Hello, and welcome to the Iren Group conference call. My name is Zach, and I will be your conference operator for today's event. During the presentation, all participants' lines will be in listen-only mode. At the end of the presentation, there will be a Q&A session. If you would like to ask a question, please press pound and five on your telephone keypad. I will now hand over the call to Carlo Dubini, Head of Investor Relations, who will begin today's conference.
Thank you, and please go ahead. Good afternoon, everyone, and thank you for joining the conference call to present the Iren Group's results as of 30 September 2026. The results will be presented by Executive Chairman Luca Dal Fabbro and CFO Giovanni Gazza. The presentation will be followed by a Q&A session. I will now hand over to Luca to present the results for the period.
Thank you, Carlo. Good afternoon, everyone, and thank you for joining us today. The results for the first nine months of 2026 confirm the soundness of our strategic decision to maintain our focused multi-business model. Indeed, by strengthening our regulated and semi-regulated activities, which now account for 74% of EBITDA, we are able to ensure greater stability in the group's results, even in adverse and highly volatile external environments. EBITDA increased by 2.4%, supported by organic growth and synergies. While the performance was negatively affected by poor hydrological conditions, which reduced hydroelectric power generation by 16%. As anticipated, the third quarter saw an acceleration in growth with EBITDA of 6% compared with the same period last year. Investments continue to increase. The technical CapEx amounted to almost EUR 650 million, up 5.5% year on year.
The investments were mainly focused on strategic infrastructure that represents a key driver for the group's future growth, in line with the new industrial plan to 2035, which we presented two weeks ago, as you may recall. In light of the results achieved and the expected developments in the final part of the year, we are confirming that for the financial year 2026, the guidance communicated in July will be confirmed. On page three, we take a closer look at the main economic and financial results for the first nine months of 2026. EBITDA stood at EUR 1,037 million, up 2.4%, representing an increase of EUR 24 million compared with the first nine months of 2025.
This performance reflects the following positive factors: organic growth over the period of EUR 25 million, driven by investments in networks, the recovery in profitability of waste treatment plants, and the commissioning of new photovoltaic plants. The synergies already mentioned amounted to EUR 17 million, and opportunities in the MSD ancillary services market, which were particularly positive during the summer months and generated an increase in margins of EUR 18 million. On the negative side, we recorded lower hydroelectric power generation, down approximately 260 GWh, or 24% compared with last year, with a negative impact of EUR 28 million, which is pretty relevant. The loss of energy efficiency contributions associated with rebuilding activities, which had benefited from the Ecobonus and Superbonus incentive schemes, amounted to approximately EUR 30 million.
EBIT reached EUR 411 million, up 2.4%, while group net profit stood at EUR 232 million, an increase of 1.2% compared with the EUR 290 million recorded in the first nine months of 2025. Our investment plan also continues to progress. Technical CapEx reached EUR 647 million, approximately EUR 34 million higher than in the same period last year. Investments were mainly focused on water and electricity networks, the completion of waste treatment plants, and the group's digitization activities. Among the financial investments made during the period, it is worth mentioning the full consolidation of ETAmbiente in August. This company operates in waste collection services across several Italian regions and was already a minority-owned investee of Iren. Finally, net financial debt stood at EUR 4,406 million, up from EUR 4,222 million at the end of 2025, representing an increase of EUR 194 million.
With that, I will hand over to Giovanni, who will provide a more detailed overview of the performance of the individual business units and the main operational trends in the first nine months of the year.
Thank you, Luca, and good afternoon to everyone from me as well. As usual, we'll start our analysis with the networks business unit shown on page four. In the first nine months of 2026, the networks business unit confirmed its growth trajectory, reporting EBITDA of EUR 412 million, up 2%. Compared with the EUR 404 million recorded in the same period last year. The business unit's positive performance was supported by, one, organic growth, which contributed approximately EUR 30 million, mainly in the integrated water cycle business.
Second, positive regulatory effects of approximately EUR 5 million, mainly related to the recognition of higher operating costs due to inflation, as well as other minor regulatory items. Third, synergies of approximately EUR 5 million. We should also recall that last year, the water business included EUR 8 million related to the award for the technical quality of water services. While gas distribution benefited from EUR 10 million related to the recognition of previously incurred operating costs, as provided for under ARERA resolution number 570. Growth in our regulated businesses continues to be supported by our investment plan, with investments up 5% compared with last year, driven by a 6% increase in CapEx in electricity distribution. This strategy is reflected in the evolution of our RAB, which now stands at approximately EUR 3.5 billion overall, up 5% compared with the end of 2025.
Moving on to page five, the environment business unit reported a positive performance in the first nine months of 2026, with EBITDA amounting to EUR 227 million, up 13.7% compared with EUR 200 million last year. The overall result includes approximately EUR 21 million in tariff adjustments, recovering higher operating costs incurred in previous financial years. Looking at the main operating trends, the waste collection business made a positive contribution of approximately EUR 9 million, benefiting from around EUR 10 million in the tariff adjustments already mentioned. Excluding this component, performance was broadly in line with last year, despite higher operating costs, which were offset by greater efficiency and synergies. Waste-to-energy plants also made a positive contribution, with EBITDA exceeding EUR 90 million and improving by approximately EUR 4 million compared with last year. This was mainly driven by the trend in prices for the electricity generated.
The most significant contribution to growth came from waste treatment plants, reflecting a recovery in margins of approximately EUR 40 million. We should also point out that the positive one-off items recorded during the period amounted to EUR 40 million in total, comprising EUR 11 million in previous period tariff adjustments and a EUR 3 million insurance reimbursement, were entirely offset by the negative effects of capacity constraints at certain landfills, minus EUR 6 million, and higher energy costs, minus EUR 7 million. From an operational standpoint, total waste volumes handled decreased by 4% compared with the same period last year, but improved by 4% compared with the first half of the year, thanks to the resumption of activities at certain landfills. In particular, the new section of the Barricalla landfill more than doubles its capacity for the coming decade, offsetting the natural decline in capacity at the other sites.
The energy business unit, shown on page six, closed the first nine months of the year with EBITDA of EUR 192 million, down 4.7% compared with last year. The individual business areas showed different trends. In particular, renewables, hydroelectric, and photovoltaic recorded an overall EBITDA decrease of EUR 21 million. More specifically, hydroelectric power generation recorded a decrease of EUR 29 million, reflecting lower hydroelectric volumes, minus 250 GWh, and the expiry of green certificates, minus 126 GWh over the period, with expected reduction of approximately 230 GWh for the full year. These negative factors reduced the result by EUR 28 million and EUR 7 million respectively. The impact was partially offset by higher energy prices achieved, particularly on unhedged hydroelectric generation. Photovoltaic generation volumes increased by 15%, thanks to the commissioning of two new photovoltaic plants in Noto and Gavassa.
Overall, photovoltaic generation made a positive contribution of EUR 8 million over the period. Generation from CCGT and other thermal power plants increased by EUR 23 million, mainly thanks to greater opportunities in the MSD market during the summer months, because these opportunities generate a contribution of approximately EUR 27 million, up EUR 18 million compared with 2025. With an increase of more than EUR 10 million in the third quarter alone. This performance was made possible by the flexibility of our plants. The positive results in this business area was also driven by the merchant thermal power plant in Turbigo, which increased electricity generation by 32%, plus 470 GWh, benefiting both from higher captured clean spark spreads and a greater number of operating hours. Generation from our cogeneration CCGT plants, on the other hand, remained broadly flat.
Capacity market revenues amounted to EUR 73 million in line with the previous period. Heat sold through the district heating network recorded a 4% decrease in volumes due to the early and unusual end of the heating season compared with 2025, as already commented in the first half results. The increase in connected building volumes, which reached 160 million cubic meters, together with higher production margins, resulted in a EUR 2 million increase in EBITDA. Finally, energy efficiency recorded a decline in activities related to rebuilding projects, which had still been significant throughout 2025. This reduction is expected to continue into the fourth quarter. We conclude our analysis of the business units with the market business unit, shown on page seven. Over the period, EBITDA amounted to EUR 196 million, essentially stable compared with the EUR 198 million recorded in the same period last year.
This trend reflects the following factors: a positive contribution from electricity sales, plus EUR 4 million, driven by a 4% increase in volumes sold to end customers, as well as from the Iren Plus business line and other services, which recorded growth of EUR 3 million. A negative contribution from gas sales, which remained unchanged compared with the first half of the year, minus EUR 9 million. The reduction in gas sales volumes can be attributed to unfavorable weather conditions during the first part of the year, lower average consumption per customer, as already anticipated during the presentation of the industrial plan, and third, to a much lesser extent, a reduction in the number of customers served. Our customer base has in fact remained broadly stable, with approximately 1.4 million electricity customers and 900,000 gas customers. The effects of margin normalization were partially offset by positive cost management initiatives.
In particular, the full integration of the former AGR retail company and the reduction in cost to serve have contained the business unit's overall costs. Overall, the market business unit has demonstrated good resilience in its performance thanks to efficiency enhancement initiatives and the growing contribution of value-added services, despite the competitive environment and the expected normalization of gas margins. To understand the evolution from EBITDA to group net profit, let's move on to page eight. Starting from EBITDA, we can observe an increase in depreciation of amortization of approximately EUR 70 million, mainly attributable to investments commissioned over the last 12 months. The provision for doubtful accounts, which remained broadly in line with the previous year. As a result of these trends, EBIT reached EUR 411 million, up EUR 10 million, or 2.4%.
Moving further down the income statement, financial expenses remained broadly stable at approximately EUR 85 million, with an average cost of debt around 2.4%. The contribution from companies accounted for using the equity method decreased from EUR 11 million to EUR 8 million, and this was more than offset by other items relating to the early repayment of certain financing facilities, an operation which was completed in 2025. Taxes amounted to EUR 103 million, reflecting a tax rate of 30.5%, which also incorporates the 2% increase in IRAP, the Italian regional production tax, introduced under the February energy decree. Taking all these effects into account, group net profit reached EUR 232 million, up EUR 3 million, or 1.2%, compared with the first nine months of 2025. We'll conclude our economic and financial analysis with the evolution of net financial debt shown on page nine.
At the end of September, net financial debt stood at EUR 4,460 million, an increase of EUR 194 million, or 5%, compared with the EUR 4,232 million recorded at the end of 2025. Net working capital increased by EUR 257 million, slightly less than at the end of the first half of the year. This increase includes approximately EUR 90 million in medium to long-term receivables relating to investments made in the integrated water cycle and waste collection businesses, as well as seasonal cash absorption dynamics. We confirm our expectation that the net working capital will increase by approximately EUR 150 million by the end of 2026 compared with its level at December 31, 2025. As regards M&A transactions, we record a positive net contribution of EUR 37 million.
reflecting the proceeds received from the sales to COGESI of the Cuneo water business, previously acquired as part of the EGEA transaction, offset by the consolidation of ETAmbiente. These developments were also accompanied, as already reported at the half-year stage, by dividend payments totaling EUR 189 million. I will now hand back to Luca for his closing remarks and the 2026 guidance.
Thank you, Giovanni. We will conclude today's presentation, as usual, by looking at the outlook for the final quarter of the year and our 2026 guidance, supported by the 6.5% growth recorded in the third quarter of 2026. As anticipated in July, we expect growth to be more concentrated in the final months of the year, supported by different trends across the individual businesses. Networks, we expect an acceleration in growth, supported by organic growth in the regulated businesses and a greater contribution from investments already made.
For the environment business units, we expect growth broadly in line with the first nine months, excluding non-recurring items supported by the performance of our plants. For the energy BU, we expect a positive contribution across the entire value chain, mainly thanks to district heating, although lower activity levels in the energy efficiency businesses are expected to continue. For the market BU, we expect further normalization of gas margins. Overall, the performance achieved in the first nine months allows us to confirm our 2026 guidance, which includes EBITDA growth of approximately 2% compared with 2025, technical CapEx of approximately EUR 950 million, group net profit growth of approximately 2% compared with 2025, a net financial debt to EBITDA ratio of approximately 3.1x .
These targets confirm the strength of the group's industrial fundamentals and its ability to continue along its planned growth trajectory for the financial year, despite the highly volatile environment in which we operate. This concludes our presentation, and we can now open the floor to your questions. Thank you very much for your attention.
Thank you. If you would like to ask a question, you can select the pound five key on your telephone keypad, and you will be added to the queue. The first question comes from Francesco Sala from Banca Akros.
Good afternoon, everyone. Thank you for allowing us to ask questions. The first one is if you could share with us your analysis after the publication of the decree on the capped gas prices, and if you already calculated what the impact could be for you. The second question is about the network business unit.
You wrote that you expect an acceleration in the fourth quarter. I would like to understand if you could add more color about the details of this acceleration, and also some measure about this. The third question is on the spark spread trend in the last few weeks. What can we expect for the next quarter? Finally, on the waste business related to the tariff adjustment on the collection, can we expect some effects of this dynamic also in the next quarter and maybe even next year?
Thank you. Yes, let's start with the comment on the decree, the political decree. They are pretty complicated because, as yet, we do not have a full picture, as you may have seen, of the operative modalities, which has been delegated to ARERA. So, these are only first considerations that we will face more in depth in the next few weeks.
We can say that this measure forces very important principles, in our opinion, which concerns the inversion of flows. The European Commission positively assessed this measure because it does not create an inversion of export flows coming out of Italy. We assessed a level under which there could be an inversion, and it is about EUR 160 per megawatt hour. We believe it is very important because this mechanism is not active for the whole year, but it should be applicable only during the first quarter, and also in a non-recurring way for the first three months. This was the first thing I would like to point out. The second element concerns the kinds of exemption that are pretty clear in the decree. Their objective is to exclude customers with a fixed rate.
That is the cover position where we have a portfolio that consists of 38% fixed rate and the rest a variable rate. If we consider the volume, this 38% goes down to 20% of the 6 TWh that we sell are fixed rate sales, because as you know, on variable rate sales, we have some measures to recover the cost. We then have a subset because our fixed rate sales are almost totally covered by We have some hedgings, so there is an amount that is not hedged where we could apply a penalty, which is however limited. The mechanism on the sales side, we are unprotected for very limited amounts according to a first reading. We are speaking about less than EUR 5 million. This is what we can say based on our first analysis.
Concerning the effects of this measure on the energy prices overall, we are assessing this in line with the considerations made by the minister that assessed a possible reduction of 5%. Our hypothesis is that the CU could be lower than 5% compared to the current amount. This repositioning, and I would like to stress this out because the consideration that we already made at level of plan and that we will repeat at budget level had already foreseen some upgrades that were below this value of EUR 150, EUR 160 per megawatt hour concerning renewable energies for 2027. Concerning the second question related to the network's BU, we can say that this BU in the first nine months was driven by growth generated by the investments that we made in the past financial years. There was also a positive impact of synergies.
Of this EUR 17 million, EUR 5 million were related to the network BU. We foresee that these growth drivers can be projected also in the last quarter, both as organic growth and as synergies that we foresee that can reach about EUR 20 million overall in 2027. Concerning the current situation of the Clean Spark Spreads, at the moment we see important Clean Spark Spreads, so the flexibility of our plans allows us to catch this opportunity. We assess this situation that seems to be contingent. We do not believe it can continue for the whole quarter, so we have a positive effect that offsets the negative impact of other hydroelectric production.
During the semester presentation, we foresaw to generate 1,600 GWh, and we now have made a review of 1,000 GWh because we didn't have the amount of water that we expected based on the 10-year forecast and the referrals that we usually have at the end of September and the beginning of October. The lower hydroelectric generation is offset by the higher possibility that we can see with the Clean Spark Spreads and photovoltaic plants. The following question, the nine months, as we already said, had a positive impact of the one-offs. The adjustments that belong to the previous years. They have come to an end, so they won't have an impact during the fourth quarter.
Thank you very much. The next question comes from Roberto Letizia from Equita.
Thank you very much. I have a small question on the October effects. Can you please tell us how much of the rest generation have a fixed price at the moment to better understand the mechanisms of the asset for 2027? I wanted to know if you could better explain the impact of IRAP, because we are seeing the effects of the new decree. What is the effect of a 5% increase of IRAP? If you could provide us on the effect of the hedging, and if you foresee any hedgings for 2028. Concerning the guidance, it's true that there are 50 GWh less, but Clean Spark Spreads are really very strong. I would like to understand if we can consider the guidance as conservative or if there are other dynamics that make you remain a bit more prudent.
Thank you very much. I would like to start with IRAP.
Each IRAP point has an impact on our group of EUR 3.6 million. This increase in 2027 may have an impact of a further EUR 10 million compared to the EUR 7 million that we had already forecasted. This will also be moved to 2028 and 2029. Considering the previous measure and the possible increase, we could have EUR 7 million in 2026, EUR 17 million in 2027, EUR 10 million in 2028, and EUR 7 million in 2029. This is the estimate that we have made for this measure. Concerning the issue of October, we have a renewable production of about 2 TWh. In 2026, due to the dry period, we have a lower production. I would like to stress that we sell our hedgings in the market. We don't use the natural hedging in the supply chain.
There should be the exemption clause because we cannot change our hedgings. Concerning the guidance for 2026, it's true that at the moment we have a very positive Clean Spark Spreads, but as I said before, they are only available in some time ranges. We are exploiting them, but we have seen the whole dynamics that happened also in the third quarter. There are really favorable conditions, but they are temporary. Our assessment to confirm the guidance is not conservative based on the data that we have today. Concerning hedgings for 2028, hedgings were really low, also because there is no liquid market that can support the execution. For 2027, we are covered at 67% of renewable production that, as I said, we estimate at 2 TWh, and we are covered for about EUR 150 per terawatt hour.
Thank you very much.
Next question comes from Javier Suárez from Mediobanca.
Hello. Good evening, everybody, and thank you for this presentation. I have some follow-up on the energy decree. I listened to your explanations concerning the fact that the hydro generation should not be included in this measure of the government, but I was wondering if there are some changes on your strategy side. What are the implications from the operational point of view and your attitude towards your customers as a consequence of this decree that is certainly changing the rules on the table. The second question concerns your view on business supply for the last quarter of 2026 and also for the first half of 2027. It is very volatile. I heard that you talked about an improvement, especially on gas supply during the last quarter. I would like to have your view on the dynamics of the business supply of 2027.
Last question is about the budget structure. I think I have understood that you are talking about EUR 150 million of working capital absorption for 2026. Can you add a bit more color about the dynamics that impacted your working capital in the first three months of the year, and the dynamics that should be reabsorbed in 2027, and what we can expect for 2027? Thank you very much.
I can answer the first question and leave the floor to Giovanni for the last two questions. What changes on the strategic side, the implication for your business management? There is no impact. Nothing changes. Our attitude is a little speculative, little trading, and more strategic, so we go on with this road.
Concerning supply and gas supply, we have already seen in the first nine months a reduction of margins, and we expect that for the full year, there can be a normalization of about EUR 10 per customer. Concerning 2027, when we presented our plan, we had already hypothesized a single step ordinary of about EUR 5. So this is our view. Concerning the net working capital, we have a little expedition for business customers, and this is an element that can differentiate us. Our other peculiarity is that we have a long generation, and we foresee a thermoelectric generation, as we have seen this far, that will be more significant. So there will all those mechanisms of anticipated income or cash will be anticipated compared to gas production.
The dynamics are the seasonal dynamics that we have already seen in other quarters, and there will be a peak of our net working capital in September, and then there will be a reduction towards the end of the year. Concerning the medium to long-term component of absorption on net working capital, EUR 90 million, as you have seen, are for the so-called overcap in September, and we foresee, due to the dynamics, that this EUR 90 million can reach EUR 100 million.
Thank you very much.
Next question comes from Davide Candela from Intesa Sanpaolo. You have the floor.
Good afternoon also from my side. Thank you for receiving questions. I have a few questions.
The first one is a clarification on the estimates and on the assessments that you made on the cap on gas price, so that approximately EUR 5 million. I wonder if your reasoning is the maximum of the fork that can impact. The second question concerns margin calls. I wonder if, given the current prices, especially in the end of year and first quarter of 2027, there is a different management of your cash flow, and if this can impact the decisions that you can take on the spur of the moment that can have a short-term impact that is then absorbed in the long term.
Thank you also for the first question, because this allows us to explain better that the estimate concerns the maximum, the cap of EUR 15, and a continuous application of the mechanism that is also granted because there may be seasonal situations that make the gas price go below the cap, so the mechanisms wouldn't activate. This is an assessment for the worst-case scenario. Concerning the margin call for the EEX, after what happened in 2022, we were already little exposed at the time, but I have to say that the operation that we have on EEX is very limited. It's always monitored. We don't have a very important exposure on EEX. We are not very exposed on these margins.
Thank you very much.
I would like to remind you that if you would like to ask a question, you can select pound five on the keypad of your telephone. At the moment, I don't see any other question. I give the floor back to the speakers for the conclusions.
Thank you for your attention, and until next time. Thank you and good afternoon.