Good afternoon. This is the Chorus Call operator. Welcome to the presentation of the results of ACEA as of March 31st, 2026. Let me remind you that all participants are in listen only mode. After the initial presentation, there will be an opportunity to ask questions. If you need assistance from an operator during the conference call, please press star zero. Let me now yield the floor to Mr. Dario Michi, Head of Investor Relations of ACEA. Please.
Thank you. Good afternoon, welcome to the presentation of the results of the first quarter of 2026 of the Acea Group. Pier Francesco Ragni, Co-General Manager, and Valentina Bracaglia, CFO and Planning and Control Manager, will give you a detailed illustration of our results. Let me now yield the floor to Mr. Pier Francesco Ragni, the General Manager.
Good afternoon, everyone. As usual, let me give you some information on the regulatory environment. In water, the main tariff approvals under MTI 4 have been completed by local authorities, and ARERA is about to finish the whole process to approve all group operations by Acea. As far as grids are concerned, we expect the professional provisional reference tariff for 2026 for grids to be published in May, this month. Whereas, the final 2024 reference tariff was published in March this year. As for commodities, in the first quarter of 2026, the energy prices and gas prices are decreasing versus the same quarter of 2025 by 6% and 14% respectively. The opposite is happening with consumer prices that are increasing by an average of 1.5% this quarter.
As to 2.8%. As to the group's results for Q1 2026, we confirm a robust performance, operating performance. Organic pro forma EBITDA is increasing by 4%, this growth is virtually all driven by regulated businesses that now account for about 95% of the overall group. We also point out that organic EBITDA in the first quarter of 2025 was adjusted to include the effect of the new perimeter, meaning the sale of High Voltage to Terna, photovoltaic and Publiacqua, which we will discuss in detail later on. Organic net income has double-digit growth, which is about +14%, it also shows the improvement of operating performance. As to CapEx net of grants and public contributions increased by about 18%.
These investments are mainly going to support the regulated activities to support infrastructure, sustainable long-term development. Operating free cash flow is about EUR -91 million. This allows us to keep a robust financial structure and net debt every day pro forma ratio, which is stable at 3.3x , which is in line with the end of 2025. As I was saying, the first quarter results are perfectly in line with the whole year guidance we provided when we first published our data in 2025. As I already said, pro forma organic EBITDA is increasing by 4% over year, up to EUR 344 million. This result is in line with the year-long objectives, it's mainly driven by regulated businesses.
CapEx net of grants is EUR 286 million, up 18% versus last year. Considering the CapEx with grants, the overall CapEx is up to EUR 302 million. Organic net income, as I said earlier, is up 14% versus the shifting from about EUR 5 billion as of December 31st, 2025 to EUR 5.1 billion as of March 31st, 2026. On a pro forma basis, considering asset rotation as well, as we will find in details in notes, the net financial position is about EUR 4.65 billion as of March 31st, 2026 versus about EUR 4.6 billion at the end of 2025. The debt EBITDA ratio is unchanged, and it stands at 3.3x .
In view of the results achieved in the first quarter, we confirm the 2026 guidance that we have already disclosed in March. Let me now yield the floor to our CFO, who will give you more details about the results I just outlined. Valentina, floor is to you.
Let's now look in detail at the EBITDA performance. Growth posted in the first quarter of 2026, it was wholly driven by the organic development. Confirms quality and visibility of growth. In detail, in this quarter, recurring EBITDA is EUR 344 million, which shows an organic growth of EUR 14 million versus the first quarter of the year before. This increase is mainly due to the growth of tariffs in water and grid, but also to the operating efficiencies we have made in this quarter.
On the right-hand side of the slide, you see the main one-off events and changes in scope, which in the first quarter of 2025 amounted to a total of EUR 10 million. These effects may be due to the elimination of the contribution of High Voltage and photovoltaic assets and has been disposed of in Publiacqua. As to the first quarter of 2026, the one-off elements and changes in scope may be due in particular to the interim revamp in some installations in the environment business. Let's move on. Result of the first quarter of 2025 with an organic growth of 14%. This increase also shows the improvement of the operating performance that has already been reported under EBITDA.
Just like for EBITDA, in this slide too, the right-hand side of the picture shows one-off components and changes in scope as described before. Besides this, we should add the contribution of income from discontinued operations and, with reference to the first quarter of 2026, the input from the surcharge of the IRAP tax, as per the Decreto Bollette tax law. Let's move on to CapEx. In the first quarter, CapEx confirms the main focus on regulated business, which accounts for 89% of overall CapEx, for a grand total of EUR 302 million, including EUR 60 million of public funds.
This slide also shows the main initiatives which were started in this quarter for each individual business, and these initiatives bear witness to the constant attention that the group devotes to developing and strengthening the resilience of its infrastructures. In the following slide, we see cash flow. Cash flow confirms the robustness of the group's financial structure. Operating cash flow is negative by EUR 91 million, mainly because of high level of CapEx and the dynamics of working capital, which reflects the current seasonal performance in the first quarter. With reference to the financial structure, slide 10, we can see that nearly 80% of our debt is at a fixed rate, and the average cost, the overall average cost is 2.15%, whereas the average duration is about four years.
This setup allows to guarantee a significant protection versus the volatility of interest rates. The robustness of this financial structure is also confirmed by the fact that we kept our ratings, and both Fitch and Moody's gave a stable outlook on our company. To support the investment plan, we also point out that in March, a new EIB financing has been undertaken for an overall amount of EUR 190 million to finance the Areti CapEx investments. Following slide, water business confirms the first quarter of 2026 a really robust growth with organic EBITDA up 6% year-over-year. These results have mainly driven by the tariffs growth.
We continue our CapEx investment plan. CapEx net of rents is up 20% to support the development of infrastructures in this business area. For grid and public lighting, too, we see in the first quarter a very positive growth with an increase of organic EBITDA by 8%. This increase is supported by the investment plan and by the operating efficiencies we have achieved. Net CapEx grows by 7%. It's now EUR 90 million, and these are designed to support and to enhance network infrastructures. The environment business in the first quarter of 2026, there is a slight decrease of EBITDA by about EUR 3 million. This is just a temporary phenomenon, which is mainly due to the decrease of WTE volumes because of the planned shutdown of some installations.
We continue our CapEx investments in this business. CapEx is actually up 35% to support our plans to modernize, revamp, and to enhance installations, with a view of strengthening their operating efficiency and capacity over the medium to long term. Slide 14 shows generation. Organic EBITDA is particularly significant. It's as much as 21%, this performance has mainly driven from the strong recovery of hydroelectricity generation, which is up 727% versus the first quarter of 2025, which is more than offsetting inflation of energy prices, which is less favorable with an energy price dropping by 6%. In detail, energy generated grew by 11% from 210- 233 GWh. We continue our CapEx load planning this business.
CapEx is up EUR 5 million versus the Q1 2025 to support the development and efficiency of our generation assets. That's all for the presentation, so we can now open the Q&A session. Thank you.
This is the Chorus Call operator speaking. Now we can start the Q&A session. If you have questions, please press star one on your phone. To leave the queue, please press star two. Please ask your question, sir, by using the receiver's microphone. If you have a question, please press star one now. The first question is from Javier Suárez of Mediobanca.
Good afternoon. Good afternoon, everyone. My first question on the update of your business plan is when do you think you will be in a position to update your business plan?
Can you provide us with some general ideas on what you think should be the main basis for the business plan update, and what kind of timeframe you have in mind for this update? I have a second question on the guidance for 2026, and I would like to try and understand whether you can help us understand what guidance you have in mind for the net income of 2026. Do you have any update about that? That would be extremely useful. Also, I have a question on a possible update on the process to build the waste management plant in the city of Rome. I'm really interested to understand whether you have some timing in mind for that.
Finally, can you give us some update on your expectations on the future activities from 2027 onwards? Thank you.
As to our business plan, we as a management team are always looking, of course, at economic and financial conditions, we monitor them carefully to understand and monitor the business performance. We're waiting for the new board to become effective and to fully take office before we complete the plan together. The average duration would be the same duration as the previous business plan, the final details will have to be defined as soon as the new board takes office. As to our guidance, in general terms, we can confirm the guidance we have already disclosed.
We have given guidance about will be driven by water with grids. We expect growth to be pretty dynamic, much will depend on regulation and the whatever happens with the new regulations. The negative point we had in the environment business at the beginning of the year is mainly due to some planned stop focus for some plants, and so we expect that to disappear during the rest of the year. Overall, we should stay within the guidance we have already given. The EBITDA of that company at the beginning of the year was about EUR 30 million.
As to net income, we're not giving any guidance specific with this, but apart from the capital gain that we are posting in April after disposing of retail, we don't expect anything disruptive to happen in this field. Now, as to the are actually experiencing the energy prices that are on the decrease. Of course, there will be a big impact from the conflict in the Middle East to understand what's gonna happen in the rest of the year. It is important to realize that after losing AA rate from Standard & Poor's, we expect that we will remove some countries from the spread calculation panel.
If that happens, if Iran is canceled in particular from the overall average calculation system, that will have an impact on pretty much everything we do. As to the Rome waste disposal plant, we're waiting for the finalization of the current dealings, and we expect something to be communicated to us in the next few weeks. Thank you.
The next question will be answered by Francesco Sala of Banca Akros.
Good afternoon. Thanks for receiving my questions. I have three questions. First is, can you give us some idea of the working capital performance on a full year basis apart from the season impacts we had in Q1? The second question is about waste and in particular, about waste treatment.
What should we expect for the rest of the year considering that some installations are not working in Q1, but they should open again for the rest of the year? Third question, is Acea going to be involved in tenders on some regions, Piedmont and Lombardy in particular, that are actually starting to open up for the next few quarters?
Thank you. As to the working capital dynamics that we have included in our guidance, and we expect for the end of the year, it's pretty new. EUR 25, and to the payment of some fees which were connected to the extra profits of 2022, and which were due in the first quarter of this year. We expect dynamics to be pretty neutral.
As to the waste, as I said earlier, we expect a partial reabsorption of some of the shutdowns. Quite a few shutdowns happened in the first quarter. Some will continue during the second quarter too. These are all planned maintenance shutdowns, and we are consuming them in these next two months. However, partially, shutdowns will be completed between today and the end of the year. As to the hydroelectrical tenders, we have been following what the individual regions are doing carefully ourselves. We are in the process of evaluating individual tenders depending on their features, depending on their geographical location, we will evaluate that. We're actually already looking at that too. Thank you.
Next question is from Roberto Letizia of Equita.
Good afternoon. I have a question on guidance again.
Could you please give us an idea of the main elements right now that may take you to the high end of the guidance or even beyond that because of favorable market conditions, favorable pricing conditions or whatever? What are the elements that might actually bring us over 5%, over the current guidance? Then maybe you have some more information than we have on the concessions of electric distribution, can you give us some update on Peschiera? This was expected for April, if I'm not mistaken, there may be some new features there. Can you give us an update on M&As? This is still a really important topic, you said that full integration may happen anytime soon.
Do you think 2026 may still be a pretty active year in terms of possible M&As? Thank you.
Thank you. As to guidance, there are two key elements here. The first would be water and, with the tariff approvals and the two-year updates of tariffs that are going to happen in the second half of the year, there will be some tariff components. Another key element was the acquisition of Aquanexa. Aquanexa is actually included in the guidance. Of course, this happened in April, so it has no input on Q1, but it's going to support Enagás from now on. For the rest, we expect generation to keep sustaining growth, but it's been quite short to begin with in Q1.
As to the extension of the concessions on electrical distribution, there's nothing relevant, nothing particularly new there, but we are ready for it with our CapEx plan. Our CapEx plan is already in line with the ARERA target. We are actually talking to the ministries and the all the other stakeholders, but we have no specific preference on any given timing or any kind of tariff update. Right now, we're following and monitoring the process carefully, but there's nothing particularly new as far as we know. As to your questions on M&As, M&As are by definition hard to plan. After the asset acquisitions season, which was completed with the sale of, you know, Aquanexa to Algebris and buying from Algebris their platform for services in the water business.
After all that, right now, we are actually looking at possible new opportunities on the market. Our main focus is always our fundamental core businesses, and we want to grow organically there. We have all the CapEx plans we need to improve network efficiency and resilience. Should any opportunities appear on the market that might help us accelerate our growth process, as usual, we will take them into account. As we speak, this is what we're doing now. It's premature to comment on any other things now. Peschiera, we are at the final stages of the contracting procedure, so we are going to start the economic offer and the blueprint designs, and we're going to start construction in the second half of 2027.
The next question will be asked by Emanuele Sartori, Kepler Cheuvreux.
Good afternoon. Thanks for your presentation. I have a question on tenders. Can you give us an update? Because ACEA was awarded in the last few years virtually all the tenders where it was involved also out of its historic geographical presence and locations. What kind of major interesting tenders are going on now, or is there any tender that has already been decided or nearly so? Considering that the new ARERA board has taken office and the chairperson is actually very experienced in managing water and emergencies connected to water, we may suggest, and we may consider they will be particularly sensitive to this.
Actually, the water network's situation is pretty much of a disaster, whereas it's really, really efficient for electricity and gas. We all know there are major problems in water losses in Italy, especially in the central and southern parts of the country. Are you talking to the new board to make sure there may be some structural long-term solutions that may actually push a new opening of investing capital or entering joint ventures or maybe partnering with non-listed companies, private companies, so that investor players like you may actually start working in those concessions that are really abandoned or lacking investments and that have a terrible situation? There's some places where there's as much as 45% water losses. Can you have a role in improving that? Thank you.
Sorry, I cannot hear you anymore. Sorry. We did have a technical problem with the microphone. Can you hear me now? Okay, good. As far as tenders are concerned, in the next few months, the Benevento tender is going to be decided. We are the only player involved so far. In particular, we're working with the water board of Campania, of the Campania region. They have completed their due diligence, and they approved to continue the tender. Another tender that's going on is Cerchio. In particular, we are in the competitive dialogue phase right now, before the summer, the actual tender is going to be launched in the Cerchio. Further tenders we may expect during the year is the Messina tender in particular.
We know this will be one of the opportunities, more opportunities will actually appear in 27, 28, many concessions are going to expire in the next few years, too. As to ARERA, right now we have a very constructive open-end dialogue with ARERA, we also have formal connections with the new board. Also we all agree on the need to invest and to improve the quality of the grid. We see the possibility to discuss some methodological issues in order to fine-tune them and improve them. We expect that some mechanisms such as RAB evaluation parameters and some will be assessed on a top priority basis.
Actually, in the last few years, with some geographies, we already had some very interesting discussions with ARERA, and this put us in the right position to improve the grid as much as possible. For the next biennial update, we count we can continue doing that. Also, we discussed wider issues with ARERA, governance and expanding to other geographies and so on, but this is part of the future work we're gonna have with them.
Well, may I have a follow-up questions on water? Can you please give us an update on the litigation with Plures?
Yeah. We know that on March 10th, 2026, that the court of Firenze said we need to sell our share in Publiacqua to another company. The hearing to discuss this has been postponed to May 15th. All the economic impact of this transaction have already been accounted for in the 2025 financial statement, and the guidance for 2026 does not include the Publiacqua results. In our 2026 results, we have not included the impact of Publiacqua, and starting in 2027 it will be excluded from the scope. That's where we stand now. It's not included in Q1 2026, and there's no grant. Exactly. It's not included. There's no contribution to the economic performance, EBITDA or income.
There was no contribution to the guidance, and when I say no contribution to the guidance, I'm also referring to the fact that in the net financial position, we have not accounted for the possible sale of Publiacqua. There was no contribution to either EBITDA or net income, and in 2026, no contribution is posted for EBITDA or net income, and this is something we have excluded from our accounts, or not even the disposal of the company. If you dispose of the company, it's not necessarily gonna happen in 2026, if it happens at all, right? Yeah, absolutely. If we will be forced to sell our stake, we will actually cash in the proceeds, because that will happen at the same time.
On the other hand, if suspension decision happens, we'll only cash in the, our sales proceeds of EUR 114 million, if and when we sell our stake. If we do sell our stake, we will be cashing that money in, but we're still waiting for the final decisions of the court.
Thank you very much.
Next question from Davide Candela of Intesa Sanpaolo.
Good afternoon. Thanks for your presentation and Q&A. I only have one question on the disposal of Acea Energia. The closing happened, do you think there may be some capital gain you can derive from that? As you did in the past with Terna, will that actually increase dividends, which is what happened in 2025? Thank you.
The sale of Acea Energia includes a capital gain, which is certainly higher than that we have from High Voltage. It's about EUR 200 million on separate accounts, and on consolidated accounts it will be even higher. As to dividend, the dividend policy we have today is a 4% increase over the ordinary dividends of 2025, so without the extra ordinary component. Of course, as we update the plan and approve the results of 2026, we will certainly review everything and see what we'll decide at the time. Thank you.
Next question in English from Enis Zeka of Oddo. Please.
Yeah, thank you very much, to taking my question. Almost all of my question have been already answered. Maybe a follow-up question on the environment segment, just to understand. You say that contribution in Q2, you should have also partial shutdowns in Q2 and coming back by the end of the year. Is it, what you said? Thank you. Hello?
Thank you, Enis. Yes, we confirm that the shutdowns will include the planned shutdowns, and will close the impact on P&L too. Thank you.
Maybe one question also on discontinued operation. The contribution in Q1, EUR 32 million, it came in well above expectation. Could you elaborate on the main drivers behind this stronger than expected performance? Should we expect any further contribution in Q2 for the 10 days prior to the closing of the transaction? Thank you.
Yeah. As to discontinued operations, the contribution to net income in Q1 was EUR 32 million. That EUR 32 million also includes a purely accounting effect, which is due to the stoppage of amortizations, because discontinued operations are classified as a finalized for sale. In our results, the amortizations of these assets are neutralized. We have net profit from the asset that's been disposed of, which is an FGM, which is about EUR 16 million, plus an accounting effect, which is due to amortization costing, which is another EUR 16 million. The overall impact is EUR 32 million. If we compare that result to the result of the first quarter of 2025, that EUR 16 million of Acea Energia compare to a result of EUR 19 million last year.
Of course, last year, the stop of amortization. In Q2, we expect no impact because the asset has been disposed of in April. We'll have the impact of the capital gain, but we won't have any impact on the economic performance.
Thank you very much.
Have questions, you can press star one on your phone. There are no further questions in the line. Thank you very much for attending. As usual, the investor relations team will be happy to answer any possible future questions you may have. Thank you. This is the Chorus Call operator. The conference is now over. You can disconnect your phones. Thank you.