By Jonathan Loades-Carter
Enel, Italy's biggest utility group, said on Thursday that last summer's sale of half of the country's national power grid had bought a sharp jump in its annual profits.
The state-controlled former monopoly reported a 36 per cent rise in net profits to €3.4bn, while revenues increased by 16.5 per cent to €36.5bn.
The bottom line was boosted by €1.7bn of proceeds from the sale of 50 per cent of Terna, which runs Italy's national grid, in an initial public offering last summer. Enel also benefited from €1.1bn of compensation from the Italian government to reimburse it for unprofitable decisions made when it was entirely state-owned.
Despite the higher profits, Enel froze its annual dividend payment at 36 cents a share - the same as 2003's payment - although the company said it expected to pay at least that amount for 2005. The final payment came in addition to the return of 33 cents a share to investors in November following the Terna sale.
Enel is selling out of Terna after its voting rights were capped by the Italian government, which is hoping to encourage competition in the sector. Last week, the company, which still holds 50 per cent of Terna, said it would sell a further 30 per cent stake to state-controlled investment group Cassa Depositi and Prestiti. Then on Wednesday it announced it was divesting another 14 per cent.
Paolo Scaroni, chief executive, has delivered the proceeds of recent sales and other exceptional gains into the hands of shareholders in a bid to woo them and boost Enel's share price ahead of further privatisation of the utility.
Italy's finance ministry announced last week that it would sell a further 10 per cent of Enel by September in order to reduce the country's debt burden - reducing its stake to about 20 per cent.
The sale is expected to raise in the region of €5bn and will be the fourth time that Silvio Berlusconi's government has dipped into its holdings of the Rome-based company.
(euro2day)