Hera and A2A, more investments to increase network resilience

While unfortunately the increased demand for electricity for cooling and the overheating of the underground electricity cables of the low- and medium-voltage grids are causing blackouts like wildfire in various parts of Italy (55.85 GWh of electricity demand touched on 1/7/2025), the companies operating the energy grids in our country are trying to run for cover with increasing investments in grid modernisation and green transition.

Among the leading Italian operators in the sector are A2A and Hera. The Lombardy-based group saw revenues rise by 16% to EUR 3,968m in the first quarter of 2025, thanks to the consolidation of Duereti (acquired from Enel at the end of 2024), but also to higher unit prices in the Retail and District Heating segments. However, ebitda, ebit and net profit decreased by 4% to EUR 675m, 11% to EUR 415m and 13% to EUR 257m, respectively, due to the lower hydraulicity of the period, as well as the increase in depreciation and amortisation and financial expenses related to the investments made (in addition to the acquisition of Duereti). Hera, for its part, saw revenues jump 28.3% to EUR 4,321.3m as at 31/3/2025, due to the rise in energy commodity prices and the 20% increase in the number of Energy customers, in addition to the increase in turnover in the Environment and Public Lighting areas.

Budget numbers.

Ebitda stood at EUR 418 million (+0.2%), Ebit at EUR 247.2 million (+0.5%) and net profit, thanks to a lower incidence of financial charges, at EUR 153.7 million (+7.4%). Both A2A and Hera showed costs for raw materials and materials rising more than proportionally to revenues (respectively +22% to €2,979m and +47.4% to €2,714.5m). For the current year A2A estimates to achieve an ebitda between 2.17 and 2.2 billion and an ordinary net profit (not considering non-recurring items) between 0.68 and 0.7 billion. A2A's recently updated Strategic Plan 2024 - 2035 envisages reaching ebitda of EUR 2.4 billion in 2027 and EUR 3.3 billion in 2035, and ordinary net profit of EUR 0.7 billion and over EUR 1 billion respectively. Hera, in its Industrial Plan to 2028, believes it will reach an ebitda of 1.7 billion, an ebit of 911 million and earnings per share of 34 euro at the end of the Plan.

This is in the presence, for A2A, of total investments of 22 billion in the period 2024 - 2035, of which 6 billion for the circular economy and 16 billion for the ecological transition, while for Hera, investments 2024 - 2028 should amount to 4.6 billion, of which 2.2 billion for maintenance, 2.4 billion for development (including 0.3 billion for M&A operations). Both groups have indicated a gradually increasing dividend policy.