May 9, 2008 / 5:16 PM / 11 years ago

EARNINGS POLL-Enel Q1 core profit to jump, debt in focus

 * Enel first-quarter results
 * Due on Tuesday, May 13, before markets open
 * Core earnings (EBITDA) forecast at 3.329 billion euros
 By Ian Simpson and Alberto Sisto
 MILAN/ROME, May 9 (Reuters) - Italian power company Enel SpA (ENEI.MI) is expected to show a 43 percent jump in first-quarter core earnings, boosted by the purchase of Spain’s Endesa in a deal that has made investors focus on debt, a Reuters poll of analysts showed.
 Enel, Europe’s fourth-biggest power company by market value, is forecast to report earnings before interest, tax, depreciation and amortisation (EBITDA) of 3.329 billion euros ($5.15 billion) according to the average of a Reuters poll of 11 analysts.
 Net profit is seen up almost 9 percent at 1.025 billion euros, on average.
 The hike in earnings stems from consolidation of Enel’s 42.5 billion euro purchase of Endesa SA (ELE.MC) last year with Spanish partner Acciona SA (ANA.MC).
 With the purchase, Enel’s debt soared some five-fold to 55.8 billion euros at the end of last year. Enel also paid about 970 million euros in March to raise its holding in Russian power generator OGK-5 OAD OGKE.MM to almost 60 percent.
 The former state monopoly has vowed to cut debt by as much as 11 billion euros under its 2008-2012 business plan.
 “We see a risk that this quarter might disappoint investors in terms of the cost of debt and the overall debt level,” Morgan Stanley analyst Antonella Bianchessi wrote in a note.
 She forecast that debt might rise to 56.3 billion euros and “increase concerns that the company’s targeted net debt ... might not be achieved”.
 Investors will look for an update on plans to sell assets to cut debt, including power and gas distribution networks that Enel has said could be worth 4 billion euros.
 Enel also could give details on a special dividend from sale of Endesa assets to Germany’s E.ON AG EONG.DE. Enel has a dividend yield of 7.1 percent, more than three times the European sector average, according to Reuters data.
 “The timing of and proceeds from the expected disposals will be key to alleviating market concerns about sustaining the dividend,” Exane BNP Paribas analyst Nicola Porcari said in a research report.
 Enel trades at 11.32 times forecast 2008 earnings, near the bottom of the sector.
 Following is a summary of analysts’ estimates for results that will be released on Tuesday before markets open (figures in millions of euros):
         Average   Median   High   Low   Sample  Q1 2007  REVENUES    13,307   13,307 13,924 12,690    2       9,728  EBITDA       3,329    3,333  3,608  3,200   11       2,332  EBIT         2,382    2,400  2,431  2,311    7       1,709  NET PROFIT   1,025      981  1,335    900    9         943  DEBT        56,462   56,500 59,000 53,897    9      55,800*
                                                              * Figure at Dec. 31, 2007
 The following banks took part in the poll: UBS, Morgan Stanley, ABN Amro, Santander, BNP Exane Paribas, UBS, WestLB, Mediobanca, Banca Leonardo, Chevreux and one that asked to remain anonymous.  (Editing by Stephen Weeks)   

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