Capital Markets Day. Strategic Plan

Transcription

1 Capital Markets Day Strategic Plan

2 Agenda Francesco Starace (CEO & General Manager) Enel Today Our Delivery Our Vision & Positioning Our Pillars Alberto De Paoli (CFO) Capital allocation Our Plan Business line highlights Financial management Risk management Earnings & targets Francesco Starace (CEO & General Manager) Closing Remarks

3 Capital Markets Day Strategic Plan Francesco Starace CEO & General Manager

4 Enel Today

5 Enel today We are a leader in the new energy world 1st network operator 1 73 mn end users 43 GW capacity 2 World s largest private player 2 in renewables 46.5 GW capacity GW demand response Largest retail customer base worldwide 1 64 mn customers 4 1. By number of customers. Publicly owned operators not included 2. By installed capacity. Includes managed capacity for 4.2 GW 3. It includes nuclear 4. Includes customers of free and regulated power and gas markets 4

6 Enel today Our business model is well diversified and provides long term visibility North & Central America Italy Iberia Europe & North Africa 0.6 bn 2% 51% 7.0 bn 31% 5% 56% 15% 3.4 bn 28% 22% 0.5 bn 100% 16% 13% 11% 6% 44% South America 3% 44% 11% 4.7 bn 42% 1. As of 2018E. Breakdown excludes -0.1 bn from holding and services Presence with operating assets or through Enel X 2018E Group EBITDA 1 1% 47% 18% 16.2 bn 7% 27% Africa, Asia & Oceania 0.1 bn 100% Networks Thermal generation Renewables Retail Other 5

7 Our Delivery

8 Our delivery Sustainable, profitable, digitalized and customer centric E Renewables focus Owned RES capacity/total capacity % 41% 45% CO2 Footprint Specific Co2 emissions kg/kwh eq Decarbonization End Users mn Retail customers Mn customers in the free market New businesses Gross margin Enel X bn n.a. 0.5 Customer centricity Digital impact % of digital investments on total n.a. 19% Group simplification Group net income/total net income 64% 70% Cash flow generation FFO gross capex bn Value creation Shareholder return DPS /sh

9 Our delivery Our strategy delivered growth while improving our financial strength Average capex ( bn) FFO/Net Debt +19% +150bps Net Debt 25.0% 26.5% ( bn) 37.5 ~ E Rating 1 BBB BBB+ EBITDA ( bn) Net income ( bn) +8% +41% Standard & Poor s E E 8

10 Our delivery Active Portfolio Management was balanced and accretive Transactions completed ( bn) Operating benefits from APM 2018E 2021 End users +10 mn +11 mn Demand response 5.7 GW 9.9 GW Charging points 1 37k 348k 5.3 Acquisitions Households passed 4.2 mn 8.5 mn Financial impacts Minority buy-out Impact on Group Net Income +100 mn +300 mn Source of funds Use of funds EPS accretion 2% 5% 1. emotorwerks worldwide private charging points 2. Net Impact from both source of funds and use of funds 9

11 Our delivery Strong commitment to our SDGs targets Engaging local communities (mn beneficiaries) 2018E High-quality, inclusive and fair education Access to affordable and clean energy mainly in Africa, Asia and Latin America Employment and sustainable and inclusive economic growth Climate change Reduction of CO 2 specific emissions (kg/kwh eq ) 2018E < Cumulated figures since In the whole Group perimeter, 4.9 mn beneficiaries were reached 10

12 Our delivery Management actions have driven higher returns and shareholder remuneration Value creation spread Shareholder return DPS ( /sh) 8.8% +75% 120 bps 8.2% 7% 6.3% Value creation 250 bps MIN DPS E E ROIC 1 WACC EPS Adjusted for IFRS15 and WIP 11

13 Our Vision & Positioning

14 ENERGY TRANSITION Our vision and positioning Integrated model captures opportunities from energy transition Gorwth in renewable capacity Grid development & automation Full speed renewables towards a full decarbonized profitable mix Foster digital networks as key infrastructure in the energy transition Urban infrastructure e-mobility Lead cities transformation through infrastructures and platforms Push mobility electrification to capture future value 13

15 Our vision and positioning Decarbonisation shapes our capacity and improves margins Total installed capacity (GW) Renewables extra margin Production Twh (0.6) Production Twh ~20% extra margin Capacity 2018E Thermal capacity reduction Renewables additions2 Capacity % Emission free production 3 62% Renewables Thermal Generation Nuclear Thermal cost Solar LCOE CO 2 specific emissions <0.35 kg/kwh eq in CO 2 specific emissions 0.23 kg/kwh eq in 2030 Decarbonization in Includes managed capacity GW additional capacity subject to portfolio rotation 3. Emission free production includes nuclear generation 4. Target certified as «Science based». CO2 specific emissions will be <0.345 kg/kwheq in

16 Our vision and positioning Electrification and urbanization drive infrastructure investments and new services to clients Infrastructure investments Network automation efficiency Customer/RC node -8% Customer needs and services Electricity distributed (TWh) End users (mn) +10% +3% Free market customers 3 (mn) +64% E E E E 2021 Public lighting (mn points) Charging points 1 (k) Fiber deployment (Households passed mn) E Demand response (GW) Storage (MW/yr) Maintenance and repair (mn clients) Credit cards (mn) 2018E Public & private charging points installed (public 5.5k in 2018E and 24.1k in 2021) 2. Includes Italy for clusteres A&B 3. Power and gas customers 15

17 Our vision and positioning Digitalization fuels economic benefits and satisfies customers needs Digitalization Capex Cumulated economic benefits ( bn) Key highlights 11% 2.5 ~4 bn for networks digitalization 5.4 bn 5% Advanced automation of construction and O&M of renewable assets 84% Increased flexibility and automation for thermal generation plants Asset Asset Customer Customers People People EBITDA Process automation and increased offering to customers 16

18 Our Pillars

19 Our pillars Sustainable value creation over the long term Industrial Growth Operational Efficiency Simplification Human Capital Asset development Customers Asset Management 27.5 bn capex 3.2 bn incremental EBITDA Asset management Customers 1.2 bn opex savings Corporate Streamlining Communities & People 18

20 Our pillars Asset development supports our growth ambitions Industrial Growth Total gross capex by business and by nature Asset development by business % 5% 9% 27.5 bn 40% bn % 16.5 bn 64% 42% 4.8 4% 4% Networks Renewables Thermal Generation Enel X Retail Asset development Customers Asset management Networks Thermal generation Renewables Enel X 1. Includes 1.6 bn BSO capex 19

21 Our pillars Renewables are the driving force of growth Industrial Growth Higher investments to build 11.6 GW additional capacity Focus on markets with integrated presence & on developed countries Value creation through decarbonization & integration with retail portfolio Asset development capex % 9% 6% 14% 10.6 bn 37% 30% Additional capacity by geography 33% 15% 4% 3% ~11.6 GW 2 By technology 16% 29% Maximization of portfolio returns Italy Iberia South America Europe & NA North & C. America Africa, Asia & Oceania 70% 28% 1. Includes 1.6 bn BSO capex 2. Of which 1.8 GW related to BSO and 0.8GW related to JVs. 20

22 Our pillars Networks investments tailored to maximize asset base value Industrial Growth Gross capex by nature & by geography Restructuring of Eletropaulo Completion of Goias turnaround Resiliency and flexibility in Italy and Spain 29% 11.1 bn 29% 36% 3% 11.1 bn 44% Digitalization to promote efficiencies and improve service quality 42% 17% 2021 RAB ~45 bn: ~30% South America, ~70% Europe Asset development Customers Asset Management Italy South America Iberia Europe & NA 21

23 Our pillars Enel X capital allocation addresses customers needs Industrial Growth Gross capex by nature & by geography Smart lighting and fiber optics for cities 41% 13% Electric mobility in Italy, Spain, US and Romania 1.1 bn 27% 1.1 bn 39% Demand response and storage solutions for C&I customers 59% 21% Energy efficiency solutions Asset development Customers Italy Iberia South America North & C. America 22

24 Our pillars Driving efficiencies across all businesses Operational Efficiency Opex evolution ( bn) 1 Efficiency by business -8% 23% (1.2) % 1.2 bn 8% 36% 2018E CPI & Forex 2 Growth Efficiency 2021 Networks Thermal generation Retail Other 1. Total fixed costs in nominal terms (net of capitalization) 2. Of which CPI +0.9 bn and forex -0.3 bn 23

25 Our pillars Our commitment to SDGs and Human Capital Human Capital Engaging local communities (mn beneficiaries) Our people Climate change High-quality, inclusive and fair education 2.5 Access to affordable and clean energy 10.0 Employment and sustainable and inclusive economic growth Reduction of CO 2 specific emissions (kg/kwh eq ) 0.23 Talent attraction and retention Appraise performance of people we work with 3 Climate corporate survey 3 Diversity Global implementation of the diversity and inclusion policy 100% of people involved 99% of people appraised 100% of people involved 86% of people participating 2021 Recruiting should ensure equal gender splitting of the candidates (c. 50%) Innovation and infrastructure/sustainable cities 2021 Smart meters (mn) 46.9 Digitalization capex ( bn) 5.3 Charging points 2 (th) 455 Training Enable digital skills diffusion among people we work with 100% of people involved in digital skills training 1. Cumulated figures since Public & private charging points installed (public 5.5k in 2018E and 24.1k in 2021) 3. Eligible and reachable people having worked in the Group for at least 3 months 24

26 Our pillars Sustainable, profitable, digitalized and customer centric E Renewables focus Owned RES capacity/total capacity % 41% 45% CO2 Footprint Specific Co2 emissions kg/kwh End Users mn Retail customers Mn customers in the free market New businesses Gross margin Enel X bn n.a. 0.5 Digital impact Cumulated EBITDA ( bn) n.a. Group simplification Group net income/total net income 64% 70% Cash flow generation FFO gross capex bn % % 4.4 ~1.8x 25

27 Our pillars Improved return on invested capital supporting dividend growth Value creation spread Implicit DPS at 70% pay-out ( /sh) 10.2% +39% CAGR Value creation 250 bps 8.8% 6.3% 6.2% Value creation 400 bps Min DPS + 12% +9% E ROIC 1 WACC EPS Adjusted for IFRS15 26

28 Capital Markets Day Strategic Plan Alberto De Paoli CFO

29 Our Plan

30 Our plan New investment cycle drives growth while debt remains stable Average capex ( bn) +12% Net Debt ( bn) Old Plan EBITDA ( bn) E 2021 Net income ( bn) +20% +37% E E

31 Our plan % 12.0% 10.0% 8.0 % 6.0 % 4.0 % 2.0 % 0.0 % 35.0% 30.0% 25.0% 20.0% 15.0% 10.0% 5.0 % 0.0 % Solid improvement in profitability, returns, and credit metrics Profitability Return on invested capital FFO/Net debt +400bps +140bps +460 bps 25% 27% 29% 29% 8.2% 8.8% 9.3% 10.0% 10.2% 25.0% 26.5% 27.4% 28.6% 31.1% 19% 7% 6.3% 6.3% 6.2% 6.2% E E E Net income/ebitda ROIC WACC 30

32 Capital Allocation

33 Capital allocation Increased capex plan focused on asset development and customers Capex plan 1 ( bn) EBITDA evolution by investment ( bn) +12% +20% old plan new plan EBITDA 2018E Asset development Customer Asset management EBITDA 2021 Asset development Customer Asset management Asset management pre-tax cumulated cash generation above 32 bn 1. It includes 1.6 bn BSO capex 32

34 Capital allocation 100 % 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 100 % 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 100 % 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Growth driven by networks and renewables Capital allocation ( bn) Incremental EBITDA 2 ( bn) % 28% 64% Asset development 4.8 9% 66% 25% Customers % 52% 15% Asset management Total by business vs It excludes other equal to -0.1 mn. Thermal generation includes nuclear 2. Excluding the impact of our asset rotation programme 33

35 Capital allocation Beyond plan period, run rate capex grows from 6.7 bn to 8 bn Capex run-rate ( bn) Drivers of run rate by business line +19% Development of 3.5/4 GW per year Resiliency, digitalization and service quality Infrastructure investments to cope with customers needs 40 43% ~8 bn 42-45% Increased flexibility and restructuring in thermal generation fleet <5% <5% 7% Run rate old plan Run rate new plan Retail 34

36 Business Line Highlights

37 Business line highlights Renewables: diversifying mix, improved visibility Installed capacity and Production by technology 1 CAPACITY (GW) PRODUCTION (TWh) Sales portfolio composition PPA duration (yrs) +23% +32% E 2021 Hydro Wind Solar Other 132 ~ E % ~357 TWh 1% 35% Incentivized Forward sales > 15 38% % 9% % < 5 31% LT PPA contracted Open position ~ 65% of cumulated production sold forward 2 1. Consolidated capacity only 2. Volumes to be sold forward in year n-1 36

38 Business line highlights Incremental asset development capex fully allocated to renewables Asset development capex evolution ( bn) Incremental renewable capacity by geography and technology 8.3 (~ 2) ~ BSO 18% 5% 8% 4% ~5 GW 41% 60% 3.4 BSO 24% 40% Brazil USA Iberia Italy Chile Other Old plan BSO Organic New plan EBITDA/CAPEX 1 IRR spread 13% ~200 bps over WACC 1. Calculated as asset develpoment Ebitda at regime/capex (net of BSO) 37

39 Business line highlights Renewables: accelerating growth Gross Capex EBITDA evolution ( bn) +23% % 11.6 bn 8% Asset development Asset management 2018E Asset development Asset management 2021 Asset management pre-tax cumulated cash generation for ~12 bn 38

40 Business line highlights Networks: 4% total RAB growth Europe: RAB evolution ( bn) South America: RAB evolution ( bn) - +20% E E 2021 Argentina Brazil Chile Colombia Peru Energy distributed (TWh) WACC nominal pre-tax 2. Blend of Rio, Cearà, Goias and Eletropaulo 39

41 Business line highlights Networks: profitability supported by asset turnaround and efficiencies Gross Capex EBITDA evolution ( bn) +17% 29% 11.1 bn 29% (0.3) % Asset development Customers Asset Management 2018E Eletropaulo Connections Tariff & volumes Efficiency FX

42 Business line highlights Networks: Eletropaulo turnaround doubling EBITDA Eletropaulo asset turnaround (EBITDA mn) Eletropaulo operational KPIs +2x 2018E Electricity distributed (TWh) Quality index 1 (%) Opex/end user ( /cust) 43 +9% bps 62-30% Networks benchmark RAB/end user (k /cust) Eletropaulo 2021 ~255 Cearà 2021 ~ E 6M 2018 pro forma 2018 pro forma Operating improvement 1. Quality on service rewards/penalties and losses reduction economic impact on gross margin 2021 Opex/end user ( /cust) ~44 ~ 36 41

43 Business line highlights Enel X: capturing new opportunities with customers Gross Capex EBITDA evolution 1 ( bn) 59% 1.1 bn 41% Customers +0.3 bn 0.5 Asset development Customers 0.1 Asset Development +0.2 bn 2018E e-city e-mobility e-home e-industry Rounded figures 42

44 Business lines highlights Retail: further growth on increase in customer base and efficiency EBITDA evolution ( bn) Free market customers (mn) volumes sold 3 (TWh) +17% +64% +29% E E E 2021 Italy South America Iberia Romania EBIT 5% 6% margin 1 Total 64 mn customers 2 69 mn 1. Includes Italy, Spain and Romania 2. Resulated and free market power and gas customers 3. Free market + PPAs 43

45 Financial Management

46 Financial management Stable debt throughout the plan Net debt evolution ( bn) Source of funds allocation ( bn) -% 0.3 (27.5) 41.1 (13.9) ~41.8 ~42.2 ~ E Sources of funds Incremental Debt Gross capex Dividends 45

47 Financial management % 30% 25% 20% 15% 10% 5% 0% -5% -10% Improving credit metrics Credit metrics Long term credit rating 25.0% 26.5% 27.4% 28.6% 31.1% Standard & Poors Rating BBB+ Outlook Stable 2.5x 2.5x 2.4x 2.3x 2.2x Moody s Baa2 Stable Fitch BBB+ Stable E Net debt/ebitda FFO/Net debt 46

48 Financial management % 4.5 0% 4.0 0% 3.5 0% 3.0 0% 2.5 0% Continued reduction in cost of debt Financial strategy for ( bn) Net financial expenses on debt ( bn) Amount Expected cost 1 Current total cost -4% Bond refinancing including green bonds Bank loans and other financing Hybrid refinancing % 2.5% 4.9% 4.2% 2.3% 6.4% 5.0% % 4.6% 4.6% 4.4% 4.4% Emerging markets % 7.6% Total % 4.8% E Net financial expenses Cost of gross debt Previous plan 1. Enel estimates on current cost associated with financial instruments 47

49 Risk Management

50 Risk management 120 % 100 % 80% 60% 40% 20% 0% Operating risk: low EBITDA exposure to merchant risk EBITDA ( bn) Regulated EBITDA by business Regulated ~ 100% Merchant 28% Retail portfolio hedge Regulated, contracted under long term PPA, incentivized ~ 64% Regulated ~ 46% Regulated & contracted 72% Regulated ~ 23% Regulated ~ 20% EBITDA 49

51 Risk management % 140 % 120 % 100 % 80% 60% 40% 20% 0% Operating risk: natural margin hedge from retail portfolio Integrated margin Generation GM vs retail GM Hedging position on price driven production Coal & Gas 13% Hedging of CDS-CSS based on scenario/market Pool price indexed Large customers Ren & Nuke hedged price vs 2018 Retail margin vs % = +14% = Renewables + Nuke 87% Natural hedging with retail portfolio Small and medium customers 100% 44% Generation Gross margin A Retail portfolio

52 Risk management Operating risk: low regulatory risk over the plan period Europe WACC South America WACC Italy 5.9% Brazil % Iberia 1 Romania 5.5% / 6.0% 5.7% Colombia Chile 11.8% 10% BP Argentina Peru BP 12.5% 12% Stable and mature regulations Highly visible frameworks 1. WACC nominal pre-tax 2. Blend of Rio, Cearà, Goias and Eletropaulo 51

53 Risk management Operating risk: renewables growth already significantly addressed Additional capacity addressed 1 (GW) Pipeline by geography and technology 2 (GW) 11.6 ~60% addressed 2019 Coverage by yr 91% 21% 3% 7% 47% ~ % 34% 24% 19 GW 45% 52% ~5 Italy and Iberia Europe & North Africa Target additional capacity Addressed Residual target South America North & C. America Asia/Australia Total pipeline / residual target ~ 4x Short term pipeline 3 / residual target ~ 3x 1. It includes managed capacity 2. As of September Includes CODs only 52

54 Risk management Currency risk: low exposure to volatile currencies FX sensitivity 1 Avg. yearly impact ( mn) EBITDA by geography EBITDA by currency EBITDA Group NI BRL (180) 225 (30) 35 63% 63% ARS (35) 40 (6) bn 55.3 bn CLP (6) % 5% 26% 11% COP (100) 125 (12) 15 Europe South America North America EUR USD South America PEN (20) 25 (2) ~3 TOTAL (340) 420 (50) 60 % on yearly value (1.8%) 2.3% (<1.0%) 1.1% 1. Sensitivity based on +/-10% USD/LOC Rounded figures 53

55 Risk management Financial risk: gross debt hedges softening FX swings and rates movements Gross debt by currency at 2021 After swap Interest rate composition 57% 86% 22% 7% 6% 55.1 bn 7% 7% 55.1 bn 55.1 bn 78% 30% EUR USD GBP Other EUR USD GBP Other Floating Fixed + Hedged 54

56 Risk management Financial risk: limited re-financing needs; strong available liquidity Debt maturity by year 1 ( bn) Liquidity available 1 Maturities/Gross Debt 8.5% 8.1% 7.3% bn Total Refinancing on average gross debt New plan Last 3 yrs 8.2% 16.1% Available committed credit lines Cash Total liquidity / Maturities 112% 1. As of September

57 Earnings & Targets

58 Earnings and targets Strategy driving 37% increase in earnings vs 20% increase in EBITDA Group net ordinary income ( bn) 2018E-21 Group net ordinary income evolution ( bn) +37% (0.4) 0.1 (0.9) (0.5) E E EBITDA D&A Financial charges Taxes Minorities

59 Earnings and targets Visible value creation for our shareholders Earnings growth CAGR (%) Ordinary EBITDA ( bn) ~+6% Net ordinary income ( bn) ~+11% Value creation Pay-out ratio 70% 70% 70% 70% - Implicit DPS ( /sh) ~+12% Minimum dividend per share ( ) ~+9% Three years minimum dividend per share 58

60 Closing remarks

61 Closing remarks Delivering on all targets Integrated model driving synergies and reducing risk profile Acceleration of renewables capacity development Significant value creation for all stakeholders Three years dividend certainty, with upside potential 60

62 Financial annexes

63 Agenda Macro scenario Thermal generation Renewables Infrastructure & Networks Retail Enel Group 62

64 Macro scenario

65 Macro scenario GDP, CPI, FX GDP (%) CPI (%) FX against Italy n. m. n. m. n. m. Iberia n. m. n. m. n. m. South America Argentina Brazil Chile Colombia ,657 3,767 3,859 Peru Europe and North Africa Romania Russia North & Central America USA M exico Year end 64

66 Macro scenario Commodities prices 2018E Gas TTF /MWh Gas Henry Hub $/mmbtu Oil Brent $/bbl Coal API2 $/ton CO 2 /ton

67 Thermal generation

68 Thermal generation Final installed Capacity (GW) Nuke CCGT Coal Oil & Gas Total 2018E E E E E 2021 Italy Iberia South America Europe and North Africa North & Central America Africa, Asia & Oceania Total

69 Thermal generation Installed Capacity (GW) -15% E 2021 Nuke CCGT Coal Oil & Gas 68

70 Renewables

71 Renewables Final Consolidated capacity (GW) Hydro Wind Geothermal Solar & Other Total 2018E E E E E 2021 Italy Iberia South America Europe and North Africa North & Central America Africa, Asia & Oceania Total

72 Renewables Consolidated capacity (GW) +25% E Hydro Wind Geothermal Solar & Other 71

73 Infrastructure & Networks

74 Infrastructure & Networks Electricity distributed, End users, Smart meters Electricity distributed (TWh) End users (mn) Smart meters (mn) 2018E E E 2021 Italy Iberia South America Europe and North Africa Total

75 Retail

76 Retail Power & gas customers and volumes 1 Power Gas Customers (mn) Volumes (TWh) Customers (mn) Volumes (bsmc) 2018E E E E 2021 Italy Iberia South America Europe and North Africa Total Net of Salvaguardia 75

77 Retail Power unitary margin, cost to acquire, opex & capex per client Power unitary margin ( /MWh) 1 Opex per client ( /customer) Capex per client ( /customer) 2018E E E 2021 Italy Iberia Europe and North Africa Includes only power free market 76

78 Retail Italian power market 2018 Customers (mn) Energy sold (TWh) Enel market share 1 Enel 17.1 market share Enel market share Enel market share % % % % 66.2 Regulated 85% Free 50% Total Regulated 87% Free 27% Total Business Residential 1 Enel estimate based on FCST 2018, not including Last Resort ( Salvaguardia )

79 Retail Spanish power market 2018 Customers (mn) Energy sold (TWh) Enel market share Enel 5.8 market share % Enel market share 78.1 Enel market share % % % 33.7 Regulated 44% Free 30% Total Business Regulated 48% Free 32% Total Residential 1. Internal estimates for Business and Residential Enel market share 78

80 Enel Group

81 Enel Group Old Plan Capex reconciliation ( bn) Connections Maintenance Growth Customers Retail, Enel X (e-home, e-industries), Network connections Asset management Investments for recurring asset maintenance Asset development Growth investments in renewables and networks (quality programs & smart metering) Enel X (e-cities, e-mobility) Old view New view 80

82 Enel Group Gross Capex ( bn) Italy Iberia South America Europe and North Africa North & Central America Africa, Asia & Oceania Other (0.2) (0.1) 0.1 (0.3) (0.2) Total (0.1) Total Capex Global Generation & Trading Global Infrastructures & NetworNs Renewable Energies Retail Enel X Services & Other Total (0.1)

83 Enel Group Asset development capex ( bn) Global Generation & Trading Global Infrastructures & NetworNs Renewable Energies Italy Iberia South America Europe and North Africa North & Central America Africa, Asia & Oceania Other (0.2) (0.2) (0.1) Total (0.1) Total Capex Retail Enel X 0.7 Services & Other (0.1) Total

84 Enel Group Asset management capex ( bn) Italy Iberia South America Europe and North Africa North & Central America Africa, Asia & Oceania Other Total Total Capex Global Generation & Trading Global Infrastructures & NetworNs Renewable Energies Retail Enel X Services & Other Total

85 Enel Group Customers capex ( bn) Italy Iberia South America Europe and North Africa North & Central America Africa, Asia & Oceania Other (0.1) (0.1) - (0.1) (0.1) Total (0.1) (0.1) Total Capex Global Generation & Trading Global Infrastructures & NetworNs Renewable Energies Retail Enel X Services & Other (0.1) Total

86 Enel Group Ordinary EBITDA Global Generation & Trading Global Infrastructures & NetworNs Renewable Energies 2018E E E E E E E Italy Iberia South America (0.1) (0.1) (0.1) (0.1) Europe and North Africa North & Central America Africa, Asia & Oceania Other (0.1) (0.1) (0.1) (0.2) (0.1) (0.5) (0.5) (0.1) (0.2) (0.5) (0.5) Total (0.4) (0.4) Total EBITDA (0.8) 55.3 Retail Enel X Services & Other Total 85

87 Enel Group Baseload power price & production sold forward Baseload price 2018E Italy ( /MWh) Iberia ( /MWh) Production sold forw ard 2018E price % price % price % price % Italy ( /MWh) % % % - - Iberia ( /MWh) % % % - - Brazil (USD/MWh) % % % % Chile (USD/MWh) % % % % Colombia (USD/MWh) % % % % Peru (USD/MWh) % % % % 1. Average hedged price; wholesale price for Italy, retail price for Spain. 86

88 Enel Group Delivery on gas contract renegotiation Portfolio evolution (bcm, %) Price review impact ( bn, %) % 14% 15% 19% 32% 26% 41% % 33% 46% 20% 34% 19% 24% 26% 67% Old New 1 Legacy - Oil linked Legacy - Other2 To be contracted/spot US LNG + TAP Already negotiated To be negotiated 1. Italy, Spain. Chile 2. Rest of the World 87

89 Environmental Social and Governance annexes

90 Agenda Our 2018 ESG delivery Our ESG targets Our ESG pillars and backbones Our commitment to Sustainable Development Goals Growth across low carbon technologies and services Operational improvement for a better service Engaging local communities Engaging the people we work with Digitalization and cyber security Innovation boost Our Corporate governance 89

91 Our 2018 ESG delivery

92 ESG delivery Our commitment to low carbon growth Plan actions E Development of renewable capacity and reduction of thermal capacity 43 GW renewable capacity GW thermal capacity Implementation of environmental international best practices to selected coal plants 94 mn of investments for environmental retrofit Reduction of CO 2 specific emissions -16% vs 2007 Electrification, storage & demand response 5.7 GW demand response 3 MW/yr storage 1. Includes managed capacity for 4.2 GW 91

93 ESG delivery Assets optimization and innovation Plan actions E Large scale infrastructure innovation mostly in grid digitization, smart meters and charging points 48k charging points 1 44 mn smart meters installed 2 Foster global partnerships and high potential startups to reap new technologies and ways to service energy 13 projects with startups in deployment in the business 2 new Innovation Hubs (Catania, Pisa) 1. Public and private charging points installed 2. Includes replacement of smart meters 92

94 ESG delivery Engaging local communities Plan actions E 1 High-quality, inclusive and fair education 0.9 mn beneficiaries Access to affordable and clean energy, mainly in Africa, Asia and Latin America 2.2 mn beneficiaries 2 Employment and sustainable and inclusive economic growth 1.8 mn beneficiaries 1. Cumulated figures since In the whole Group perimeter, 4.9 mn beneficiaries were reached 93

95 ESG delivery Engaging people we work with Plan actions E Appraise performance of people we work with 1 100% of people involved 99% of people appraised Climate corporate survey 1 100% of people involved 85% of people participating Global implementation of the diversity and inclusion policy 38% women involved in recruiting processes Enable digital skills diffusion among people we work with 36% of people involved in digital skills training 1. Eligible and reachable people having worked in the Group for at least 3 months 94

96 ESG delivery Digitalization and cyber security Plan actions E Single strategy approach based on business risk management 85% of internet web applications protected through advanced cyber security solutions Business lines involved in key processes: risk assessment, response and recovery criteria definition and prioritization of actions Enel s CERT 1 acknowledgement in deployment in 8 countries 2 of presence and affiliation with international organizations 3 Integrated information systems (IT), industrial systems (OT) and Internet of Things (IoT) assessment and management 15 cyber security knowledge sharing events held Cyber security by design to define and spread secure system development standards 1. Computer Emergency Response Team 2. Italy, Spain, Romania, Argentina, Brazil, Peru, Colombia, Chile 3. First and Trust introducer 95

97 Our ESG targets

98 ENERGY TRANSITION ESG targets Our ESG pillars and backbones to capture opportunities from energy transition Growth across low carbon technologies and services Operational improvement for a better service Engaging local communities Engaging the people we work with SUSTAINABLE LONG TERM VALUE CREATION Occupational health & safety Sound governance Environmental sustainability Sustainable supply chain Econ. & financial value creation High-quality, inclusive and fair education (mn beneficiaries) Access to affordable and clean energy (mn beneficiaries) Employment and sustainable and inclusive economic growth (mn beneficiaries) Reduction of CO 2 specific emissions (kg/kwh eq ) Smart meters installed 1 (mn) Digitalization capex ( bn) Charging points 2 (k) 1. Includes replacement of smart meters 2. Public and private charging stations

99 Cross boosts Backbones Pillars ESG targets Our commitment to Sustainable Development Goals Our targets are set across the board of the 17 UN SDGs Growth across low carbon technologies & services Operational improvement for a better service Engaging local communities Engaging the people we work with Occupational Health & Safety Sound governance Environmental sustainability Sustainable supply chain Economic and financial value creation Digitalization and innovation Public commitment with United Nations 98

100 Innovation boost ESG targets Growth across low carbon technologies and services Plan actions Related targets/commitments Development of renewable capacity and reduction of thermal capacity in GW renewable capacity 1-7GW thermal capacity Implementation of environmental international best practices to selected coal plants 340 mn of investments for environmental retrofit in Reduction of CO 2 specific emissions 0.23 kg/kwh eq in Electrification, storage & demand response 9.9 GW demand response 173 MW/yr storage New products and services and new power production technologies Electric mobility; home and business solutions; marine energy; data valorization; integrated storage solutions 1. Includes managed capacity 2. CO 2 specific emissions will be <0.345 kg/kwh eq in

101 Innovation boost ESG targets Operational improvement for a better service Plan actions Related targets/commitments 46.9 mn smart meters installed 1 Large scale infrastructure innovation mostly in grid digitization, smart meters and charging stations 5.3 bn digitalization capex in k charging stations 2 E&C 3 and O&M 4 automation and IoT applied to O&M Generation assets flexibility and digitalization; networks efficiency; PV panels manufacturing automation; trading automation Customer centricity New products and services co-creation and sales increase leveraging on cross countries synergies 1. Includes replacement of smart meters 2. Public and private charging stations 100

102 ESG targets Engaging local communities Plan actions Related targets/commitments 1 High-quality, inclusive and fair education 2.5 mn beneficiaries in Access to affordable and clean energy 10.0 mn beneficiaries in Employment and sustainable and inclusive economic growth 8.0 mn beneficiaries in Cumulated figures since

103 ESG targets Engaging people we work with Plan actions Related targets/commitments Appraise performance of people we work with 1 100% of people involved 99% of people appraised Climate corporate survey 1 100% of people involved 86% of people participating Global implementation of the diversity and inclusion policy Recruiting should ensure equal gender splitting of the candidates (c. 50%) Enable digital skills diffusion among people we work with 100% of people involved in digital skills training 1. Eligible and reachable people having worked in the Group for at least 3 months 102

104 ESG targets Cross boosts Digitalization and cyber security Plan actions Related targets/commitments Single strategy approach based on business risk management 100% of internet web applications protected through advanced cyber security solutions Integrated information systems (IT), industrial systems (OT) and Internet of Things (IoT) assessment and management 15 cyber security knowledge sharing events per year Cyber security by design to define and spread secure system development standards 103

105 Innovation boost ESG targets Cross boosts Innovation Plan actions Related targets/commitments Bosting Group s innovation through a tools portfolio composed by innovation hub network, crowdsourcing platforms, intelligence, internal innovation communities active on forefront topics, internal entrepreneurship, innovation with startups and larger companies, suppliers, universities and research centers Implementation in the business of 60 projects with startups in Opening of a new Innovation Hub in

106 Our Corporate governance

107 Corporate governance Corporate governance structure 78% BoD s composition Shareholders meeting Audit firm 11% 11% Executive Non - executive Independent Board of Directors 1 (9 members 2 ) Board of Statutory Auditors (3 members) Nomination and Compensation Committee Control and Risks Committee Related Parties Committee Corporate Governance and Sustainability Committee 1. Chairperson can be considered independent in accordance with TUF criteria 2. Out of which 3 directors drawn from minority slates 106

108 Corporate governance Board composition BoD s members BoD s Diversity 1 P. Grieco Non ex (Chairperson) CGSC 11% 33% F. Starace Executive (CEO and General Manager) 67% Age diversity 22% Gender diversity A. Antoniozzi Independent CGSC RPC 67% A. Bianchi C. Calari P. Girdinio A. Pera A. Svelto A. Taraborrelli Independent NCC RPC Independent NCC RPC Independent CRC NCC Independent CRC NCC Independent CRC RPC Independent CRC CGSC % 11% 22% 1-3 years 4-6 years over 6 years Office seniority diversity 1. Data as of 22 March 2018 Male Skill diversity Female 5 Energy Engineering Expertise in international environments Strategy and Finance Cyber Security 107 Legal 3 2

109 Corporate governance Short-term variable remuneration 1 Objective Type of target Macro objective Entry level (50%) Target (100%) Over (120%) Ordinary consolidated net income 40% bn 4.1 bn 4.2 bn Economic Profitability FFO/Consolidated net financial debt 30% 2 26% 27% 28% Financial Cash and debt management Consolidated cash cost 20% bn 11.4 bn 11.3 bn Economic Efficiency Safety in the workplace 10% 2 FI =1.17 & FA 4 <=9 FI =1.15 & FA 4 <=9 FI =1.11 & FA 4 <=9 ESG Safety 1. Management by objectives (MBO) (%) Weight in the variable remuneration 3. FI: Work-related accident Frequency Index 4. FA: Number of Fatal Accidents during 2018, except for road events 108

110 Corporate governance Long-term variable remuneration 1 Objective Type of target Macro objective Entry (50%) Target (100%) Over I (150%) Over II (280%) 5 TSR 2 50% 3 Enel s TSR from 90% to 100% of TSR Index Enel s TSR from 100% to 110% of TSR Index Enel s TSR from 110% to 115% of TSR Index Enel s TSR > 115% of TSR Index Market Performance ROACE % 37.5% 38.0% >8.6% Financial Profitability 40% 3 CO 2 emissions reduction 10% gco 2 /KWheq 6 gco 2 /KWheq 6 gco 2 /KWheq 6 gco 2 /KWheq 6 ESG Environmental 1. Long-Term Incentive Plan (LTI) % payment (if any) in the 4th year. 70% payment (if any) in the 5th year (deferred payment) 2. Average TSR Enel compared to average TSR EUROSTOXX Utilities Index-EMU. In case of negative absolute TSR of Enel, the incentive (if any) is reduced on the basis of a regressive scale of the same negative percentage of the absolute TSR of Enel share, multiplied for a constant value equal to (%) Weight in the variable remuneration 4. Cumulative for the period For the CEO/General manager. 180% for the other beneficiaries of the LTI Plan In

111 Disclaimer This presentation contains certain forward-looking statements that reflect the Company s management s current views with respect to future events and financial and operational performance of the Company and its subsidiaries. These forward-looking statements are based on Enel S.p.A. s current expectations and projections about future events. Because these forward-looking statements are subject to risks and uncertainties, actual future results or performance may differ materially from those expressed in or implied by these statements due to any number of different factors, many of which are beyond the ability of Enel S.p.A. to control or estimate precisely, including changes in the regulatory environment, future market developments, fluctuations in the price and availability of fuel and other risks. You are cautioned not to place undue reliance on the forward-looking statements contained herein, which are made only as of the date of this presentation. Enel S.p.A. does not undertake any obligation to publicly release any updates or revisions to any forward-looking statements to reflect events or circumstances after the date of this presentation. The information contained in this presentation does not purport to be comprehensive and has not been independently verified by any independent third party. This presentation does not constitute a recommendation regarding the securities of the Company. This presentation does not contain an offer to sell or a solicitation of any offer to buy any securities issued by Enel S.p.A. or any of its subsidiaries. Pursuant to art. 154-bis, paragraph 2, of the Italian Unified Financial Act of February 24, 1998, the executive in charge of preparing the corporate accounting documents at Enel, Alberto De Paoli, declares that the accounting information contained herein correspond to document results, books and accounting records. 110

112 Contact us Monica Girardi Head of Group Investor Relations Phone Web site Investor Relations team Francisco Basauri Serena Carioti Alessia Di Ninno Federica Dori Fabrizio Ragnacci Federica Todaro Emanuele Toppi Follow us 111