Iren Group conference, my name is Zak, and I will be moderating the events today. Throughout the entire duration of the call, your lines will be in listening mode only. Anyway, you will have the possibility to ask your questions during the presentation or at the end of the presentation by choosing Star 1 on your phone. If you need assistance during the call, you will be able to dial Star 0 on your phone, and you will be contacted by an operator. The floor goes now to Giulio Domma, Head of Investor Relations, to start today's conference. Thank you so much. Enjoy the listening.
Good afternoon, ladies and gentlemen, and thank you so much for connecting to our call on the results of Q1 2025. I'm here with Giovanni Gazza, our CFO, and the Executive Chairman, Luca Dal Fabbro. Luca will start off the presentation.
Thank you so much, Giulio, and good afternoon, everyone. Now, the results have just been approved by the Board of Directors, and the start of 2025 is positive. It is supported by a strong recovery of electricity, thanks to the increase of volumes and margins, together with organic growth in the regulated sectors, and EUR 20 million coming from Egea integration starting from January. In general, we have incremented EBITDA plus 9% versus last year. In terms of investments of a technical and financial nature, the amount is around EUR 720 million. All of this is being covered by the cash flow generated by operating management, plus the hybrid bond, EUR 500 million. This was done in the month of January in order to cover the cash out of extraordinary operations. The cost of credit means we have reduced the net debt level, which is now under EUR 4 billion.
The difference is EUR 110 million versus the previous year, 2024. The positive results achieved in the quarter allow us to confirm the guidance, and because we have a greater forward-looking visibility, we can also outline the expected net profit range, as I will tell you later. Now, as usual, I will now share with you a summary of the main ESG results. They testify to the significant progress made by the group in terms of sustainable growth that you can find in the industrial plan. Those results were made possible thanks to a share of investments eligible for the European Taxonomy, around 70% of the total. They confirm the strategic role of sustainability in Iren. If, in our opinion, it is a key driver for growth for our positioning in medium and long term as well.
A summary analysis of the main performance indicators related to the green transition shows the stability of carbon intensity. It is in line with last year's level, an increase in the share of sorted waste collection thanks to investments made in waste collection, but also the factor. Thanks to the consolidation of Egea, the presence of Iren in the local communities has become bigger. We have increased the number of municipalities with waste collection. We have integrated 200,000 gas and power customers. We've also extended the district heating volumes. We have reached 103 million cubic meters. Now, the group's commitment in terms of service quality can be seen also in this quarter, in which the duration of power outages was reduced. This is very important. It is a marker of quality and all what's behind this quality. Waste water treatment capacity has increased.
We also have increased energy savings, having to do with Iren Plus products and services, together with renewable electricity that also grew remarkably. We can now go through the EBITDA. We reach EUR 418 million. The increase is EUR 35 million compared to Q1 2024. Now, if we analyze the trends that have influenced its performance, we can include the positive elements as follows. The consolidation of Egea, this means EUR 21 million, more than 50% of which has to do with gas sales and district heating. Now, in this case, as you know, there's a seasonal component in that case. Positive results of the energy business unit due to higher volumes and margins in the generation business compared to last year and organic growth, especially in regulated businesses.
Some negative elements: the absence of extra margin gas sales made in the same period last year and the planned reduction of those activities having to do with energy efficiency. This is due to depreciation and amortization. Now, as for the net profit of the group, on the other hand, it amounts to EUR 136 million. It went up by as much as 8%, benefiting from the reduction in minorities having to do with the purchase of Iren Acqua. As for technical investments, this is worth EUR 185 million, up 12%. This is to develop the water and electricity network in order to complete the waste treatment plans, together with extending the district heating network. Giovanni will tell us more on business dynamics. Giovanni, the floor is yours.
Thank you so much. Good afternoon. As usual, we can start our analysis of the corporate performance from the IRETI, or networks business unit.
In this case, I'm talking about slide five. Now, the quarter ended with a plus 6% increase of EBITDA. It means plus EUR 7 million growth. Now, this increase is worth around EUR 4 million. It is due to organic growth supported by investments done in the previous years. The tariff revisions applied since the beginning of the year had had no impact, basically, because the reduction of the WACC on electricity and gas grid was offset by a positive deflator effect on the RAB. Let me analyze the dynamics of every single line of business. You can see that the integrated water service is now impacted by the impossibility to replicate an extraordinary inflation recovery on the operating costs in 2023, EUR 9 million accounted for in Q1 2024, while integrated water service includes a positive contribution from the consolidation of Egea.
Point number two or bullet two is the electricity distribution. In this case, we have an increase of EUR 5 million. This is the result of the growth in the revenues supported by an increase in RAB plus 7%, together with improvements in the service quality, as the CEO said before. Basically, we experienced a great reduction of unavailability times. The gas network includes EUR 2 million. Once again, this is due to the consolidation of Egea from January 1, 2025. All the investments made in the period, they are in line with those that we had in the same period of the previous year. We have maintained our orientation that is set forth in the plan. It is focused, as you know, on the growth in the water cycle and electricity distribution industries.
Now, as for the environment business unit, as you can find on page six, the growth is plus 3%. As for waste, so waste collection, these activities continue to grow. The increase is EUR 2 million. This is due to new tariffs and, again, the consolidation of Egea, Egea contributing about EUR 1 million. As for disposal activity, it is stable, flat compared to last year, due to two offsetting effects. Effect number one is that, on the one hand, we have the positive contribution of the waste-to-energy plants supported by the increase in energy production. This is due to the bigger plant availability. Please do not forget, last year we had a partial unavailability of the plant we have in the city of Turin. This was due to scheduled maintenance concerning the turbine, but also the alternator.
This is also due to the greater volumes delivered to landfills, especially the Siena Ambiente area. Point number two, this is a negative point because we can see that there was a decline in the waste treatment plants. In this case, this was due to the unavailability of the plastics sorting plant in the city of Cadelbosco . Now, following the fire that occurred in this plant in the second half of 2024, it significantly damaged the plant. Now, overall, we can say that the volumes of waste managed during the quarter increased by 6%. All of this has been supported by the increase in municipal waste. This is due to the integration, again, of Egea. Last but not least, investments also increased by 4%. 2/3 of these investments go to the construction of plants.
Of course, I'm talking about waste disposal, while the remainder, this is due to all spent on waste collection activities. Slide seven, here you can see, compared to last year, the change in the trend, a big change of the energy business unit, which shows a growth of almost 30%. Now, if we analyze the single business segments, we can note the following. Point number one, renewable generation is up by EUR 10 million. This is due to the increase in hydroelectric power, + 56 GWh , thanks to an increased business supported by higher volumes stored in our reservoirs at the end of the year. The second segment is the thermal electric and cogeneration segments. In this case, the increase is EUR 19 million, of which almost EUR 17 million came from the increase in spark spreads compared to last year.
Again, the higher contribution from the Capacity Market is worth EUR 7 million. It is offset by the reduction of the MSD market, down by EUR 3 million. The increase in production volumes is due basically to the full availability of the thermal electric plant we have in the city of Turbigo. In particular, we have a new unit, 430 MW. It has gone through all the testing activities. This is what happened in the H2 2024. This means that it can guarantee a much greater flexibility in terms of use. As for heat, it is substantially in line with last year. With the positive contribution of Egea's consolidation, it is offsetting the decrease in the margin in terms of unit. In particular, there was a reduction in the thermal spark spread. This is due to a very high 2024 margin level, very high, and supported by hedging operations.
This was very favorable. This is what we have done in advance in 2023, something that we cannot replicate in the current scenario. Finally, the energy efficiency segment, it goes down by around EUR 3 million. This is due to a smaller planned activity, also considering the recent regulatory developments and changing concerning the so-called superbonus. Let me wrap up this narrative of the business dynamics with the market BU slide eight. In this case, you can see that the result is in line with last year's result, thanks to the consolidation of Egea. Its contribution is worth around EUR 10 million in the quarter, of which EUR 6 million to support the gas segment and EUR 4 million to support electricity. Now, the result from Egea makes it possible to compensate for the absence of extra margins that we had last year in terms of gas sales.
It was supported by contracts signed at 2023 market prices and by favorable, non-repeatable hedging activities. Once again, this was so favorable and again one-off or non-repeatable. Now, unit margins, net of the extraordinary items I have just mentioned, are flat versus last year. This trend should continue in the coming quarters. This is also due to the fact that main contracts with our customers expire beyond 2025. Now, our customer base has more than 2.5 million customers. The growth is 8% compared with the number we had at the end of 2024. This is due to the integration of around 200,000 gas and power Egea customers. Volumes sold to end customers in the quarter are up by 24% in the electricity segment or power or 9% in the gas business. The customer portfolio is now represented by 75% variable price contracts and 25% fixed price contracts.
Even if I have to say that in Q1 2025, we saw an increase of fixed price contracts. Now, this confirms the industrial trend, positive trend in the sale of high value-added products and services. The economic result decreased just a little bit due to a different product mix. Let me now go through the elements that lead from EBITDA to net profits to do so. Please see page nine. Depreciation and amortization, they go up by EUR 17 million, of which EUR 9 million due to investments, EUR 8 million related to the consolidation of Egea. We also confirm our expectations in terms of depreciation and amortization at the end of 2025. The total amount will be around EUR 0.7 billion. Provisions for bad debt increased by EUR 4 million. This is due to the increase in receivables. They come from direct billing to citizens having to do with the waste collection services.
In this very case, in the past, the proceeds were invoiced directly to municipalities and in turn, they charged a specific tax to citizens. Now, we have to consider that there will be a change in these services and once again, we will be able to recover environmental services costs. The cost of debt is also going up. This is due to new issues and, of course, the redemptions of bonds. This is what happened in H2 2024. Now, the average cost in that period has reached 2.35%, while last year we had 2.1%. Now, there was a positive contribution of the equity and consolidated investing companies. This was offset by the absence of the reassessment or revaluation of investments, which is what we have recognized in Q1 2024. Now, the net profit of the group for the period is EUR 136 million. The increase is EUR 10 million, which is 8%.
This is thanks to the purchase of minority shares of Iren Acqua. They created a positive increase of the net profit of around EUR 6 million. What is stable at 30% is the current tax rate. Let me wrap up with the analysis of the net financial position and NFP, page 10. At the end of March 2025, debt is going down by the end as compared to December 2024. It is down by EUR 111 million, which is - 3%. This means it is now less than EUR 4 billion. As for the operating cash flow for the period, we have EUR 314 million. It largely covers all of the technical investments carried out in the quarter. We have EUR 500 million raised through the hybrid bond issue in January. It was used as we planned for the purchase of minority stakes in Iren Acqua, EUR 283 million.
The second point is the exercise of the call, so we can have full control of Egea. Now, this operation will be finalized in the coming weeks. We also have to consider the consolidation of Egea's net financial debt, the final overall effect, so the call and the consolidation. The total is EUR 249 million. There's a slight increase also in the net working capital. The difference is plus EUR 28 million. This is mainly due to higher receivables that we still have to collect for the investments having to do with project finance by the Italian PNRR. To a lesser extent, we also have tariff receivables, which are due beyond the year. Actions in order to streamline the net working capital and the collections of the receivables having to do with the PNRR, this will enable us to guarantee quite a good stability on the year-end number.
Back to Luca for the conclusion of the presentation.
Thank you, Giovanni. Let's conclude our presentation as usual with the guidance slide. The key economic and financial indicators for 2025 are confirmed from what was stated during the previous conference call and supplemented with the net profit forecast, which is one of the objectives of this presentation. EBITDA at the end of 2025 is expected to be in the range between EUR 1, 340,000,000 billion and EUR 1,360,000,000 billion , supported by the results achieved in the first quarter and the confirmation of the expected result from Egea of around EUR 55 million for the whole year. In the coming quarters, including Egea's contribution, we expect the following trends. Networks, a growth achieved in the first quarter, was confirmed mainly due to the increase in the revenue constraints supported by investments.
In the environment, a recovery in planned profitability of about EUR 10 million is expected. We should also note that the AR Piemonte, the granting authority, decided to focus on the waste-to-energy plant in Turin as a possible expansion out of the three options presented in response to the regional plan. AR Piemonte will have to define the design guidelines for the 250 Kton expansion in the coming months, after which it will proceed with the executive design phase for authorization purposes. In energy, the positive trend continued, featuring higher thermoelectric volumes, the contribution of the capacity market, and a clean spark spread captured higher than last year. In market, we expect a result in line with the previous year. Egea's contribution compensates for the missing extra marginality in gas sales, which we had in 2024, as already anticipated in the previous conference call.
When it comes to group net profit, we have an expectation of around EUR 700 million and financial management of around EUR 110 million, leading to a result of a range in between EUR 300 million-EUR 310 million, also supported by the reduction of minorities. The technical investments planned for 2025 will amount to approximately EUR 900 million plus EUR 500 million in financial investments already finalized, as you have seen in the previous slide on net financial debt. The net debt/EBITDA ratio will cap constant expected at 3.2x , considering the hybrid bond issue. We can now move on to the Q&A session if you wish. Thank you so much for your attention.
Thank you so much. If you want to ask a question or give your contribution to today's conference, you are please asked to select star one on the keyboard of your device.
The first question comes from Javier Suárez's line from Mediobanca. Please.
Good afternoon, everybody. I had a few questions. The first ones are about the general landscape and then a few questions about the results. When it comes to the landscape, I would like to understand, if possible, to speaking to all of you, where we are headed when it comes to the discussion with the government when it comes to the purchase of systems of electricity distribution in Italy and what your expectations are. If you can please give us some update about this process, it would be extremely interesting and important. Also, I would like to know what the situation is when it comes to the reviewing process of the extension of the concession for the hydroelectric production. Second question, and it is about your last business plan.
We saw an update, so to speak, of the methodology which is used to calculate the regulated businesses. Can you please help us in understanding what's the positive impact on your business with this new calculation methodology and when it comes to all the things you do? I was also interested in another thing. I would like to know a bit more about the dynamics which we can expect in the supply business for the next quarters. Obviously, we know that the market is more competitive. I would like to see what's happening in your regions, in your areas, especially when it comes to the margins. It means, in other words, what strategy are you going to implement to face this kind of more competitive market? The other question, I would like to know how is the situation with the Egea consolidation and integration.
Could you please give us a greater outlook of what the circumstances are and what's going on with the synergies of this activity? Thank you so much.
Thank you. Thank you for the question. Let's answer. When it comes to the first question, the first point, as far as the extension of the concession is concerned, as you know, we have a small part of the national hydroelectric production, especially in Turin and Vercelli, and a few things even in the Emilia-Romagna region next to Parma, to be more precise. Afterwards, we are actually waiting for the introduction of the new aspects of the decrease. We have also spoken with the antitrust authorities the day before yesterday. We spoke of several things, especially the importance of the presence of big-dimension distributors, which represent a big part of the market. Let's say that we are very, very, very calm.
We are very easygoing because we think that the Italian law will be easily implemented. Therefore, we wait for this law to be actually implemented. We are convinced that there will be a regional discussion about this as well. Regions will have several possibilities to speak their mind. Therefore, with every region, we wait for their proposals and their ideas, which could be complementary to the decrease. We have a lot of trust in the future. When it comes to the hydroelectric area in Piedmont, we are waiting for several proposals. We remember the proposal in September 2022 when it comes to the concessions which we have, which have expired in Val d' Orcia and San Mauro.
When it comes to these points, even in this case, we are waiting for a statement by the regional authorities when it comes to the strategy value and the value for the region, the so-called public utility scheme. We are waiting for the start of a tender. When it comes to this point, we can expect something already in 2025. Obviously, we are going to have under tenders. Since we have proposed the PPA, which has been proposed and selected, we have a so-called last call thing. Therefore, we can sleep tight about this. The last question is for Giovanni, but maybe we'll try to focus on the other two. We have recorded an increase in the premium competitiveness level. In this case, we have seen medium to high prices in the offer.
What we are doing at the moment, actually, we are trying to defend with different rates, which are lower than the competitors, thanks to a hybrid offer, which combines some fixed contracts and variable contracts. We have customers who want a certainty, which cannot be paid by them with premium prices. Therefore, this variability gives them the chance to focus a bit better on the money they have to spend for the commodities. We also have differentiated activities. Therefore, when it comes to the insurance, to the tenders, when it comes to gas and electrical systems, commercially speaking, we are working very hard and we expect results in line with our forecasts. When it comes to the consolidation of Egea, as you have seen, we have sped up on the process of this consolidation.
In over just a bit more than four months, we have created a first option. Then we have completed last year by purchasing 100% of Egea. This is already at the beginning of spring 2025. We are now in a process of greater synergy, which especially focuses on strategic sectors such as finance, just to name one, information systems. Obviously, we will leave the brand Egea. We leave that. Some of the personnel will work in Alba and other regions, which are important. Therefore, everything is confirmed when it comes to the occupation, the employment, but also when it comes to the embedding, especially when it comes to the financial department. We will also start with another kind of company integration process whenever it is needed to make this whole system even more efficient.
You have seen, thanks to the numbers and the figures as well, that we are very happy with Egea's results. This is an industrial operation of purchase, which has shown results which went beyond our expectations. I have to thank all the people involved in this operation. When it comes to the approval, we obviously welcome it. When it comes to the system itself, we can have an RAB adjustment, which is better and which is much faster than previous adjustments. I say this because when we set out our industrial plan, we had focused about the factor by focusing on the perspective about the inflation. Therefore, in a few words, we see no important difference with our business plan. We have seen the dynamics of this update. Therefore, we have the sum of the update on 2024 and 2025.
We can say that it is indeed positive. Obviously, there is around a difference of 6% between 2024 and 2025 when it comes to the Q1, but it is a positive sum. The interesting dynamics when it comes to the CapEx and OpEx. Especially, as we have already said, this update allows us to offset the negative effects due to the review of the WACC on the electric line and gas lines.
Thank you. Thank you so much. Now, next question comes from the line of Emanuele Oggioni. Please.
Good afternoon. Thank you for the presentation. The first question is about projects you have mentioned about the Turin area. If you can, please remind us a few details if possible, especially when it comes to the CapEx figure, the development plans. If this is implementing, when will it be implemented and more details?
The second question is about the new business plan. When do you expect this to be the object of an updated plan with a new CEO? Third question is about your interest, if any, in the purchase acquisition of gas distribution assets, which are going to be put on the market following the consolidation operations of the industry in general. Thank you.
Thank you. Thank you so much for the questions. When it comes to the waste-to-energy system in Turin, with this line around 250 K tons, it will close the circle of waste sorting in Turin with an investment in between EUR 300 million and EUR 350 million. It could be implemented in between 2031 and 2032, probably more probably 2031. We are working with no problem. When it comes to the cash out, we can sleep tight.
We can say that this has been done a bit in the background, behind the scenes. When it comes to the margins, this whole operation makes our financial structure much more compact and much more resilient. Therefore, there is a transformation, which is actually a semi-transformation of Egea. It is a line of 250,000 tons. Therefore, it is important industrially, economically, and financially speaking. When it comes to, obviously, we produce energy, we give greater value to the waste. There is a combined effect, which is very interesting when it comes to economics, but also when it comes to the decarbonization process, which is extremely important. When it comes to the plan, we have said that now we are about to launch ourselves in a new reviewing phase, updating phase of such plan. We are not going to have any kind of Copernican revolution.
We try to focus on a business model, which, as you have seen for the Q1 2025. We are in line with results, successful results. We will apply modifications, if any, if needed, with updates or in general to make a few business areas even more resilient. Another option is to think about extraordinary businesses or activities if any opportunity is to be found. Therefore, the plan for the end of this year and next year, therefore, and 2025, beginning 2026, there will be new plans. We will speak about those. When it comes after gas, we have an opportunity-based approach. Little by little, we will open the several files. We will study those thoroughly. We will see what kind of result we can extrapolate from that. Obviously, we will not purchase this and that and whatnot.
We will focus on yields, which are in line with our plans. We will study the several possibilities. Otherwise, we will be the first ones not to take any action if this is not needed. Thank you.
Thank you so much.
Thank you. Next question is from Francesco Sala, Banca Akros. Please go ahead.
Good afternoon, everyone, and thank you so much for taking my questions. Question number one is, what did you do? What happened in Q1? Question number two is on electricity. So what is the level that you have in your guidance, and what do you expect in terms of hydroelectricity generation within the end of the year? Last question, can you give us some color on hedging policies for 2025? And if any, the policies you will have also for next year, 2026.
Now, as for spark spread, basically, what we see today is a market that is not producing margins on the forward, but of course, we have margins on the delivery side. The visibility based on the current situation is low. We think that we need, of course, as for the general situation of the system, we think that the thermal electric plants, as happened in Q1, can still have good opportunities, especially during some hours or time slots of the day. We can really, really see margins changing in terms of thermal electric plants, especially with two peaks every day. Our forecast is basically the following. We will have in the second, third, and even the fourth quarter of the year, the SS, so this spread should be EUR 2-3 per MWh.
As for the hydroelectric production, now Q1 has taken advantage, if you will, of an extraordinary production. We know that the levels of water in the reservoirs were quite high. This means that we have been able to get around 50 GWh extra. This is what makes the difference versus Q1 2024, once again, in terms of production or generation. It goes without saying, this is one-off, so it is something that you will not find in the next quarters. Basically, also considering that we have had some important changes at the end of this period. Once again, what we foresee is 1.5% of hydroelectric production, so 1.35%. We have to also include the 300 GWh of the photovoltaic and wind production of plants, 550 MW from waste-to-energy plants. The total target in terms of renewable production 2025 will be 2.2 TWh.
Now, in terms of our own, let's say, coverage strategy, right now and in the last two months of this year, we've been able to further increase the hedging, so the coverage. We have reached 85% of this 2.2 TWh that I have just mentioned. Once again, this is our generation target, and the price now is around EUR 105 per MWh. As for next year, 2026, we have already started working in terms of coverage. Of course, we are doing this because what we want is to stabilize our margins also on 2026. We've been able to cover 50% of the target concerning renewable production. In this very case, in 2026, our target should be 2.1 TWh, so a little bit less than 2.2.
First of all, we cannot replicate, I mean, the reservoir topic, if you will. At the same time, of course, the first part of this year has been very important in terms of production. Again, the value will be between EUR 105 and EUR 110 per MWh, MWh. We are really, really covering, if you will, the renewable production. As for the thermal electric production, also considering the points I have raised before, I mean, the fact of having very weak signals and indicators on spark spread, we have been able to only cover 30% of the thermal electric production. In this case, the spark spread is EUR 2-3 per MWh. In this case, on thermal electricity, we think the production will be 6.9, even 7 TWh.
This is going up versus last year because, first of all, the market situation is positive versus last year, but almost certainly because we will have the availability of the new plant in Turbigo, and its worth, so to say, is 400 MW. Thank you.
Thank you so much for your questions. I do not see any more questions in the queue, so the floor is to be given back to your guest.
Thank you so much for your questions. Thank you for your time and attention. This is it with our conference call. Of course, we will be ready for the next quarter conference. Thank you so much. Enjoy the rest of the evening. Thank you so much. Ladies and gentlemen, you can disconnect your devices.