Iren S.p.a. · MIL:IRE
Iren — Investor Day (2024)
36 slides from Iren's investor day presentation, 2024
Slide 1: A Focused Disciplined Growth: business plan at 2030
A FOCUSED DISCIPLINED GROWTH business plan at 2030 INVESTOR DAY 2024
Slide 2: Strategy, Action Plan, Financials, Annexes
⦿ STRATEGY ⦿ ACTION PLAN INVESTOR DAY 2024 ⦿ FINANCIALS ⦿ ANNEXES
Slide 3: Strategy
⦿ STRATEGY ⦿ ACTION PLAN INVESTOR DAY 2024 ⦿ FINANCIALS ⦿ ANNEXES
Slide 4: An updated plan to seize new opportunities
An updated plan to seize new opportunities ⦿ EGEA acquisition ⦿ Increased visibility of returns in regulated activities ⦿ Investment portfolio optimization INVESTOR DAY 2024 STRATEGY ACTION PLAN FINANCIALS ANNEXES 4
Slide 5: A new capital allocation to support the strategic vision
A new capital allocation to support the strategic vision Green Service transition quality ⦿ CAPITAL ALLOCATION REVIEW 1) Reallocation of investments with a selective approach to profitability 2) Financial discipline aimed at maintaining current rating levels 3) Extended visibility of dividend policy
Slide 6: Prioritizing organic investments in regulated activities
Prioritizing organic investments in regulated activities... CAPEX ‘24-’30 ⦿ MAIN CHANGES VS. OLD PLAN 6% 1) Investments refocusing New plan Old plan ’24-’30 ‘24-’30 2) Increased investment in organic growth of regulated businesses 8.2 B€ 9.1B€ 3) Investments in renewables supported by incentives 4)
Slide 7: We reallocate investments for a sound and visible plan
...we reallocate investments for a sound and visible plan B€ 4.9 Regulated* Development 80% 3.3 60% Cumulated capex Corporate 8.2 B€ Market Waste Energy Networks 2024-2027 2028-2030 40% Maintenance 20% Unregulated ⦿ LOW EXECUTION ⦿ HIGH PREDICTABILITY ⦿ HIGH RISK OF RESULTS FLEXIBILITY *Including in
Slide 8: Sustainability drives future investments
Sustainability drives future investments 24% Water resources 35% ⦿ 5 SUSTAINABILITY FOCUS AREAS DECLINE OUR INDUSTRIAL STRATEGY, Circular economy Decarbonization ~70% IN LINE WITH THE CSRD Resilient cities Sustainable Capex* * Eligible for EU Taxonomy 30% Water leaks Material recovery Carbon intensi
Slide 9: EGEA: a contribution to the growth of all businesses
EGEA: a contribution to the growth of all businesses in 2023 (Iren estimates) ⦿ EBITDA Adjusted: 55/60M€* EBITDA ⦿ STRATEGIC DRIVER 1) Accelerate growth in all ⦿ Net debt: 190M€* business lines 2) Strengthen territorial ⦿ CASH OUT: 85M€ in 2024 and 85M€** in 2026 presence in historical areas 3) Extr
Slide 10: Sound and sustainable growth
Sound and sustainable growth CUMULATED CAPEX 8.2 B€ of which 600M€ flexible over the three-year period 2025-2027 EBITDA: Cagr 6% €M GROUP NET PROFIT: Cagr 7% €M FINANCIAL LEVERAGE 3.5x ~1,800 >400 Financial 1,550 360 3.3x flexibility 255 3.1x 1,197 2.7x 2023 2027 2030 2023 2027 2030 2023 2027 2030 C
Slide 11: Action Plan
⦿ STRATEGY ⦿ ACTION PLAN INVESTOR DAY 2024 ⦿ FINANCIALS ⦿ ANNEXES
Slide 12: Macrotrend and main development drivers
Macrotrend and main development drivers BUSINESS UNITS MACRO TREND IREN’S ACTIONS • Water resource scarcity • Sustainable water management NETWORKS • Electrification of consumption • Power grid upgrading • Quality of service • Performance improvement • Circular economy • Material and energy recovery
Slide 13: Networks: service quality and investments drive growth
Networks: service quality and investments drive growth WATER ELECTRICITY GAS CAPEX ⦿ Network upgrading ⦿ Network upgrading ⦿ Maintenance of ⦿ Increased 13% distribution network investments in ⦿ 4 new purification plants ⦿ 5 new primary substations distribution ⦿ Network replacement networks 58% ⦿ Op
Slide 14: Waste: collection development and energy recovery
Waste: collection development and energy recovery TREATMENT AND COLLECTION CAPEX DISPOSAL ⦿ Territorial expansion through ⦿ Waste treatment facilities ⦿ EGEA consolidation in tenders and consolidations, not development (6 new plants) collection activity 36% only in historical territories 1.6B€ ⦿ Ene
Slide 15: Energy: decarbonization of energy generation
Energy: decarbonization of energy generation CCGT, THERMO ENERGY RES AND HEAT EFFICIENCY CAPEX ⦿ Development of ⦿ Air cooler installation on ⦿ Rebuilding activity on ⦿ EGEA consolidation in greenfield renewable CCGT private and public district heating and public 19% capacity sector lighting ⦿ Turbig
Slide 16: Market: long term valorisation of customers
Market: long term valorisation of customers CLIENTS SERVICES CAPEX ⦿ Increasing EE clients due to ⦿ Boost cross-selling of Iren Plus ⦿ EGEA customer base electrification of consumptions products and services for increased consolidation household loyalty Medium and long term PPA with Consolidation of
Slide 17: Synergies and operational efficiencies
Synergies and operational efficiencies SYNERGIES AND EFFICIENCIES ’24-’30 Rationalization activity: 1. Turnover and reskilling 2. Specialization hubs 31% 3. Streamlining of sales and engineering functions 4. Unification of call centre and customer billing 130 M€ 5. Integration of acquired companies
Slide 18: Financials
⦿ STRATEGY ⦿ ACTION PLAN INVESTOR DAY 2024 ⦿ FINANCIALS ⦿ ANNEXES
Slide 19: Growth already visible in the first part of the plan
Growth already visible in the first part of the plan EBITDA NET PROFIT 2024-2030 GROWTH PILLARS: 6% CAGR M€ 7% CAGR ⦿ Organic growth: >+550 M€ M€ ⦿ Inorganic growth: +95 M€ 7% CAGR 9% CAGR ⦿ Efficiencies and synergies: +130 M€ ~1,800 >400 ⦿ Asset rotation: -40 M€ 1,550 360 1,450 320 ⦿ Scenario and r
Slide 20: Net debt evolution
Net debt evolution NET DEBT TIME EVOLUTION 4.9 Net debt (B€) B€ B€ 4.8 1.6 4.9 3.9 0.3 7.8 (0.8) 3.9 3.5x Maximum threshold Financial flexibility consistent with current ratings’ 3.3 3.1 parameters 2.7 Net debt/EBITDA (x) (7.9) 2023 Operational Net capex Dividends Asset disposal Other 2030 cash flow
Slide 21: A solid and low-risk financial profile
A solid and low-risk financial profile AVERAGE COST OF DEBT MATURITIES 4.6 years 843 ~2.6% M€ <2.4% 594 575 553 568 1.8% FY2023 average duration 87% 80 FY2023 fixed tax rate debt 2023 2024-2025 2026-2030 2025 2026 2027 2028 2029 2030 SUSTAINABLE FINANCE 76% 90% ~100% 2023 2027 2030 INVESTOR DAY 2024
Slide 22: Dividend policy with floor until 2027
Dividend policy with floor until 2027 DIVIDEND POLICY maximum between: ⦿ 60% PAY-OUT of ordinary Group’s net income ⦿ 8% DPS growth until 2027 FLOOR: 8% CAGR 16.16 Dividend per share, c€ 14.97 13.86 12.83 11.88 DIVIDEND PAYOUT RATIO 60% 2023 2024 2025 2026 2027 2028 2030 INVESTOR DAY 2024 STRATEGY A
Slide 23: Closing remarks
Closing remarks ⦿ An investment plan with greater predictability of returns ENHANCING THE ⦿ The Group's effectiveness in seizing relevant growth opportunities STRATEGY THE NEW PLAN SHOWS: ⦿ Low execution risk: exclusion of poorly visible organic and inorganic investments ⦿ Financial discipline suppo
Slide 24: Annexes
⦿ STRATEGY ⦿ ACTION PLAN INVESTOR DAY 2024 ⦿ FINANCIALS ⦿ ANNEXES
Slide 25: Iren at a glance
Iren at a glance National player in DH 1° volumes with 101 mcm 17% EBITDA made by: ~65% regulated and National player in the water semi-regulated 4° management with 2.9 million EBITDA FY 2023 inhabitants served activities 1.2 B€ ~35% unregulated activities (mainly energy National player in electrici
Slide 26: Investments and profitability by business unit
Investments and profitability by business unit EBITDA - EBIT M€ GROSS INVESTMENTS B€ 695 1.7 590 1.1 375 320 400 153 Networks 345 440 0.9 245 0.7 110 165 75 Waste 379 375 440 1.4 1.1 164 175 225 Energy 198 235 240 0.4 0.3 73 75 75 Market EBITDA 0.4 EBIT 0.2 Investments Corporate 2023 2027 2030 2024-
Slide 27: Regulated framework
Regulated framework WASTE INTEGRATED SERVICE GAS ELECTRICITY WATER AND REGULATED PLANTS Regulatory period 6 years (2020 – 2025) 4 years (2024 – 2027) 6 years (2024 – 2029) 4 years (2022 – 2025) WACC methodology 6 years (2022 – 2027) 6 years (2022 – 2027) 6 years (2024 – 2029) 6 years (2022 – 2027) u
Slide 28: Industrial KPIs
Industrial kpis 2023 2027 2030 Waste collected (Mton) 2.1 2.7 3.0 Waste treated in Iren’s plants (Mton) 2.7 3.9 4.4 WTE’s electricity sold (TWh) 0.5 0.5 0.8 Hydro production (TWh) 1.1 1.3 1.3 Solar and Wind production (TWh) 0.2 1.0 2.4 Thermo and CCGT production (TWh) 6.9 6.4 2.9 Heat sold (TWht) 2.
Slide 29: Business plan's energy scenario
Business plan’s energy scenario 2023 2027 2030 PUN (€/MWh) 127.4 98.6 94.6 PSV (€/MWh) 42.3 28.3 25.5 ETS (€/Ton) 83.5 102 116 Clean spark spread Iren 5.0 3.0 2.0 (€/MWh) INVESTOR DAY 2024 STRATEGY ACTION PLAN FINANCIALS ANNEXES 29
Slide 30: Networks concessions
Networks concessions GAS WATER ELECTRICITY CONCESSIONS CONCESSIONS CONCESSIONS ATEM EXPIRY AREA EXPIRY AREA EXPIRY Genova 1 Expired Piacenza 2040 Torino 2030 Parma Expired Reggio Emilia 2043 Parma 2030 Reggio Emilia Expired Genova 2032 Vercelli 2030 Vercelli Expired Parma1 2027 Piacenza 2 - Est Expi
Slide 31: Concessions
Concessions HYDROELECTRIC COLLECTION CONCESSIONS WASTE CONCESSIONS HYDROELECTRIC AREA POWER (MW) EXPIRY AREA EXPIRY PLANT Piemonte 1 Pont Ventoux-Susa 157 2034 Parma 2037 Expired 2010 Piemonte 2 Valle Orco e S. Mauro 300 Piacenza 2037 PPP proposal S. Lorenzo, Moncalieri, Expired Piemonte 3 25 >2042
Slide 32: Decarbonization
Decarbonization 2020 2023 2027 2030 332 Carbon intensity of energy generation (scope 1) (gCO2/kWh) 337 176 287 95% 100% Certified renewable electricity purchased (%) (target reduction emission scope 2) 0% 1% Use of sold 0% products (gas) -25% Emission scope 3 Fuel and energy related -13% activities
Slide 33: Circular economy
Circular economy 2020 2023 2027 2030 76,5% 74,6% Legacy regions 71,1% 69,3% Waste collection (%) 74,7% 71,0% 63,1% 60,6% Other territories 1.501 1.539 Material recovery from waste in our plants (kton) 836 492 28,9 28,9 Biomethan from organic 9,0 0,0 waste (mln mc) 20 Reuse of water from 10 purificat
Slide 34: Water resources
Water resources 2020 2023 2027 2030 4.265 3.527 3.970 Wastewater plants capacity (k equivalent inhabitants) 3.675 281 Water withdrawals from the environment 260 261 257 (liters/inhabitant/day) 33,3% Water network leaks (%) 30,4% Legacy regions 25,7% 20,0% 33,3% 31,3% All regions 26,7% 22,0% 85,6% 77
Slide 35: Resilient cities
Resilient cities 2020 2023 2027 2030 125 District heated volumes (mln mc) 101 118 97 44% Eco-vehicles on total fleet (%) 29% 19% 20% 3.000 2.465 Green electricity sold to retail 1.887 clients (GWh) 326 Energy saving from Iren 642 products/services (kTep) 543 338 71 35
Slide 36: People
People 2020 2023 2027 2030 Employment, development and +4.856 +5.559 +3.322 enhancement of skills New hires* (N.) 25 24 25 23 Training hours per capita (N.) 86% 93% 94% Employees evaluated on 54% performance** (%) Diversity & Inclusion 30,0% 26,5% 25,1% 22,8% Women in managerial roles (%) 56,8% ≥55,