A2A SpA Q1 2023 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Stefano Gamberini - Equita SIM S.p.A., Research Division - Analyst : The first is about power generation. What are the margins on CCGT. Congratulations to EUR 32 per megawatt hours. Do you have pressures on these margins? That's a question. Can you see maintain certain levels on the market? Or is there any recurring element and the market has changed of the prices last year? Again, on power generation, I'd like to know more about the prices of renewables. It's mid-May. They should expire in June. Do you have the feeling that the government is moving somewhere? Is it going to somewhere? Or what are the different scenarios that we can expect? The disappearance of a cap in June, the possibility to increase to EUR 180, which would be very high as compared to the current market or somewhere in between. As to sales safeguard EUR 20 million in the quarter means EUR 80 million over the year. It sounds like a big amount. And then what can we expect from April. But especially for January. In your plan, you see a strong growth in the results of this division. In April, you're going to have these new customers? In the -- from the liberalization of the market from small- and medium-sized customers. In January, there will be probably the tender, the actual tender. Do you have any new updates? Is the authority starting to regulators for the tenders.? So can you help us understand the whether January could be the turning point for you to achieve your target set out in the plan for this division? And then I have two more questions, if I may. One is about waste. We have a slight first quarter and the target is EUR 13 million over the year. Is this confirmed? And what can we expect in the next quarters? If I'm not wrong, last year, we had positive impacts of the prices from power generation also in this division. So can you outline the elements and how can they be compensated? And then M&A is the next topic. Do you no longer have the exclusive power exclusive contract, what happened? Why? Did you find it different from what you expected? Is it a blurred acquisition? Or are you still running for that? And what are the latest M&A options, the leverage is under control. The CapEx is about EUR 1.3 billion. So I'm thinking of ages but maybe that's further down the line. Is there any other deal in addition to (inaudible) that may come to surface during the year? Unidentified Company Representative Hi, Stefano. I will give some answers and Luca will give the others. As far as the cap is concerned, we are keeping the cap at EUR 58 for the second half of the year. If you're asking me how realistic I believe is going to remain, so I'm saying not really. We don't have a clear sentiments on that. I don't know what will happen to that provision. The work carried out by the European Union to reach a flat cap talking about the EUR 180 Europe that you mentioned, that's totally in contrast with the EUR 58. Today, we are much lower. Actually, and one of our forecasts indicates that the prices should increase above EUR 150 over the year. However, you're asking me whether this regulation can be replaced by something else? Well, the answer is I don't know. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 11, 2023 / 2:00PM, A2.MI - Q1 2023 A2A SpA Earnings Call In the next few days, we are going to pay a significant amount of extra profit, and we hear the government talking about bank extra profits and so on. So we believe that being cautious with our accounts at the moment on renewable power generation still the way to go. So if we decide to use this provision, we can do it during the 6-month period during the presentation of the 6 months results. On CCGT margins, Luca, do you have any update?

Question: Stefano Gamberini - Equita SIM S.p.A., Research Division - Analyst : A short comment on the statement you made before on financing (inaudible). But if you do so, you're going towards tender and not towards an extension and towards investment or did I get it wrong? I'm talking about electricity concessions. While the extension, as a result of investments, it's not easy to achieve, in my opinion. Unidentified Company Representative Exactly. Because it would be against the provisions of the law decree for the (inaudible) competition, which is one of the reforms that was negotiated by our government for the PNNR, negotiated with the European community. So the possibility to remove hydroelectric concession will go through a broader negotiation on PNNR having our concessions as priority. They are very important. But if you look at the overall picture, yes. So what is the benefit? What is the benefit of the finance and parts mechanism if you have a motu proprio, the incumbent manager. And on the other hand, a contracting entity of public interest that organized as a tender. And the fact that you have a right match, you know the concession and you know what investments need to be carried out to your offer investments that are consistent with the situation. You can also propose a remuneration mechanism to concessions or whatever to the (inaudible) authority. But on the other hand, when you participate in a tender is a full tender. But since it's based on your project document, allows you to have the right -- the preemptive right on the proposal, which is the path that many of following today. Have I answered your question?

Question: Stefano Gamberini - Equita SIM S.p.A., Research Division - Analyst : I understand. Unidentified Company Representative We'll see how it goes. Thank you very much.