Omar

Al Bayaty: Good evening to all the people connected. Welcome to the Full Year 2024 Result Presentation, which will be hosted by Enel CEO, Flavio Cattaneo and the 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 now let me hand over to the CEO.

Flavio Cattaneo: Thank you, Omar. Welcome to everybody. We are starting with our focus on rebuilding and constructive dialogue with the institution that is already showing positive and visible outcome.

The resulting improvement of regulatory frameworks will support our investor plan delivery and confirm the value creation of our capital allocation. Group delivery in 2024 was visible and based on a solid performance and allowed us to meet all the targets. The result was achieved due to the higher contribution of Iberia, U.S. and LATAM at integrated margin level as Stefano will detail later on in the presentation. The leverage has been successfully executed and its completion improves our balance sheet flexibility for a more profitable growth.

Lastly, in light of the result achieved, we will propose to the next AGM a dividend per share equal to EUR0.47 for 2024, implying around 70% payout and 7% dividend yield at the current price. The floor [ph] is confirmed at EUR0.46 per share over the plan period. As additional shareholder remuneration, the Board of Directors has approved the renewal of the share buyback program for a maximum of 500 million shares and amounts up to EUR3.5 billion. The program will be proposed to the next AGM and the shares acquired will be consequently cancelled. Now, we will have a look at 2024 delivery.

The next slide you see, last year, the group recorded an outstanding financial performance and growth across all businesses. EBITDA reached EUR22.8 billion, landing at the top of the guidance range on the back of a less volatile environment, restoring the full growth potential. Net income came in at EUR7.1 billion, increasing by 10% versus previous year. EBITDA and net income are the outcome of our managerial action implemented in the known domestic market, where the new capital location approach is increasing asset base profitability. Net debt EBITDA ratio lowered to 2.4 versus 2.7 times of last year, on the back of an improved performance and the delivered completion.

Now, we move and we see the progress of our advocacy action in the next slide. Supported regulatory frameworks are the main driver to attract investment for the energy transition. Therefore, we reinforced our advocacy action and over the past month, we started to record notable achievements. In Italy, for example, the first and most relevant outcome was the renewable of the distribution concession. Also, on the renewable side, the new supported measures have been introduced in the FER X Decree.

In Spain, we are working to ensure the regulatory framework will be supportive of investment into energy transition. For LATAM, discussions have been positive so far and the renewable of the concession in Brazil is expected by the end of this year. Now, I will dive into capital allocation on the next slide. Our capital allocation has been designed to maximize return profile while reducing risk and consequently improve the performance of the Group. Investments were deployed in line with our strategy with networks accounting for more than 50%, 5-0, 14%, 1-4 higher than previous year.

As a consequence, operating KPIs improved. RAB reached more than EUR45 billion. Renewable production on total increased by 8% year-on-year while the share of emission-free stood at 83%. Therefore, our customer side, renewable coverage on fixed sales reached 82% from 65% in 2023. Now, we will see the progress in M&A activities as announced during the Capital Market Day.

We will leverage different models in order to create value and reach the level of desired returns. In the recent months, we catched two brownfield opportunities. The first one is -- it has been 600 megawatt of hydro asset in Spain and the second one over one giga of renewable asset in Australia through our joint ventures in the region and exploiting the stewardship of more business model in this case. These two deals prove we are moving to less risky technologies and countries, delivering on what is announced. Now, it's time to the second pillar of our strategy.

Let's talk about our efficiency program in the next slide. So far, we reached around EUR800 million savings compared to 2022 and we are more than halfway to the improved plan target of EUR1.5 billion. And I remember you, we updated it last November. Actually, this achievement is a clear evidence of our persistent focus on optimization of processes and activities without compromising our operation which continues to deliver a strong performance. Now, it's time of financial and environmental sustainability.

In 2024, our financial performance continued to be solid and the net debt on EBITDA reached 2.4 times, well below the peers average. This level of leverage gave us over EUR10 billion additional financial flexibility on top of the EUR 43 billion investment announced in CMD, including the buyback, which I will comment in detail later on, to capture all of these, the future and profitable growth opportunities and to maximize the value for our shareholder. On environmental sustainability, absolute emission continues to decrease in line with 2030 goals. Finally, shareholder remuneration on slide 9, the resiliency of our business model and the efforts of our advocacy actions as well as the positive operating performance allowed us to achieve solid economic and financial results. As I mentioned before, we propose to the next AGM a dividend per share of EUR0.47 cents for 2024, implying a payout of around 70%, and the new share buyback program aimed at improving shareholder remuneration.

A further option on top of the organic and inorganic opportunities and part of the EUR10 billion additional flexibility mentioned before. This option could be evaluated also at subsidiaries level. I leave the floor to Stefano now for the financial performance details. Stefano

De Angelis: Thank you, Flavio, and welcome to everybody. The pragmatic back to basic and financially disciplined approach we adopted in the last two years drove to a consistent positive delivery, across the KPIs and financial performance across all businesses.

Emission-free generation is growing with financial results boosted by a remodeled energy management, already fully enforced in Italy. In our domestic market, the supply business normalized after the thrust we followed upon in 2023, thanks to a mandatory broad review of our retail customers offer portfolio. Last but not least, a pragmatic and factual advocacy supported a constructive regulatory framework that allows to increase investments and in parallel the value generated in the network business. As a result, 2024 ordinary EBITDA reached EUR22.8 billion, increasing more than EUR2 billion versus previous year on a like-for-like basis. This like-for-like comparison is not to give a different and positive perspective to the 2024 reported EBITDA that was higher compared to the ordinary result, reaching EUR24.1 billion on the positive returns of the executed disposal plan, generating significant cash capital gains, but recurring long-term growth leverages on the organic performance of the core business.

From a geographical perspective, this portfolio rationalization is visible with EBITDA coming from Europe and U.S. accounting for almost 80% of the total. Finally, in 2024, net debt on EBITDA landed at 2.4 times accepted benchmark, providing ample balance sheet flexibility moving forward. After this broad overview of the 2024 results, I will speed up focusing just on the main topics of the business, starting from the networks. As we commented in the presentation, this EBITDA reached almost EUR8 billion, up by 8% year-on-year on a like-for-like basis, confirming the positive growth pathway observed along 2024.

On top of the positive and consistent trend in Europe, it is worth mentioning that the LATAM EBITDA stabilization was achieved in a tough macroeconomic and political environment, where the positive contribution from investments, tariff indexation and energy volumes distributed to our customers, has been offset by the local currencies devaluation observed in the period, and this accounts for EUR0.2 billion. Now we move to the evolution of our integrated business, and I am on slide 13. Integrated business EBITDA increased by EUR1.9 billion year-on-year net of perimeter, driven by the normalization of relevant business dynamics that restored a segment performance that is coherent with our asset portfolio mix in terms of value generation also moving forward. As a consequence, renewables recorded a strong performance across all regions, recovering around EUR2.7 billion versus last year. Flexible generation, I would say, are moving to normal.

As a fact, minus 21 terawatt-hour reduction in coal and gas was mostly driven by the end of mandatory requirements. Finally, Retail EBITDA reflected the mentioned downward price campaign in Italy. Starting from 2025, we expect a more linear evolution of the performance with price dynamics fully embedded in groups and assumptions. I will now provide an update on our energy management and hedging strategy in the domestic market, meaning Italy. Slide 14 describes how the new integrated sourcing sales management model supports ample visibility and resiliency on future evolution of the earnings.

Compared to the past, we move from an approach focused on the forefront financial hedging of the industrial open position on generation and gas contracts to an end-to-end integrated and flexible approach focused on the value potential of our large and resilient residential and small-medium business customer base. Thanks to this new approach, the renewable generation is set to be naturally matched with retail sales and more resilient customer base, with financial pre-hedge as a lever to add incremental value to optionality. This allows us to maintain a predictable fair profitability, with guaranteeing to our customers a sustainable price despite a persistent volatility on power price scenarios. As you can see from the chart, 2025 is almost fully hedged and for 2026 we already covered 85% of the expected generation. The contracted price of these volumes are reliant or above the Capital Market Day market scenario.

More in detail, for 2025 we forecasted EUR114 megawatt and we hedged at EUR117, while for 2026 the average price as of today of the hedged volumes is EUR114, compared with the scenario at EUR111. And now I will move on to slide 15, talking about the earnings evolution. Ordinary Group net income came in at EUR7.1 billion above the guidance provided on the back of the positive results of our operation, and additional contribution also from the assets disposed in 2024, mostly excluded from the guidance provided to the market. Financial expenses reduced by EUR100 million at profit and loss level, but it is worth to highlight that cash financial expenses declined by around EUR400 million, EUR500 million as no cash effects impacted and other non-monetary items generated a relevant and volatile impact both on P&L and net debt on an accounting measure. While the reduction in charges on debt is mainly driven by the EUR4 billion reduction in gross debt, I would like to highlight also a higher contribution from associates, mainly due to the positive performance of Slovenské elektrárne, whose stakes will be deconsolidated by 2025 after the exercise of the call option by EPH at the end of 2024.

Finally, reported net income stood at EUR7 billion, almost in line with the ordinary net income and doubling versus the average results achieved in 2021-2023. Let's now move to the slide related to the FFO. In 2024, we confirmed the strong results achieved in 2023 in terms of cash EBITDA, with FFO once normalized for cash-out [ph] not organically related to the 2024 operational performance standing at EUR14.6 billion, exceeding 25% of the Group's net debt and reflecting a solid monetization of two-thirds of our EBITDA. As highlights, I want to mention, first of all, the Qatar arbitration that was mostly related to the 2021-2022 operation was moved in 2023, but financially impacted the 2024 working capital change that would have been neutral, excluding just these items. Another important highlight is the provision where we include EUR300 million non-cash items related to the 2021-2024 additional regional hydro fees in Italy, which, as you could remind from the Capital Market Day, we have already potentially included in the plan assumption.

On this matter, we maintain our solid position that these amounts are not due before concession has parried, meaning after 2029. Final remarkable points are the following. The tax payment was impacted by the 2023 tax balance paid in Q3 2024 due to the significant difference, we are in Italy in this topic, between 2022 taxable income versus 2023. Financial expenses, as said before, benefited from debt reduction as cash did not follow the accounting principle. Let's now move to the debt evolution on slide 17.

Cash flow generated by the operation was dedicated to fund EUR11 billion of CapEx, including EUR1.1 billion of grants already cashed in. Additionally, our partnership model contributed for EUR2 billion with cash inflows from the gas project in Italy and solar projects in Spain. Finally, dividends paid stood at EUR5.4 billion. Thanks to the strong focus on cash generation and the completion of the 2022 disposal plan, we have been able to reduce net debt by more than EUR4 billion versus last year, reaching a remarkable balance sheet solidity with net debt on EBITDA ratio at around 2.4 times. Now, having already started a new fiscal year before our CEO closing remarks, I share the year-on-year perimeter reconciliation, and this is the last time having completed, as already stated, disposal plan set in 2022, on page 18.

In order to compare organically full year results with the 2025 guidance shown at November Capital Market Day, we provide the rebased EBITDA and net income for 2024. Like-for-like EBITDA 2024, is EUR22.4 billion, adjusted for Peru and Lombardy asset disposal. This year, as you may see, the differences are not the same as in the past, let's say they are minimal. Net income baseline is EUR6.6 billion, where on top of the Lombardy and Peru assets, we adjusted 2024 net income for the contribution of Slovenské elektrárne that amounts to EUR0.3 billion positive. On this last item, Slovenské, it is worth to remind that on their side, we recorded the repayment of more than EUR1 billion intercompany loans at the end of January.

This will have a positive impact on rating agencies adjusted net debt. As a result of the normalization I have mentioned, in 2025 we expect 3% growth versus the 90% EBITDA secured in the last plan scenario presented last November in the Capital Market Day. On top of this, I want to highlight that there is a clear potential upside to be considered on the back of the balance sheet flexibility we have achieved. But on this topic, I hand over to the CEO for his closing remarks.

Flavio Cattaneo: Thank you, Stefano.

The economic and financial results are clear evidence of our delivery abilities. The increased focus on advocacy actions across all countries provide full visibility on the implementation of our capital allocation strategy. The continued effort of improving group profitability allow us to confirm 2025 full year guidance. Through our actions, we have been able to restore growth financial solidity to capture future and more profitable growth opportunity and guarantee an attractive shareholders remuneration via current dividend policy and the new share buyback program. I take the opportunity to announce that we will move our CMD to the beginning of 2026.

It will be more efficient and align with the standard market practice. Finally, we will continue to focus on group's profitability to lock in marginality and guarantees a Safe Harbor to our shareholders. Thank you for your attention and now let's move to the Q&A. A - Omar

Al Bayaty: Thanks to our CEO. Let's now open the Q&A session.

We received a lot of questions for the call. We have summarized them by topics. Let's start with the most strategic question that will be answered by our CEO. The first one, distribution concession renewal. How will concession fee be calculated? Any indication on the potential amount?

Flavio Cattaneo: Well, all the technicalities are still under discussion and the amount of the fee is subject to the final decision of the government and the authorities.

In terms of amount, it will not be negligible in my opinion and will be included for sure. And I won't point out this element in our graph. Omar

Al Bayaty: Thank you. Is there any news on the renewal of the hydro concession in Italy?

Flavio Cattaneo: First of all, let me say our concession asset is by 2029. So we expect the process will take a longer time to start and it will involve both regional and national authorities.

In any case, this is one of our priorities and our intention is to implement the focus in this sense. But we aren't in a hurry and it is not the right time to speed up the process, let me say, trust in us. Omar

Al Bayaty: And a question on concession, when do you expect the situation in South America will be solved?

Flavio Cattaneo: We have already in the presentation said about our expectation in South America, especially in Brazil, even because the plan for improving the network resilience is well on track. Our expectation, the renewal is by the end of the year. Moreover, while we expect the update to go to a framework in Argentina, where we are in the discussion even there, we are having a positive discussion in all the countries in South America.

Omar

Al Bayaty: Thank you. The deleverage completion resulted in higher balance sheet flexibility, more appetite for M&A?

Flavio Cattaneo: I repeat it again, on M&A, we only look at accretive deal. And when we talk about accretive and without synergy or other things at the beginning, it's important to understand this. And we intend to buy assets, and especially in developed countries with a stable environment and profitable returns. I said many times, I want to point out again, we are not interested in large M&A deals.

Now we have room in our balance sheet, but we don't want to buy at any price and to look at the right opportunity. Otherwise, we prefer to buy our shares, also at the subsidiary's level as I said in the presentation. Omar

Al Bayaty: So, shareholder remuneration upside, you increased DPS to EUR0.47 per share. It's fair to think about this is the new floor?

Flavio Cattaneo: No, as I said before, the current dividend policy is clear and foresees a EUR0.46 as a floor. And we have already changed the floor.

We can change every year, with the possibility for DPS to increase up to the 70% payout. Indeed, this year it has been 0.47 euro. Obviously, the share buyback program is a further option to approach our remuneration and DPS growth naturally. In this case, I think we cover the expectation of our shareholders, including me. Omar

Al Bayaty: Right.

Recently, there have been news around government measures to reduce the price of electricity for finance consumers. What's your view?

Flavio Cattaneo: But today, there is a strong discussion in Italy. We have a constant dialogue with authorities and all the parties involved in this discussion. Measures like the price cap applied in the past in Spain have demonstrated to be not effective. And it has been abandoned in this country.

We have already the real proof, proof it's not a concrete way. One of the most effective instead measures has been already included by the government in the FER X decree where there is a possibility to sell electricity for 20 years with PPAs at a fixed price. This could be a benefit both for customers and operators. And this reduces naturally the price of energy. I suggest, let me say also, not following only the energy price evolution for defining the result of our company, because for integrated players, the profitability is not strictly linked to the price of electricity.

And I'll give you some examples. The first one is the good performance in 2024 driven by contribution of non-domestic countries, like Iberia, for example, which had a lower power price, but higher integrated margins compared to Italy. The second example is Italy. In 2022, results were power prices were at the highest, but the economic performance was the worst ever recorded. This is the reality.

This is not only a general discussion. Omar

Al Bayaty: Last one for the CEO. What's the impact on your development strategy in the U.S. after the executive order from the Trump administration?

Flavio Cattaneo: Now there are no impacts expected. In the U.S., we don't target to add new capacity in the short term from Greenfield.

This for sure. And all the production, the existing production in the country is made by long-term deal with various rated companies, big corporates, multi-big companies. And our potential new investments for the company will be evaluated only if the conditions are supportive. Furthermore, in this area, we believe that brownfield renewable assets are more convenient and potentially more profitable than Greenfield ones. Thank you.

Omar

Al Bayaty: Thanks. Let's move to CFO questions. Stefano, could you please share with us a bit of technicalities on distribution concession renewal, any upside on CapEx versus the plan presented in November?
Stefano

De Angelis: But as of now, it's too early to go in depth on all the moving parts, as the process is at an early stage and most of the technicalities will be discussed in the next months. Technically speaking, let's say that there are three main items. The first is the size of the extraordinary investment plan and its definition.

Second, the amount of the lump sum payment by the current concessionary and recognized as RAB. And third, the incentives in terms of regulatory remuneration. For the extraordinary plan and the premium for the additional investment, we don't expect any significant change, considering that any distribution has anticipated this approach in the existing plan about resiliency, for example, represents a benchmark. So we have already a regulation for this. I want to remind that we already increased from EUR12 billion to EUR16 billion, the CapEx allocated to Italian grids over the plan period, and the additional investment, as I said, are already included in some projects for the networks upgrade.

Moving to the one-off payment, it is already established in the budget clause, but it will be defined according to a wider framework, taking into account also the sustainability of the network charges in the build on the energy system. By the way, we remind you that the Capital Market Day investment plan already includes a portion of this item that was based on our expectation, a portion of this. Omar

Al Bayaty: Thank you, Stefano. Geothermal concession, they have been renewed on $3 billion CapEx to be spent on those assets. Are investments additional compared to plan?
Stefano

De Angelis: Yes, no.

The $3 billion CapEx is spread over, let's say, like this. So the next 2025 and 2027 plan already included these investments because the discussion with the Tuscany region was already in place. The CapEx plan provides also for additional capacity, but this is also in the medium and long term. So don't expect like the other topic, let me say, a spike in the CapEx. This is more something that is in continuity compared to the past.

Omar

Al Bayaty: Thank you. Guidance. So EBITDA and net income guidance for 2025 have been confirmed despite strong 2024 results. Could you please detail the building block for 2025 guidance for both EBITDA and net income?
Stefano

De Angelis: Yes. In the presentation, we showed that there will be a perimeter effect, but this is unfortunately something that is happening in the last two years.

So starting from full year 2024 baseline of 22.4, the building block, let's say, in this way, we see today are the following. For Greece, we see around EUR800 million EBITDA increase, where Italy is expected to progress at the 10% growth run rate that we have already observed also in the 2024 results. In this, it is mostly in line with the 2024 trend. That means, let me say, a very small growth expected still this year because, as you know, the final regulation is under definition. So the CapEx plan, as we have already shared, will be revised according to the content of the new regulatory framework.

Lastly, LATAM is coming back to growth in our projection thanks to a slightly better macro environment and supporting regulatory updates on not only tariff indexation, but the whole, let me say again, regulatory framework that will allow a first upward in capital expenditures. In the integrated margin, we expect a further consolidation of the renewable generation contribution to EBITDA that will leverage on additional capacity that is now focused on regulated market and best leading storage. This positive trend will be mostly offset by the trading position and energy market normalization and the thermal generation that is progressively flat and is more and more dedicated to ancillary generation and regulated revenues. Finally, perimeter will be mostly in line with 2024 second half performance, where economics already reflected the mentioned effort on customer portfolio normalization. Lastly, again in the supply market in Spain, we are observing a slight positive room for additional profitability.

Below the EBITDA, we expect a more linear evolution. Omar

Al Bayaty: Thank you, Stefano. Hydro, 2024 has been strong in terms of hydro outputs. What's your expectation for 2025? What's the current level of reservoir in Italy?
Stefano

De Angelis: In 2024, the hydro output has been strong across all regions, excluding probably as you see in Argentina, a tough second half of 2024 in Colombia. For 2025, what do we expect? In Europe, a slight drier year versus 2024, but in line with the historical average.

While in LATAM, we are forecasting a normalized trend. What does it mean? That is, a higher production in Colombia, where the risk has been normalized across last month, and a slightly lower production in Chile. In any case, all these trends at the moment are in line with the plan assumption, because it's something that we have already assumed as a projection for the three years in the industrial plan. Omar

Al Bayaty: Thank you. Let's move to retail.

Churn was a high double digit in 2024. How is it progressing after the implementation of the new commercial strategy?
Stefano

De Angelis: But again, the situation is normalized. I understand there is a very strong focus on this, but we have already told several times that the situation has already normalized, because at the end of the day, we have completely reshaped our commercial offering to the current market price curve, moving to a more sustainable price for the final customers, compared to the 2022 and first half of 2023 offerings. The share, consequently, is naturally let's say reducing, but the retail market is in a new normal after the 2022-2023 spikes, with a higher competition, but on the other hand, also a wider market size after the full liberalization. So net-net, this is not a negative scenario, because the market, the pie, has increased with the liberalization, so some competition, some additional competition was expected.

Omar

Al Bayaty: Thank you, Stefano. Retail margins, looking at your number, it seems that the unitary margin for Italy is much higher than Spain. What's driving the higher marginality? Is it sustainable in the long term?
Stefano

De Angelis: Here, we have to be very careful, because there are also some political problems on this, but again, you have to divide the margin between wholesale and retail ones. Average commercial margins, both Italy and Spain, are similar. The main difference between the two countries, even by the underlying wholesale dynamics that are different.

We know exactly why this happened, because of the very heavy weight of gas generation in Italy, when compared to Spain. The nuclear absence in Italy, when compared to Spain, is something that we perfectly know. The integrated strategy, by the way, allows us to ensure margin sustainability in the long term in this way, both in Spain and in Italy, meaning where we have a very strong and solid integrated position. Omar

Al Bayaty: Thank you. Last one from the web.

Working capital was EUR500 million negative in 2024. What's the expectation for this year? Any one-off to be considered? Any impact expected from the elimination of system charges for non-residential customers?
Stefano

De Angelis: First of all, let's avoid any hypothesis on this last point, because system charges that are being eliminated are just a small portion. Probably the market and the investors remember what happened some years ago, so nothing comparable. Generally, working capital dynamics are impacted by several organic and non-organic items, including also, as you see, for example, the tax payment in Italy, the Qatar arbitration number is one-off, with sometimes also non-cash impact. As for 2024, it normally achieves a neutral organic working capital change, because as I said before, if you exclude the Qatar payment in early January 2024, the working capital was strongly negative along the quarters, and as I said in September and July, don't worry, because this will move to zero, let's say, to a more balanced result, this happened.

At the same time, be aware of the aforementioned dynamics. We always include in plan assumption exactly to absorb potential one-off that happens. This does not mean that we have potential one-offs in the plan, but we have, let's say, the coverage in terms of working capital for some potential one-off. Thank you. Omar

Al Bayaty: Okay, thanks to our CEO and CFO.

There are no more questions. So, Q&A session is over. We covered all the main topics. If something is missed, the IR team is available for follow-up after the call. Thanks to everybody.