]

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