The board of directors of Edison examined the interim management report as of March 31, 2022. Faced with the recovery of industrial activities after the restrictions imposed by the pandemic, there was a sharp decline in profits as a result of the application of the “Price cut” decree he was born in Supports-ter (March 2022) and del Supports-ter (law 28 March 2022).
In particular, in the first quarter of the year the gross operating margin (Ebitda) rose dthe 105 million eurosequal to an increase of 41,7% compared to the same period of 2021, thanks above all to the contribution of thermoelectric production, gas activities and some non-recurring effects. This result more than compensated for the decline in hydroelectric production, which suffered from the low water supply in the period, and the negative impact of the price increase on the margin of sales to end customers: in this scenario of price increases, Edison took action to protect customers who weighed on profitability
of downstream activities.
The net financial position as at 31 March 2022 shows a liquidity of 226 million euros (debt of 104 million euros at 31 December 2021). This result reflects the positive cash generation of operating activities, against investments to strengthen the energy transition businesses.
Context of reference and performance of the energy market at 31 March 2022
After the health emergency that dominated 2020 and 2021, are the geopolitical tensions following the invasion ofUkraine by the Russia to have a heavy impact on the economic context. The worsening of the Russian-Ukrainian conflict has accentuated the volatility of raw materials, especially energy, causing them to rise further and increasing inflationary pressures with the consequent repercussions on household and business expenses.
In the first quarter of 2022 the demand for electricity stood at 80.3 TWh, marking a growth of 2.5% compared to the same period of 2021 when the restrictive measures for the containment of the coronavirus were still in force. In terms of production, thermoelectric generation grew to 52.1 TWh (+ 17.8%), making up for the sharp drop in hydroelectric production (-44.2% to 5.8 TWh) and the decrease in imports (- 20.6% at 9.6 TWh). Other renewables are growing: wind generation marks + 11% (6.8 TWh) and photovoltaic generation + 10.9% (5.3 TWh). Overall, domestic production contributed about 88% of the total electricity demand. In terms of prices, in the quarter the Single National Price (PUN) stood at an average value of 249.3 euro / MWh, a value four times higher than in the first quarter of 2021 (59.3 euro / MWh).
More content the increase in gas consumption, which mark a + 1.2% to 25.5 billion cubic meters. Thermoelectric uses grew in the period (+ 11.6% to 7.2 billion cubic meters), while residential consumption was stable (-0.6% to 13.6 billion cubic meters) and industrial uses decreased (- 7.8% to 4.3 billion cubic meters) due to the worsening of the economic and energy context. In terms of prices, spot gas in Italy in the first quarter of 2022 stood at an average value of 103.7 euro cents per cubic meter (in the first quarter of 2021 it was 19.8 euro cents per cubic meter). The rise in prices is due, as mentioned above, to a strong volatility of the European gas markets following the tensions
geopolitics and the growing uncertainty about Russian pipeline supplies. The same trend also applies to oil prices, which in the first quarter of 2022 had an average value of $ 97.3 per barrel, an increase of 59.3% compared to the same period of 2021.
Forecasts
The current context, characterized by very high volatility in commodity prices and with some regulatory interventions on the energy sector in the process of being finalized, does not yet allow us to indicate an annual Ebitda forecast. However, the company believes that its industrial performance should remain close to that of the year 2021.
Main events that occurred during the first quarter of 2022
January 20, 2022 – Edison completes the purchase of 100% of Energia Italia, a company which owns 10 mini-hydroelectric plants located on the major irrigation channels in Piedmont. With an installed capacity of over 30 MW, the 10 plants produce more than 80 GWh annually.
February 24, 2022 – Edison announced that the Standard & Poor’s rating agency confirmed the long-term rating of the company at BBB and that it revised the outlook to negative from stable, following the downgrade of a notch to BBB with a negative outlook of the parent company EDF. While noting the solid results achieved by the company in 2021, and in particular the 45% growth in EBITDA, the S&P methodology limits the rating of
Edison to that of its parent company EDF, given Edison’s strategic importance as a development vector in Italy, a priority market for EDF.
Edison also announced that Moody’s Investors Service has lowered the long-term rating of the company to Baa3 from Baa2, with a negative outlook, for similar reasons following the downgrade of a notch with a negative outlook of the parent company EDF. Both S&P and Moody’s noted Edison’s strong operating performance, its solid credit metrics, its improved risk profile and progress in strategic repositioning.
Main events occurred after March 31, 2022
April 1, 2022 – Edison, Italgas and Marguerite have signed a binding agreement with which Edison acquires a majority stake in Gaxa, a company 51.85% owned by Italgas and 48.15% by Marguerite, active in Sardinia in the marketing through natural gas, LPG and propane air for civil uses. The new shareholding structure of Gaxa will consist of Edison with 70%, Italgas with 15.56% and Marguerite with 14.44%. The transaction strengthens Gaxa’s commercial presence and development prospects in consideration
of the important investment plan for Sardinia promoted by Italgas with the construction of new “native digital” distribution networks.
April 4, 2022 – Fenice Spa, a wholly owned subsidiary of Edison, and Citelum SA (part of the EDF group), a group active in the sector of lighting services to the Public Administration, have signed a binding agreement for the acquisition by Fenice Spa of the entire capital of Citelum Italia Srl. The completion of the sale is expected within the second quarter of the year. The acquisition of Citelum’s Italian and Spanish businesses will allow Fenice to expand its offer in the energy services business for the local area and cities, and to develop important synergies with Edison’s activities dedicated to energy services for the energy transition and decarbonisation of territories and cities towards the smart cities of the future.