Hera, focus on electricity and gas sales. More plants for waste

In company presentations to the market there is always some table that is more useful than others. Or, if you like, that allows you to better grasp some of the main business development strategies. This is also the case for the 2024-2028 business plan of Hera. Among the many graphs presented by the multi utility - which Lettera al Risparmiatore heard from top management - the one showing the contribution of the different areas of activity to the expected increase in profitability is interesting. In particular, to the target - which the group confirms - of about 1.7 billion Ebitda at the end of the business plan. Well: the greatest 'help' in terms of structural growth - that is, without considering the impact of one-off items - comes from the Energy sector (+177 million Mol). This is followed by Networks (+155 million Ebitda) and Environment (+136 million).

With such numbers, it is clear that a priority - for the multi utility - is the sale of gas and electricity. Here the focus is on customer growth. The target, again in 2028, is around 4.5 million customers. However, at the end of the first quarter of 2025, customers stood at 4.63 million. In other words, the numerical target has already been reached. Can Hera, therefore, sit on its hands? The answer is negative. First of all, it should be recalled, the numerical leap is essentially due to the assumption - by the multi utility - of about one million units in the wake of the end, in 2024, of the protected market for domestic electricity customers. These are users that Hera has also won thanks to a discounted contract, which is scheduled to expire on 1 April 2027. It is clear that, at that time, on the one hand the pressure on customers to leave will be greater; and, on the other, the group will have to have succeeded in further strengthening the loyalty rate of those customers. It is a process - the latter - that the company emphasises has been in motion for some time. The group, in this sense, indicates that it has a lower churn rate than the industry average in Italy. The result is the effect of, among other things, the commitment to efficiency and the activity offered to customers. Not only cross-selling. But also, for example, the proposal of diversified services: from forms of insurance to energy efficiency solutions (through company ESCOs) to the installation of solar panels. So much so that, precisely on the last topic mentioned, Hera expects - by 2028 - to install around 300 megawatts of photovoltaics. Of which, albeit a small part, are to be attributed to retail users.

All roses and flowers, then? The reality is more difficult. Saver points out that in the first quarter of 2025, the Energy division was marked by a drop in EBITDA. A trend that leads one to think there is a risk of reaching the plan target. Hera, although aware of the situation, calls for a more detailed analysis. First of all, it is stressed, the trend described is the effect of one-off events that will - for the most part - be accounted for in 2025. Without considering such situations," Hera says, "the trend in the first quarter corresponds to a structural increase of 6%. That is: a rise not too far from what was forecast in the plan (Cagr of 8%). More. The multi utility points out that - precisely - in April 2027 the discounted contracting will cease. At that point, customer margins - marked by that type of agreement - may improve. True! Loyalty activity is fundamental. And yet - relying on Hera - in its ability to retain customers, Ebitda at that time will only benefit. Not only that. The group claims that taking on the new customers was, in any case, achieved at a lower cost than would have been the case with normal shopping. While the company estimates that Mol in Energy will be lower at the end of 2025 than in 2024, it also confirms its target of 576 million Ebitda to 2028. Having said this, however, a further objection can be made. The increasing presence of low-cost operators in electricity can - potentially - take away users. Which is a problem. Not so, retorts the multi utility. That of newcomers is not a phenomenon of today. Hera, which points out that in the last 15 years its market share in gas and electricity has risen from around 1% to 8%, says it is absolutely capable of taking the measure of market evolution.

So far, some considerations regarding Energy. There is, however, also the Waste sector. Hera has various strategies in this division: from pushing the remediation sector to focusing on the plastics cycle and continuing to exploit the industrial waste business. In general - along with continuing along the path of the circular economy - the multi utility has a major investment programme to expand its plant base. In this sense, for example, the expansion of a facility for the treatment of special waste is planned for the current financial year. Not only that. Also this year, on the one hand, there was the start-up of the carbon fibre recycling plant; and, on the other, the soft plastics facility in Novara is underway. Other operations are also planned. This is no small commitment, so much so that the business unit's estimated Capex to 2028 is about 1.1 billion. Nevertheless, the saver underlines a problematic issue. Namely: Italy is characterised by weak industrial production. This is a context in which, as less waste is created, Hera's specific business may suffer. The group dismisses the concern. First of all, it is reminded, the plant base in our country is not sufficient to handle the supply of industrial waste. Consequently, should the drop be significant, it would be the facilities abroad that would be affected. Moreover," says the group, pointing out that it has a market share in the broader waste sector of around 10%, "the multi utility offers all-round services (e.g. on-site treatment of bilge water in shipyards). This, Hera concludes, is an additional feature that allows it to be more attractive to customers and, therefore, more resilient to industry dynamics in Italy.

Yes, in Italy. But what are the prospects on the network front? Here one focus is on the water cycle. Among the various targets, one may recall, the reduction of network losses and less urban drainage. On the electricity network, on the other hand, there is - together with the objective, across all pipelines, of making the infrastructure resistant to extreme events - the desire to enable - even in the face of the electrification of the economy - the provision of more power. Thus, among other things, the group aims to increase the capacity of the connection cabins between Terna's transport network and Hera's own distribution network by 30%. Finally, with respect to the gas world, the digitisation of the pipeline is underway - not as of today. The activity, on closer inspection, is transversal to all networks (about 200 Capex to 2028). With reference to gas, the target - on which Hera indicates it is in line - is to reach (again in 2028) 97% coverage with digital meters. Those smart meters (second generation) that in electricity should, instead, reach 92% coverage. Aqueducts, on the other hand, are further behind: at the end of the plan period, the forecast is to achieve around 642,000 digital meters, for a coverage of over 40%.