Good afternoon. Welcome to 2022 earnings call. Zach, I will be your operator during this event. During the call, your lines will only be in listening mode. You will be allowed to ask your questions at the end of the presentation. Your intervention at any time requires you to select star and press one on your device. I hand over to Marco Porro, who will be starting the presentation this afternoon.
Good afternoon. Welcome to presentation of consolidated results of 2022. The CEO, Renato Mazzoncini, and the CFO, Luca Moroni, will recommend the results. I hand over to Renato Mazzoncini.
Good afternoon, everyone. Thank you very much indeed for participating in our call, presenting the results that we have just approved within the board of directors. As you know, we come from 2022, which has been a very critical year.
We are quite used to that. Another extraordinary year. Hopefully, in the future, the world will go back to normal. I need to tell you that we have had a sort of stress test as in 20 and 2021 concerning the pandemic effect, and it has proved that the company can react very well in pursuing the business plan despite external phenomena, unpredictable events. Most especially, if we could look at our business plan that we had launched, if you remember, in January 2021, we have already achieved in 2021 and 2022, 22% of our planned CapEx. If you remember, it was a very challenging plan, EUR 16 billion CapEx, with a significant growth concerning the historical track record of the company.
There were some doubts at that time about the viability of executing the plan by the company, and I think this has been overcome. 70% of these CapEx are fully consistent with the SDGs. I also need to tell you that we have good coverage considering the complex EU Taxonomy. You know that there is still an open debate, and there are several lobbies working on that. We have 58% of CapEx in 2022 fully in line with the EU Taxonomy. This slide shows that some KPIs, which have already been attained, +12%, that's the growth versus 2021 concerning installed renewable energy capacity. Concerning energy transition, there is an increase. We have two new primary stations. These are significant investments on our side.
Just to give you an idea, Milan is the Italian city with the greatest population density and electricity consumption density. It had 10 primary stations. Just to give you an idea of how much we have added by opening two new primary stations. An increase of our capacity of our electricity grid, which, as you see, accounts for a 370 megavolt-ampere, which means an increase by about 7%-8% of the installed power capacity, a significant one. You should consider that until 2030, the goal is to increase by about 70% electricity for E-Mobility, for electrification of consumption, for heat pumps, and so on and so forth. Also in the other ESG KPIs, like the number of female managers, we are also improving 2% more better than in 2021.
We are a company with many engineers, and this makes it difficult to find the right people in the pipeline. Most of all, when it comes to very technical skills in the field of mechanical engineering, electrical engineering, you can find few talented female engineers. Another very important aspect that I would like to draw your attention to relates to the fact that there has unfortunately been an increase in Scope 1 and 2, considering emissions. The grams of CO2 per kilowatt hour. This is a contingent phenomenon linked to the fact that in 2022, for energy safety in Italy, as in many other European countries, revamping of coal stations and fuel oil stations was compulsory, and we have two in the first category and one in the second one. The coal station had been phased out long ago.
The fuel oil was operating at low settings, and now they have been working more than expected. This is a temporary phenomenon, of course, most of all concerning the coal plant and the coal station. In the last few weeks, we have received the final authorization by Friuli-Venezia Giulia, which was actually the last necessary step to get the single authorization. Now we will have combined cycle with gas turbine on the capacity market. Some of the achievements can be seen on the left-hand side. Two new biomethane facilities, one in Lombardy, La Chiarella, and one in the Piedmont region. Very important to mention that A2A is a company of electron green and green molecules. Not only renewable energy sources, but also biomethane projects, tangible ones.
We have completed the large facility at Corte Olona, connected with the water cycles, wastewater, filtering and reuse. We have two new water filtering facilities in the province of Lombardy, covering the needs of 90,000 people. For renewable energy sources, as you know, we have completed the takeover of two wind energy portfolios from Ardian. 3New and 4New, increasing by 260 MW our current renewable energy capacity, the total installed capacity in this segment. If we look at the next slide.
The positive factors that have influenced 2022 have been first, were a strong contribution from the capacity market, thanks to the award of a generating capacity in the tenders held by Terna for about EUR 130 million, that are now a stable component in our EBITDA. The positive scenario factor on electricity and heat for about EUR 100 million. This is really a scenario-driven factor, which has entailed opportunities on the MSD market, ancillary service market, as a result of Terna's request. Ancillary services are continuing. Despite the introduction of the capacity market, there are still major opportunities. If you have the stations in the right place, in the right location, and you do good energy management. This year, they account for about EUR 50 million.
Also the trading portfolio, which typically for us tends to be quite flat, about 10-12 million per year, this year has recorded an excellent performance, a little more than EUR 50 million result. We have intercepted and made the best use of the volatility, and this thanks to the internal support of energy generation, and it's also a stand-alone component leading to this positive result. 3New and 4New for about EUR 40 million contribution to our performance. We are also happy of the minor gas ATEMs and property. We have built up a package, a bundle with a small gas grids that are part of ATEM, so minimum concession areas for future tenders, where we had absolute minorities. There we should have invested if we had decided to take part in these tenders.
This asset disposal can also lead to strategic effects, so considering also the grids where we are going to invest more in the future. On the negative side, we have gas margins on energy, on retail energy, but most of all on the market, shrinking by about EUR 80 million and a severe drought, which has led to 30% less hydroelectric energy production, a significant decrease with an impact of about EUR 100 million on the EBITDA. Negative impact of the Italian Authority ARERA regulation on gas, on gas and electricity, for about EUR 14 million negative impact. The government measures that we have been discussing during the year have had an impact of about EUR 122 million on the tax item, which has been offset by a one-off item, a non-recurring item, the gain realized on the sale of property.
I don't know whether you have already seen, we have an ordinary net income and a reported net income that are quite similar, because there is this gain on the sale of property and the losses that have been offset. There is a delta of about EUR 20 million between the two items. In this slide, you see the results. In such a year, these results are really results we can be proud of. We should not look at the growth in revenues. That is not a significant EBITDA. Both the reported and the ordinary one are on the rise, significantly on the rise, +8% ordinary EBITDA. We have exceeded EUR 1.5 million, and we have confirmed the growth path in the business plan that we have presented in January 2021. We also have good ordinary items, as you see.
A positive surprise has been the fact that the net financial position is not only under control, but in such a difficult year, it's very good. This stems from industrial operations and of a close monitoring. We have realigned the active cycle, so in terms of payment and disbursement conditions, and then the financial management, which allows us to start 2023 in a very safe position, also considering our investment plan. Now I hand over to Luca Moroni, our CFO, who will give you more details on this slide.
Thank you, Renato. Good morning, everybody. Also on my side, we've had a growth of 8% on ordinary EBITDA. You see that the growth is guided by generation business, followed by environment business, and only partially offset by a decrease in the growth in the market world, as we said. We will also have a look at details and also in the factor of Smart Infrastructures. We should underline that our business portfolio that is so diversified and balanced has allowed us also in such a challenging year to grow and also actually to damp down those risks, to alleviate those risks that in another situation actually would have generated a different volatility on the trend of results. You can see that the growth in generation is EUR 210 million, the most significant growth.
We see on page six, which was the cause of that. As a matter of fact, we have heard about the main determinants, and this is the CapEx contributes for +EUR 210 million compared to the EUR 30 million we had acquired. This becomes quite important pillar of the generation sector and the MSD, so ancillary service market, EUR 49 million growth. I'd like to remind you that this value for some years has been presenting quite significant figures. Within our objectives and goals, we actually reposition it with a lower figure. Quite well, the contribution of renewable sources, wind energy and photovoltaic, in the EUR for EUR 50 million, thanks to 3New and 4New.
All these positive results are partially offset by the quite important item of minor productions of hydroelectric production, with a lower amount of about, by about 36%. Very good, the trading portfolio that exploited positively the volatility of the market with a EUR 55 million contribution. Compared to a normal situation in quite stable markets, where the value has always been about no more than EUR 10 million. + EUR 14 million from the gas portfolio.
We see here that we can directly operate on the market, and we have seized the opportunity and data to actually buy at competitive prices, gas volumes that have remained in the available portfolio, in the trading portfolio, and therefore, sold to the market at values that allowed us to have some good margins, and this should be considered in combination with gas results. EUR 24 million of the cost increase partly due to perimeter delta, 3New and 4New for about EUR 7 million and about EUR 10 million for hydroelectric fee that have increased as a consequence of the price increase of the Q1.
What we have already told you during the presentation of the updating of the industrial plan is how there is a natural hedging coming from the various electric energy production sources that allowed the company to maintain, indeed, a contribution margin, which is quite stable, in addition to what we have been doing in new things, especially in the renewable energy sources. In the following slide, we see the market and indeed, first of all, I'd like to start with the gas market, with a negative contribution of EUR 83 million. Indeed, we have two main factors. First of all, the customers had a fixed rate contract with a certain estimated consumption, and then they had a higher consumption and also actually exploiting the possibility of a fixed rate, a flat rate.
They actually bought additional volumes with prices that were formed last year that we all know. The contracts with a two-year duration and at equal margins, they had a negative margin in the first year with a recovery in the following year, that is the 2023. Concerning the power market, we were able to mitigate the negative effects. Thanks to the fact that we have the, indeed, a generation and production business unit allowed us to be more flexible in this market segment, although there were some negative situations. We actually see the opportunity of improvement of EUR 28 million of contribution to the overall margin, thanks to a very good commercial campaign that we have actually carried out.
EUR 24 million operating costs, and these are mainly due to the activities on these networks. As you can see, an important element is that, with a first and second quarter that had negative margins, especially the first quarter, that was especially penalized, as we already told you, with the closing in September. We had a continuous recovery that expressed itself in the third and in the fourth quarters concerning margins for the retail sector. Our customers are about 3 million, with an increase of 153,000 customers during the year.
As we have probably already told you about at the end of last year, we indeed were with loads in the safeguard domain for an overall value of customers in addition to the 3 million of indeed 500,000 more customers to reach about 3.5 million customers. Page eight, we see the environmental sector with a different trend with the two segments. That is, collection and that actually suffered due to the price trend, especially for fuels, for fuel price. You know that this business segment is made of people and actually means going around the main cities where we are present with our services.
So far, these are still using a fuel, and they have suffered indeed from the increase in costs that has characterized the entire 2022. On the other side, we were able to exploit the energy scenario also on indeed the WtE field. We also had other urban waste treatment plants that were part of the business perimeter of the group. In particular, there's a plant in Sant'Agata di Puglia, actually allowed us to reach EUR 6 million to the perimeter of the consolidated. The business unit closes with a EUR 350 million ordinary EBITDA, and we should actually specify that treatment plant prices actually keep a positive trend in the period of the last three years. For some years, we have been witnesses.
There's a price trend which remains positive, also as a result of the fact that in Italy there is a deficit in plant infrastructures, and therefore those who own the plants have a quite good competitive advantage. On the other side, the trend of fuel prices, you see, has significantly increased. Let's now look at Smart Infrastructures at heat and grids. As we have already seen during the last quarters, we had started with a decrease in remuneration on grid business, gas and water cycle from 5.9 to 5.2 WACC.
For gas from 6.3 to 5.6, more or less of the same on the water cycle. This has had a negative impact at the onset. Energy cost has been the other important element impacting negatively on overall costs in reporting. Conversely, we have had the opportunity to see the positive opportunities in heat generation and there have been also some contributions, positive contributions, thanks to government interventions of EUR 25 million in total, three forecast Smart Cities and EUR 9 million, thanks to the good performance in public lighting, which is also receiving the opportunity of this energy scenario. These are three positive drivers offset the negative drivers that I have described when talking about grids. What has happened under EBITDA? That's slide 10.
We have amortization and depreciation in total for EUR 726 million and an increase by about EUR 30 million due to investments from a previous financial year and CapEx and investments during current year, EUR 30 million, EUR 26 million to be more precise, concerning the perimeter delta. We have EUR 92 million of provisions for bad debts that are also stemming from the scenario evolution. I would like to highlight a very important fact that our customer base is very solid, very sound. We haven't seen any deterioration in the delinquency ratios. We are quite confident that this provision, this value of provisions for bad debts is extremely prudent if the outlook is confirmed.
As to financial charges, there has been an increase compared to the closing value last year, around EUR 70 million, EUR 72 million, and this is linked to interest rate performance. Net operating result, EUR 600 million. We have another positive factor. Tax rate, 29% versus 30.5% the previous year. We have seized also in this case improvement and streamlining opportunities of our tax impact, leveraging on all the drivers on also financial lows in Italy to get to our results, deducting the minorities of EUR 47 and EUR 380 million ordinary income with a total value of special items, i.e. no recurring items of EUR 21 million.
A net effect of the gains arising from the sale of property in Porta Vittoria, and the transfer of gas ATEMs, minor non-strategic gas ATEMs, offset by the extraordinary contribution of EUR 122 million extraordinary taxes. As to CapEx, I had already alluded to them at the beginning of this call. I will be faster. That's the engine of our growth, of the growth of our EBITDA and of the growth of the bottom line, +15% versus 2021. As you see the slide on the left-hand side, we have a cap maintenance CapEx that are aligned with last year. Development CapEx have recorded a +26%. Growth therefore continues at corporate level, at industrial level, with new facilities, new plants, and it.
You see on the left, we have a nice balance in the various factors, with grids that in absolute values take the largest share, and generation is growing most compared to 2021. We are in a situation where we have a growth. You see the CapEx growth versus amortization, very high, about 160%, 170%. This tells you a lot about increasing value of our assets and their ability to generate revenues. Of course, we have 40% Circular Economy and 70% of CapEx, 60% with energy transition. You have already got the breakdown for SDG targets and EU Taxonomy. Cash flow, the slide you see reflects the very positive result that we have recorded through our attention of the cash flow.
We have had an adverse scenario which has determined an increase in credit evolution also because of Italian government measures. Payments by installments that the customers could make, zeroing system charges. These are, of course, two drivers which have a direct effect on the net working capital. Of course, also the inventory has been affected by that. We have been able to offset proactively all of these variables, also thanks to a dynamic management seizing rebalancing opportunities. Payment charges and collection charges. We have leverage on payment charges by directly negotiating with counterparties for procurement of commodities. This has enabled us to have a positive contribution thanks to working capital, about EUR 160 million, which has in fact almost completely offset the outflows for financial charges and taxes.
The operating lever of EUR 1.5 billion has been reduced by EUR 17 million.
Hello? Hello? Hello?
The growth through external levers, EUR 331 million. Without this component, with this extraordinary component, which will anyway guarantee forward-looking cash flows, we have had positive flows for EUR 127 million. We have very positive metrics because the net debt on the EBITDA has a ratio of 2.8x, even better than previous year when it was 2.9. We have a reported result of 23%. To close this part, we can summarize by saying that we have attained very good results. We are proud of them. Also, in terms of marginality, we have exceeded the EUR 1.5 billion EBITDA for the very first time.
We have beaten the CapEx record, and they both stem from our business plan, from our planning in a clear direction. The group is sound, is well addressed towards ecological transition. The very fact that there has been an increase in the quantity of renewable energy, + 12% year-on-year, is quite significant. These conditions have enabled us to propose a dividend of EUR 0.0904 per share. Considering the dividend policy that we have communicated in the business plan, this policy is confirmed. Non-recurring is growing by 3% from... There is a non-recurring component, which allow me to say is the net positive balance of the two extraordinary items we have recorded through sale of property and extra earnings.
The little that we have considered to distribute, to pay out a part of these earnings in form of ordinary dividend. Because we have closed the net financial position positively, and this allows us to have a positive outlook and guidance for 2023, which is described here with an EBITDA between EUR 1.6 billion and EUR 1.64 billion, significant growth versus 2022. Thanks to the evident industrial effect, the energy scenario might be decreasing. The energy effect could indicate the opposite direction. This reflects the result of investments we have performed with a net ordinary income, once again, that we imagine to be increasing versus 2022, will within a range between EUR 390.
Thank you very much. Please, you can actually make a question entering star on the keyboard of your phone. We have a question from Mediobanca .
Yes. Good evening, everybody, and thank you very much for the presentation. I have some questions in data. The first question with regard to the 2023 guidance. The company presented the business plan in November, and at the time you were talking about when EBITDA EUR 1.6, whereas now it is a little bit higher. Can you tell us your reasons underlying this increase in the guidance of EBITDA compared to what you said in November 2022, whereas the net ordinary income remains more or less at the same level.
I'd like to understand the rationale of the increase of the EBITDA, whereas the net ordinary income is the same. Concerning the 2023 guidance, I was wondering how you are experiencing the impact of growth that continues to be quite significant and indeed a reason of concern. We see this also for 2023. What are you feeling as an additional impact of this for.
Hello, can you hear me? This time, and also last year, the dividend was higher than expected, thanks to those special items. Can we assume that those special measures and capital gains of the company on whatever disposal could be something that actually increase the ordinary income so that this is the company's policy to distribute this also among actually its shareholders.
The last question is on the structure of the 2023 guidance, and not only in terms of EBITDA and net ordinary income, but also in terms of CapEx and in terms of net EBITDA. What are you thinking about CapEx for 2023 guidance? The last question on capital gain, can you tell us some more details on capital gains and why there is such a positive contribution in the working capital increase?
Well, first of all, I'm quite happy that you could make more than three questions this time.
First of all, with regard to the business plan, when we presented the business plan in November, you may remember that of course, the request and indication on the part of the analyst concerning the EBITDA outlook, there was a question, and we gave an indication of EUR 1.6 billion. You actually forced us to say this, so we wanted to be more cautious. Of course, we had to answer the question. That was the indication. Now we have more data, more functional indications, so we believe we can actually provide a higher guidance for the year 2023. The effects are related, if you compare this to 2021. The effects are related to an energy scenario, and we are talking about hydroelectric and hedging, and of course this has quite good price.
The market in 2023 actually has a good recovery compared to 2022. We had an imbalance due to the two-year contracts where a loss that we recovered in 2023. That had a positive impact. Of course, concerning the EBITDA, the entry of renewable sources of the 3New and 4New portfolio and the two biomass plants activated in October 2022, the WtE biomass plants that we have activated. Also our other initiatives. We believe nowadays actually that this guidance is absolutely a robust guidance. Concerning the impact of drought in our outlook today, we are actually considering a situation that is for sure significantly lower than the historical average. That was a 4.4 kWh, and we should produce a 3.5 kWh.
In 2022, we produced 2.7 or even a little bit more. There is a potential risk under this point of view, yes. As you may remember, in our assumptions for the plan of 2023, there was a prudential assumption. Answering the question concerning government measuring, actually thinking about an increase of the cap to EUR 58. Now we have a restabilization of the energy scenario. We're not expecting we as the rest of the sector as well. Also concerning, Confindustria, we are always there, we talk about this, and this is also the result of a continuous dialogues and conversation we have with the various stakeholders. We are expecting that the price cap remains. They should not actually go down.
We were expecting about EUR 180 at a European level, but we are not expecting a continuation of the measures that were introduced in the previous years. We don't think there is a sense for that. Hydroelectric has a good, actually, coverage values concerning the price and not so much the amount of energy produced. In our outlook, when I'm talking about EUR 1.64 billion, we are also imagining a drought risk that could go below 3.5 as the actual production. Concerning the dividend, no, we cannot assume since this is a quite special item, a non-recurring item that should be evaluated from time to time. We need to consider various reasons that could bring about different choices and decisions.
The policy, the dividend policy with the 3.5% per year is confirmed. In the next few years, there will be a payout ratio that is decreasing, but consistently with a growth in investments, to actually reach the level we said by 2030. I like to just add a couple of things, to complete what indeed has been said by engineer Mazzoncini concerning the upside, concerning the margin recovery. We had talked about during the presentation of the plan concerning the two-year contracts. I like to mention a couple of things that are quite important.
The very good performance of the campaign at the end of 2022, beginning of 2023, and also the various tenders I was mentioning before that we were able to win both in Safeguard policy and the Gradual protection that give us an upside on the market part. Concerning the Safeguard policy, as you know, that is a well-known market, the one regulated by the Safeguard measures. Apart for indeed the provisions for bad loans, of course, those are not very good paying people. Probably we have actually been quite cautious for the effect on the net income.
As to the performance and what we expect concerning the working capital and as a consequence of that, the level of debt, we expect to comply with the guidance that we had communicated, so below 3x , considering the ratio, working capital, EBITDA. This is a commitment on our side. We have committed to attain that, and we will do whatever we can to comply with it. Talking about working capital, we have managed to see the set of opportunities, shifting some way operations from platforms, where you have to pay at 10 days on an average, towards bilateral contracts, where we can negotiate different payment terms when procuring raw materials with longer payment terms that have been negotiated. And this has enabled us to better balance and offset the performance, so we have more alignment between cash in and cash out terms.
We have also been working on credit collection timing. We have launched a campaign, and we have been able to reduce some payment terms, and this, of course, goes to the benefit of the working capital. These are the two main reasons or the two main levers we have been working on, and there will still be elements that we will monitor very closely also in 2023. I don't know whether I have answered to all of your questions.
Thank you very much indeed.
Yes. Next question, Stefano Gamberini, Equita.
Good afternoon. Thank you very much indeed for answering to my question. A question about your guidance. Hi, this is an operator. Can I have your name, please, and spelling? Hello, can you hear me?
If I deducted the cap in the second half of the year, and if I thought of selling at EUR 150 the hydroelectric energy.
There would be an increase of EUR 100 million, EUR 120 million, EUR 130 million. Where does the difference lie, considering that you have also drawn our attention to the fact that in the field of energy sales there is a situation which is above expectations. A second question about waste. Looking at the slide that you have presented, slide number eight, I have seen that urban waste treatment plans have recorded an increase by EUR 30 million, so 47 or in nine months. What has happened? Most of all, can you help us understand what we can expect in 2023 in terms of waste business unit? You have highlighted that there is still a very strong price effect. What can we expect in 2023? Third question is on two general topics.
First one, can you comment the proposal by the EU concerning the market design? How do you consider it? Do you believe that this can lead to great.
Please enter your conference PIN followed by the hash or pound sign. Welcome to your conference. Please enter your conference PIN followed by the hash or pound sign. Welcome to your conference. Please enter your conference PIN followed by the hash or pound sign.
We have a pipeline of 1.8 GW of renewable energy with a different level of maturation as it should be. This is the result of a selection of over 5 GW of projects. We imagine a success rate of at least 30%-35%. The target for us is to have always in the pipeline at least 1.5 GW, as to have 0.5 GW to be developed during the year. Now we are building some plants. The two most significant ones are a wind plant in Sicily, in the area of Marsala. It's in the area of Matarocco, eight plants of 30 MW. Vestas blades, 3-4 MW each. They're a modern plant in an area where there is much wind. The other project is in Friuli-Venezia Giulia, in Santo Stefano, in northern Italy.
The largest photovoltaic plant in northern Italy, with about 60 MW of installed capacity. This allows me to share some reasoning about prices, because it's true that prices for raw materials have increased, both for panels and for blades. We have an increase by about 20% versus 2019, but the energy scenario has changed. What we should keep in mind, the net of the significant investments announced by Terna yesterday or two days ago, is that prices are very local, are regional, because the grid is not able to provide enough energy from Northern Italy to Southern Italy. There are some areas in Northern Italy that are really very attractive for that reason. Even if in July we will have 1,300 hour of operations of production, a different value for Sicily.
We expect great profitability of these plants because it's not possible to transport energy in Italy. From Northern Italy to Southern Italy, there are many bottlenecks. We have 5 GW capacity between Northern Italy and Southern Italy. We should have 30 to get this flow of energy from Southern Italy towards Northern Italy. This is the reason why Lombardy, with 3.1 GW of photovoltaic energy capacity installed, is the first Italian region. We therefore have different projects in the pipeline, and we have developed this pipeline mechanism which will feed, in the next few years, greenfield installations that we have in the plan. As to the debt, as you know, we have issued a green bond at the beginning of the year. We have done some refunding.
We don't have significant maturities during the year, only towards the year-end, about EUR 300 million maturities, so we are quite liquid. The cost of debt that we envisage is 2.7%, which is in line with our forecast when we had stated, when we had presented the business plan, so 3% in 2026. Maybe we will manage to perform slightly better because of the bond we had issued had a slightly higher yield, so slightly above preliminary assumptions. Also, thanks to the market scenario, which has, in the meantime, probably changed. Thank you very much indeed.
If there are no further questions, I hand over for the conclusion of the meeting.
Okay, thank you very much indeed for the participation. Marco Porro with his team will be glad to provide you follow-up information.
Thank you very much indeed, have a nice evening.