* ERG to grow in renewables in Romania, Bulgaria, Poland
* Main owner says likely ERG will exit refining next year
* Shares end up almost 10 pct
(Adds interview comments with executive, shares)
By Stephen Jewkes
MILAN, Dec 19 Italy's ERG said it
planned to invest 500 million euros ($661 million) to end-2015
as it presses ahead with a transformation from refiner to
renewable energy company.
In its first business plan since 2008, the group said on
Wednesday it would focus on investing in renewable energy
projects mainly in Romania and Bulgaria as it looks to wind
power to drive its business.
"We are focused on developing wind power with a good
geographic mix," executive Deputy Chairman Alessandro Garrone
told Reuters, noting that after a recent acquisition around 20
pct of its wind capacity was outside Italy.
ERG earlier said it expected its core earnings to be around
600 million euros in 2015 and confirmed a dividend policy, which
in recent years has offered 0.4 euros per share.
"Our expectations for growth are already excellent. If we do
better we'll grow the dividend," Garrone said.
ERG shares closed up 9.8 percent while the European utility
index was up 0.2 percent.
Earlier this year the company bought a wind farm in Romania
through its LUKERG Renew joint venture with Russia's Lukoil
Garrone, a member of the family that controls 63 percent of
the Genoa-based group, said ERG was also looking at Poland for
possible growth opportunites.
ERG expects an average 13 percent equity internal rate of
return in its renewables business, which is supported in Italy
by incentives and a clear regulatory framework.
In December ERG agreed to buy wind assets from France's GDF
Suez to become Italy's largest wind energy player and
one of the top 10 in Europe.
Besides its renewables and refining businesses, ERG also has
a joint venture with France's Total which manages a
network of petrol stations.
Garrone said he expected consolidation in the sector in
coming years, adding ERG would be "on the buying side."
Garrone, whose family also owns Serie A soccer team
Sampdoria, said he expected ERG to exit the refining business
"I think it is likely. We can't predict the future but the
path is fairly clear," Garrone said in an interview before he
presented the company's 2013-2015 business plan.
The outlook for refiners, battered by weak demand and heavy
competition from Asia, is clouded due to Europe's sluggish
Italian refiner Saras recently signed a commercial
agreement with Russia's Rosneft that some analysts
think might pave the way for a sale of part of its refinery in
ERG expects to invest just 28 percent of its overall
spending in the refining and marketing sector to end-2015.
The company has already sold most of its stake in a refinery
in Sicily to Russia's Lukoil to reduce its exposure to
the volatile industry.
It has an option to sell its remaining 20 percent to the
Russian group in October 2013.
"We see confirmation of the exit from refining, the healthy
free cash flow generation and the dividend policy and EBITDA
visibility ... as supporting elements," a Milan-based broker
($1 = 0.7568 euros)
(Additional reporting by Giancarlo Navach; Editing by Lisa
Jucca and Anthony Barker)