Iren SpA (IRE) Earnings Call Transcript & Summary

Good afternoon, everybody, and thank you for connecting to this conference call for the presentation of results on the -- for the first 9 months of 2025 and our business plan. We will start with the results, which will be presented by the CEO, Luca Dal Fabbro; and CFO, Giovanni Gazza. And then we will present the industrial plan for 2025-2030 presented by the CEO Gianluca Bufo. At the end, there will be a Q&A session. I will now leave the floor to Luca for the 9-month period results.

Thank you. Good afternoon to everybody. We will try and keep short with the presentation of the quarter results in order to leave space for the industrial plan presentation and then for the conference call for the presentation of the other companies scheduled for the afternoon. The quarter results, which have been approved by the Board of Directors are only increased over the last year, driven by all business units and the aggregation of Egea and the synergies equal EUR 16 million and the Egea operation has contributed for EUR 43 million, in line with the expectations and EUR 55 million at the end of the year. The technical investments are on the increase by 10%, totaling EUR 610 million and together with the dividend payment for about EUR 180 million, they reflect in the growth of the net financial debt. And in light of these results, we can confirm the guidance on 2025 as we will see in the next slide. Can I please see Page 3. You can see the details of the main economic and financial indicators of the period. The EBITDA exceeds EUR 1 billion, plus 9% due to the Egea operation, the organic growth of the regulated businesses, which benefit of some nonrecurrent positive elements and on the synergy plan, which has an impact for EUR 16 million over the period. Among the negative elements, we can include minor decreased hydroelectric volumes due to the poor water conditions in the summer. And poor margins on the energy production and no extra margins on gas sales. The EBIT of the period is increased by 7%, and the group net margins is growing by 12%. And this growth is slower over the rest of the semester, which is 14% and 24% as expected because the energy scenario and in particular, the summer hydroelectric production are weaker. And there are no extraordinary, no repeatable events on water and gas networks as in the first semester. The total investments of the period equal EUR 1,124 million, EUR 613 million are technical investments for the development of the electric and water networks and the completion of waste management facilities and the extension of district heating network, EUR 500 million for financial investments for the Egea and Iren Acqua operations. If we take a look at the end of the year in the last quarter, we are expecting business dynamics, which are in line with the first 9 months, and we can confirm the full year 2025 guidance with more specific targets and EBITDA, which is EUR 1,350 million, a group net margin, net profit expected at EUR 300 million. Technical investments increased by EUR 900 million and a ratio of the net financial position EBITDA, which is improved over the expectations that we presented during the July conference call. I'm sorry, I can't hear. All right. Thank you. And we have an increase in the networks due to organic growth, plus EUR 18 million due to investments made in the last years. And then the Egea operation, EUR 9 million and the net balance of non-repeated items, plus EUR 14 million as we had illustrated in the first semester. More specifically, as far as the water service is confirmed, the EUR 8 million of the ARERA price were awarded -- ARERA contract, sorry, were awarded for the technical quality of the service and EUR 3 million for the tariff recovery counterbalanced by the missed recovery of inflation costs. And as for the gas distribution is concerned, there was an extraordinary recovery of operational costs on the 2020-2025 period due to the ARERA decision number 570, which amounts to EUR 13 million approximately. The Environment business unit is increasing by EUR 6 million, half due to the Egea operation and the rest of the positive result of the waste recovery facilities, which was partially counterbalanced by the WTE, which were negatively affected by the electric power prices -- generated electric power prices, which were lower than last year. The Energy business unit closes the quarter with an increase by EUR 9 million, which is lower than expected due to decreased volumes of renewable electrical power that is minus 90 gigawatts per hour due to poor water conditions during the summer and lower energy costs in the -- in spite of this decrease in electric power generation, especially in the summer period due to a weak demand, the unit margins for the gas thermal production were growing with a spark spread, which is especially positive in some hours of the day. The capacity market increase, which is plus EUR 20 million, was partially counterbalanced by a reduction of the dispatching service market, minus EUR 9 million. This is still a weak market. Finally, district heating confirms the dynamics of the semester with increasing volumes, thanks also to the Egea operation. Finally, the market business unit is growing by EUR 19 million, supported by the Egea operation with EUR 22 million growth and cost synergies that are balancing the decreased gas sales volumes, minus EUR 17 million due to extraordinary items at the beginning of 2024 and the reduction of volumes of gas sales. Now let's move on to the next slide, and we will see some elements of the EBITDA contributing to the net profit. In particular, EBIT is EUR 401 million, plus EUR 7 million because the increase of the EBITDA is partially reduced by the growth of amortization amounting to plus EUR 45 million due to the start-up of investments and of the Egea operation. Provisions mirror the increase in dynamics that we have witnessed during the semester. The debt cost is increased over the last year due to the differential between the bond -- new bond issuing rates and the bonds reimbursed in 2025, the average cost of the debt for the period is 2.4% in continuity with the value regarding the semester. The end of September decrease in the tax rate totaled 28% after the one-off totaling approximately EUR 4.5 million for the anticipation of taxes on the Egea operation at the end of 2025. The tax rate of the group is expected to total 29%. So the group net profit for the period equals EUR 219 million with a growth of 12% over the last year, benefiting from all the elements described above and by the purchasing of the minority shares of Iren Acqua, which reduces the margins -- third-party margins of about EUR 18 million. And then as for the net financial debt is concerned, we can see that there is a growth in debt by approximately EUR 200 million, plus 5% over the end of 2024. The operational cash flow almost covers the entirety of the technical investments for the period, which is EUR 610 million. The growth of the net financial position is basically due to the payment of dividends to shareholders in June 2025 and the growth and it is about EUR 177 million. The net circulating capital is decreasing by EUR 10 million over the semester. It is plus EUR 204 million due to a seasonal effect for EUR 100 million, which will be recovered in the fourth quarter. And then the net circulating capital of Egea EUR 40 million and the tariff credits of businesses of regulated businesses for the extra cap that is costs which will be recovered after 2025 for EUR 26 million fiscal credits connected to the super bonus credits, which contribute for EUR 24 million, and they must still be recovered. Finally, EUR 20 million credits linked to the recovery and resilience national plans are still to be recovered. Now I would like to give the floor to Luca for the presentation of the industrial plan.

The new industrial plan of Iren defines the growth of the group up until 2030. As we have said, we will provide an overview of the dividend policy, which is evidence of the fact that the industrial plan rests on very solid pillars, allowing us to design a dividend policy. And we would like to strengthen the solid pillars of this group, leveraging on the activities we are excellent at in terms of skills and results. Let's begin with the strategy, and we will see an overview of the results in 2021, 2024 period, a 4-year period characterized by the first 10-year plan at -- by 2030 approved in 2021. We have EUR 3.9 billion investments, allowing the Group to strengthen the business lines, which are 34% of growth in the RAB and a doubling of the waste of the volumes of waste that we managed for the recovery of waste, thanks to our 6 new waste management facilities. And then the generation capacity of PV has increased 10x in line with the decarbonization objectives with 220 megawatts of installed capacity, an increase by 5% of district heating due to the extension of grids and the saturation of generation facilities that already exist plus 22% in the number of power and gas clients with 2.3 million contracts. And also from the financial and economic point of view, we had a growth with an EBITDA increasing by 37% and an average rate of growth exceeding 8%. And this means that the increase in EBITDA, the Group has seen a growth of EUR 110 million. Thanks to these results, Iren was able to distribute EUR 550 million in dividends to shareholders in 4 years, keeping a balance between capital remuneration and self-financing. These results are the solid pillars of the industrial plan I was talking about. And we have some key aspects, which are a review of the multi-utility approach motivated by the will to make the Group more efficient and oriented towards its core businesses throughout a more selective management of capital. So we have a focus on core businesses. And then development investments, which are targeted, especially at regulated sectors. These are the domains where the Group has proved its solid skills and capacity to generate value, and improvement of the company income pursued throughout a concentration of the development investments and the implementation of a synergy plan supported by the commitment of the management. Financial flexibility, allowing to seize new opportunities for growth, both at the internal and the external level in the short and medium term, enabling further acceleration of the development. The solidity, the financial solidity of our plan is strengthened by the fact that we do not expect asset sales, and all investments will be covered by the generated cash flow. This 10-year strategic vision is confirmed and is based on 3 strategic pillars that are reinterpreting in light of the market evolution. So our commitment to environmental transition is confirmed and strengthened, but it evolves according to changes in markets and regulation conditions, adopting an approach which is more targeted and resilient. So we focus at reducing the environmental impact in all sectors, protecting natural resources and encouraging energy recovery and waste recovery. And we would like also to create value at the local level, which is the focus of our mission. We create strategic infrastructures for local development and the strengthening of our presence at the local level. The multi-utility nature of our services allows us to seize new opportunities, have a broad service portfolio from the geographical point of view. And we are also able to meet the needs of the communities we work with. Finally, the quality of our service is what guides our action in terms of network resilience, reduction of failures and interruptions, strengthening of the loyalty of citizens and customers throughout an extended grid of physical points at the local level for an increase of the operational effectiveness. So our strategy is based on changing the business approach from an extended multi-utility to a focused multi-utility, leveraging on a capital allocation, which is more selective on business core to create value and reduce investments in less profitable activities. And the environmental transition process, which has started in Europe in the last year -- years is undergoing an uncertainty period, but we think that we should continue to believe in environmental transition, and we should have a long-term vision to 2040. The 5 focus areas have been identified, water resources, resilient cities, decarbonization, circular economy and people. Each focus area is associated to performance indicators with concrete and measurable targets at 2028, 2030 and 2040, in line with the technological maturity of the initiatives and the solidity of implemented investments. And I would like to give the floor to the CEO, Gianluca Bufo, to continue with the presentation.

Our plan combines ambitious but realistic targets based on the strength of Iren in the several areas of activity. We are -- we rank fourth among national operators for integrated water service with 3.3 million inhabitants that we serve. And we are the fifth operator in the electrical distribution grid, 2 sectors which require investments to increase the quality of our provided services. We're the first operator at the national level concerning the number of inhabitants served for waste management with a basin of more than 4.1 million citizens. And we are aiming at closing the cycle of urban waste with 3 new WTE in Piedmont, Liguria and Calabria in line with the regional plans in 3 out of the 5 regions, which are willing to do so. We are the seventh operation at the national level in terms of installed hydroelectric power and the one, and I would like to underline the only one which has presented to the Piedmont region a proposal for a private public partnership for the renewal of hydroelectric power concessions. We are the leaders in Italy in the sector of district heating with more than 1,280 kilometers of grid that we manage, and we aim at strengthening this position by further expanding our network and saturating the capacity of heat generation of our cogenerative plants and WTE. Finally, as a market business unit, we would like to confirm our placing as a player which goes beyond commodities. Today, 4 clients out of 10 have bought one or several service office or new products with the ambition of becoming a reference partner in a multi-annual durable relationship with residential clients and small businesses. Business plan includes a EUR 6.9 billion investments until 2030, out of which EUR 522 million of operations for inorganic growth, which have been carried out in 2025. For example, the integration of Iren Acqua and Egea operations financed throughout the issuing in January 2025 of a hybrid bond worth EUR 500 million. And net of the financial investments, the technical CapEx equal EUR 6.4 billion, financed entirely by the cash flow generated by the operative management and they are targeted -- 40% of them are targeted on the network business unit, 25% of the Energy business unit, 19% the Environment business unit and 9% the market business unit. Finally, the corporate investments amount to 7%, and they are targeted on the digitalization activities involving the whole group. And there is a mild reduction of investments on new renewables totaling approximately EUR 700 million. This decrease is due mainly to bureaucratic hurdles and the reduced profitability of projects as confirmed by the recent FAIRX operation. If we dive deeper into details of the investment plan, we can see that almost 80% of the EUR 6.4 billion in the technical CapEx are destined to regulated and semi-regulated activities. So this percentage is in line with the previous plan. However, the destination of investments changes. The investments in renewables are reduced and the investments in networks are increased because the latter share more stable and yields. And if we take a look at the destination of capital, 60% of investments is targeted on maintenance, especially 36% for the maintenance of free market assets in order to keep operative efficiency and continuity of performances then 23% of investments for the RAB maintenance and the balancing of the natural decay of assets due to amortization. The remaining 40% of investments for development, 30% of which regulated activities, especially water service, electric grids and WTE, which are regulated assets. And finally, 10% of investments for development of free market activity projects such as district heating and new PV generation facilities. The EBITDA will reach EUR 1,530 million in 2028 to exceed the EUR 1 billion threshold -- EUR 1 billion, sorry, EUR 600 million threshold in 2030. So this reflects a growth and annual average growth rate by 4%. The group net profits will grow significantly from EUR 268 million in 2024 to approximately EUR 400 million in 2030 with an average annual growth rate by 7%, which is more than the EBITDA. And this result is due to the acquisition of the share of Iren Acqua. A further element of financial solidity and sustainability of that is the evolution of the IFN/EBITDA ratio, which has a decrease in trend, and it will multiplied by 3 at the end of the period. This level is lower than the maximum threshold, which was set for the group at 3.5 and ensures the necessary flexibility, which will allow us to seize new opportunities of inorganic and organic growth, which may emerge in addition to our expectations according to the basic plan. And let's move on to the action plan. The markets we are operating with are undergoing deep and accelerated transformation. The protection of water has become a strategic priority for our country. Circular economy is evolving. It's finding its way, and the guiding principle of sustainability is still strong in a competitive context based on the closure of the waste management cycle. The energy transition and decarbonization require investments in renewables, flexibility and infrastructures in a context marked by a strong growth of electricity demand. At the same time, the sector of energy clients has become more competitive and leads operators to aim at advanced services for clients -- more client loyalty. These structural drivers are the pillars of our industrial view and action plan. Now let's see the dynamics of the network business units. And for the network BU, we expect investments for EUR 2.6 billion. 60% of them are investments for development, which will allow the achievement of an RAB of EUR 4.4 billion and an annual average growth of the EBITDA by 7%, exceeding EUR 700 million in 2030. EUR 1.6 billion will be invested in the water services for the modernization of the water network and the replacement of obsolete pipelines, reducing the leaks. There will be 5 new depuration facilities and the modernization of the existing networks for an improvement of water quality. Digitalization investments will support a district approach to the grids, which will allow to identify leaks. By 2030, we would like to exceed 76% of district network and -- we will support the electric power demand and improve the performance with a reduction of the duration and frequency of failures. And finally, EUR 300 million will be aimed at maintenance of the gas distribution networks in order to ensure maximum safety of the raw material supply. The growth of RAB of EUR 1.3 billion, thanks to investments in electrical grids and water supply guides the EUR 230 million EBITDA growth by plus 48%. This growth is also the result of operational efficiency, positive effects of regulations and inflation recovery in a regulatory framework, which were WACC is expected as constant. The Environment business unit will see a strengthening of its leadership in waste management. It serves more than EUR 401 million inhabitants with new development of new facilities with the completion of the Saliceti plant in 2026. The Group will orient its investments towards facilities for energy recovery and waste recovery facilities with EUR 450 million for waste collection which will become more modern and effective, thanks to digitalization and customized collection based on the local needs and modernization of our tools. This will allow an increase of specific waste collection expected by 2030 to reach 75%. EUR 700 million will be targeted and allocated for the development of facilities in Turin, Gioia Tauro and in Liguria and their capacity will be over 1 million tons, and they will be kicked off between 2031 and 2033 to complete the construction of the FORSU facility with a capacity of 90 kilotons of tons in Liguria, there will be another facility for the recovery of electrical household equipment and the extension of paper waste and packing management and the investments of the environment business unit will include also the strengthening of the waste collection services in the areas we served, thanks to concessions and the acquisition of other shares in companies that we already are part of -- in the urban waste management domain. The total investments are EUR 1.2 billion, and they will generate an increase by 29% of the EBITDA, which will reach EUR 330 million in 2030. The margin increase is also due to tariff adjustment, thanks to a recovery of the inflation, while the management and disposal activities will be supported by more effective facilities and partnerships and by the sales of secondary raw material. The increase of the EBITDA is linked to the 3 new WTEs, which will be kicked off between 2032 and 2033. Our -- the ambition of the Energy business unit is strengthening its role as a national player with district heating with concrete solutions linked to the renewal of hydroelectric concessions and the availability of thermal electric power. And we have in the hydroelectric business line, EUR 300 million of investments, which are due to the renewal of our concessions in Piedmont, whose extension will cover the next 30 years according to our proposal of PPP, which has already been presented and is in its advanced plan. We also expect an increase of the hydroelectric capacity by 16 megawatts in the planned period, thanks to the integration of the Egea assets and the new mini hydro facilities. As for renewables are concerned, 200 megawatts of PV power capacity will be installed with the objective of sustaining the development pipelines built during the last years. The profitability of this new project will be supported by incentives of the FAIRX mechanisms and the PPA contracts then district heating with EUR 400 million investments for the extension of the networks, especially in the area of Turin. This will allow to saturate the production capacity of heat, thanks to thermal energy generated by the future fourth line of the Turin WTE. And due to the role of national players of the sector, we are studying some pilot projects for the thermal -- sorry, thermal sun power generation and geothermal research in the last years, the thermal electric facilities have gained centrality in decarbonization and environmental transition. As we've seen during the last bids for the capacity markets and the potential increase of the energy demands, due to the new data centers, which are going to be built in Italy. And we have forecast with a growth of electric power demand due to data center installed in Italy in 2030. And so we decided not to dismiss the thermal electric power plant in Turbigo and to install an air thermal sister to improve the availability and effectiveness of our services during the summer periods. And these plants in Moncalieri and Turbigo will come -- will be kicked off in 2028 and will be supported by the prices of the capacity markets. And after the development plan for the residential segment, thanks to the Superbonus incentives, a strategic repositioning is expected. The focus will revolve around services for energy requalification of public buildings, thanks to the PPPs project and the energy plant requalification in the business segment. The EUR 1.6 billion investments in the energy sector will allow to reach an EBITDA of EUR 350 million in 2030 with an average annual growth by 4% over 2024 in spite of a reduction of energy prices in our reference scenario. This result will be due to the increase of sold heat volumes after the development of the grid, increased PV power production and the contribution of the capacity market, confirming our strategic role as a driver of the energy business unit in the growth and development of the entire group. Let's conclude our analysis with the market business unit, which aims at becoming a single point of reference for our clients, especially in the residential segment. We've started with this project, with this ambition 4, 5 years ago because competition is growing and the industrial plan aims at offering more value to the customer, thanks to targeted offers, cross-selling of the Iren Plus services and an enhanced customer service. Our target is to increase profitability and customer loyalty, reducing the churn rate. So we're expecting a stable customer base with 2.3 million clients with a growth in the electric segment and reduction in the gas segment. As for the power, the electrical power segment, our aim is to increase volumes of sales throughout PPA on the mid and long term of B2C and B2B customers with an objective of 200 gigawatt per hour in 2028, so as to stabilize profitability on the electric power supply chain, while the gas supply chain will be diversified, the supply portfolio will be elongated throughout [indiscernible] annual multi-annual LNG contract for 20% of the total need. Alongside the sale of commodities, we will offer a broad portfolio of products and services for the residential services with the objective of reaching 1 client out of 2 with an additional service. The digitalization of the customer experience will allow the service to evolve maintaining its strong presence at the local level, which characterizes our approach to our clients. And we have several physical contact points at the local level, which can be reached in less than 15 minutes. We will strengthen this local dimension with the opening of 120 contact points, new stores, especially in Southern Europe, where we have achieved important results on the customer base. Investments by EUR 600 million will allow to maintain the current level of customer base with an EBITDA -- expected EBITDA of EUR 230 million, which is stable over the 2024 financial year. And the Egea operation is balancing the reduction of unit margins in the gas sales, while we are expecting a stable unit margins in the power sales, supported by the enhancing of the natural hedging driving by the integrated chain of power generation and sales. As for sustainability, 70% of the total -- in the 2025, 2030 period, that's EUR 4.3 billion, which are sustainable and admissible for the European taxonomy. 33% of investments is devoted to the protection of water resources by reducing environmental collection, thanks to a marked decrease of leakage on the net. And on the other hand, by recovering purified water and putting it back into the ecosystem, thanks to the construction of 5 new treatment plants -- management plants, sorry, increasing the purifying capacity by 17%. 28% of the investments will be devoted to support the cities we operate, which throughout increased resilience and sustainability throughout solutions such as district heating and 26% of investments is for decarbonization with a long-term objective of a carbon intensity, which is lower than 130 gCO2 per kilowatt hour, contributing to the achievement of the national and European targets. Finally, 13% is devoted -- of investments will be devoted to circular economy with the target of increasing waste management, but also to increase waste recovery with a plus 500 kilotons and the production of biomethane by biodegradable waste, which will increase by 20 million cubic meters. One of the pillars of the industrial plan is confirmation and enhancement of the synergy plan, which has already started in the previous period. The expected synergies at the end of 2030 totaled EUR 120 million with a linear growth of approximately EUR 20 million per year in continuity with the 2020 results. Part of the value that we generated in the past, however, did not translate completely into an EBITDA increase due to emerging costs connected to a development plan started in 2021 on all business lines. This industrial plan, on the contrary, strengthens the commitment on synergies with EUR 16 million that we have already achieved in the first 9 months of 2025. This is the first year of full operation of the plan and the strong action on cost control and increased efficiency in organization has allowed this results. The synergies that we have identified imply a reduction by 6% of the cost base, including industrial, general and staff costs. This is a realistic objective pursued with the involvement of all company areas. Over the last plan, part of the synergies will be absorbed by emerging costs totaling EUR 35 million, which are connected on the increase of staff costs due to contract adjustments, national contract adjustments, which exceeded the inflation. These were not foreseeable previously. So synergies are not only a motor driving force for effectiveness, but also an instrument which allows to balance the unexpected costs. The concrete results that the synergy plan is generating is based on continuous monitoring and on the mapping of 200 involved projects for the recovery of profits and achievement of economic, financial management objectives of the Group. These projects can be classified into 3 main categories: people with the simplification and increased effectiveness on the organization for the optimization of the replacement rate and an increase of total productivity, transformation for the rationalization of the Group structure and more focus on core business supported by digitalization and artificial intelligence and effectiveness with the consolidation of departments and internal specialization of competencies and interventions for the optimization of waste management and the quality of the service. And the benefits will be a more rational company organization with the integration of small companies in the year-end business units, which is already implying saving on facility costs and the streamlining of the company activities, which in 2026 will also involve the agile companies. Secondly, the digitalization of processes at the business and holding levels, thanks to the introduction of tools which are technologically advanced, especially artificial intelligence in the first phases of client management services. Then we have an aggregation of call center and invoicing with a centralization of client management activities and invoice issuing activities under the market business unit, which has replaced the previous individual structures of networks and environment, thus ensuring more effectiveness from the organizational point of view regardless of the business area. And then there is an optimization of facilities during 2025, 13 peripheral facilities or facilities with a small number of employees have been closed in favor of the main facilities with a total saving of EUR 1 million. This activity, which was made possible, thanks to smart working and the subsequent rotation of desks has generated benefits not only in terms of OpEx reductions, but also operative improvement and strengthening of corporate culture. And I would like to finish with the financial section. An important plan of investments are planned for the Group, and they mirror the main financial objectives. The EBITDA is expected to grow with an average annual rate of 4%, reaching EUR 1.6 billion in 2030. This was made possible by the visibility of the profits deriving from regulated and semi-regulated activities, which in 2030 will generate approximately 75% of the Group's EBITDA. And you can see the organic growth with a contribution of EUR 270 million with the development of the asset base. It is consistent with the development investment plan, which is EUR 206 billion and the annual contribution of EBITDA exceeds 10% apart for the development investments of 3 new WTEs, which will be kicked off in 2032 and 2033, the contribution of the EBITDA investments would grow by more than 12%. As far as synergies are concerned, the effectiveness and integration enhancement activities will generate margins estimated at EUR 120 million. However, these benefits will be compensated by an increase in staff costs of EUR 35 million due to contract adjustments, which is still being developed, and they are expected to be higher than the current inflation rates. As for inorganic growth, the EGEA operation will contribute for approximately EUR 60 million. And then the energy scenario a negative impact is expected because of the uncertainty of the scenario. And the PUN in 2030 is expected to be lower than EUR 100 per megawatt per hour and the clean spark spread approximately at EUR 3 per megawatt per hour. And then the margin of the rich clients, the industrial plan hypothesizes a reduction of profits on this segment because the extraordinary margins of 2024 in the gas segment and the increased market competition will cause this block, the expected growth of the EBITDA will have a positive impact on the group net profit with a compound annual growth rate of 7%. This increase is also due to the acquisition at the beginning of the year of the minority shares of Iren Acqua, which will benefit the group net profit by EUR 200 million approximately. In conclusion, in 2030, some important plants will still be underway, will still be in their phase of completion. So what we've mentioned before in terms of EBITDA growth and the growth of the group's net profit does not reflect the full potential of the investment plan. In particular, the 3 new WTE plants will be kicked off only in 2032, 2033, generating an increase of the EBITDA of at least EUR 100 million. This contribution of margins will lead the CAGR of the EBITDA to 5% and the net profit to 8%, further enhancing the growth of the group. Giovanni, I'll leave you the floor.

Well, as for the net debt evolution, we confirm that this plan is a strong commitment to the maintenance of the current rating, which is BBB with an outlook of stable by S&P and Fitch agencies. In the first graph, you can see the net financial debt ratio, EBITDA ratio, which is expected to be decreasing from 3.2% in 2024 to 3% in 2030. This will progressively increase the financial flexibility of the group and the further growth options, both in organic and inorganic terms will benefit from it. The maximum threshold of the IFN EBITDA ratio is 3.5%, and it is compatible with the current rating metrics strengthened by a business portfolio, which will tend to regulated activities with an increase -- an expected increase of the net financial position from EUR 4.1 billion to EUR 4.9 billion in 2030. However, over the previous plans, financial solidity is mainly supported by 2 elements. First of all, among the funding sources, so we did not include cash-ins due to asset dismissal or financial partnerships. Therefore, the investment plan is entirely covered by the operational cash flow. And the operational cash flow will also cover almost 50% of our commitment on dividends, while in the previous plans, this percentage was way lower. And the financial profile of Iren is still quite stable, characterized by a low level of risk for the entire duration of the plan with the debt cost, which is increasing due to refinancing expected for the next years with the objective of an average duration of debt of 5 years. The average debt cost will be lower than 2.5% in 2025, 2026 and lower than 2.9% in the remaining part of the plan. This result will be achieved, thanks to high fixed rate debt, which is 94% today and a constant growth in sustainable financing. On the right, you can see the financing plans, which are about to expire and they will have to be refinanced and not the equity content and take a look at these results and the graph of the right, which, however, again, I repeat, does not include the equity content of the hybrid bond, which was mentioned previously, and it will expire in 2030. I would like to give the floor to our President.

Now in light of the planned solidity and the visibility of the ROEI, the dividend policy is substantially extended to 2030. And this will provide more stability and visibility. So the annual growth of the dividend is confirmed at 8% until 2027. In the 2028 to 2030 period, a new increase of the dividends is expected totaling 6% every year. So the increase of the dividend policy is consistent with a minimum payout ratio of 60% and in line with an annual average growth of the EPS of 7%. So we have 1% increase, thanks also to the kickoff of the 3 new WTEs. Financial flexibility allows us to seize new opportunities of strategic development, which have not been included in the plan, the strategic options were included in the so-called basic plans because we're still uncertain about their potential for implementation and because they depend on external factors, which cannot be governed by the group. And so you can see a strategic basket with organic growth options in all business units. However, also inorganic growth will be enabled by our multi-utility approach, which may lead to an EBITDA increase until EUR 100 million, supported by investments amounting to EUR 600 million. This is a volume in lined with our expected financial flexibility. As for inorganic growth is concerned, its effects on EUR 100 million of EBITDA in our multi-utility structure, which will allow us to further develop 2 strategic lines. First of all, the strengthening of the companies that we already own with minority shares by strengthening the industrial profit and financial approach of the group throughout acquisitions of participation in tenders in the environmental and water service domains. As for organic options, according to the regulation evolution, we expect an acceleration of investments in the power grids and water grids due to the focused multi-business approach for the increased effectiveness of the portfolio business. In the Environment business unit, we're a leader in the revamping and modernization of WTE for the management of urban waste in the energy BU. We look to data centers of medium and small size at a local level for -- and we would like to use the synergies of our plants. We are creating an internal business manual business model for direct supply and continued supply of electric power and recovery of waste heat to be used for district heating, and we can anticipate a development scenario of this technology with a benefit for the EBITDA estimated in plus EUR 25 million in 2030. Market business units, we would like to capitalize on our competencies in energy management, and we are assessing the possibility to further extend to clients in the B2C and B2B segments with a target at 2030 of 1.5 TWH of PPA in sales, optimizing the profiles with long-term purchasing from renewable sources. In conclusion, we are really satisfied by this plan, which is supported by leveraged by factors, which are under our control and for the sharing of value creation for our shareholders throughout an increase in profitability, supported by the development of regulated sector and increased effectiveness during performance, a clear dividend policy and with a total shareholder return, which is very interesting, 30% on average every year, a strategic positioning, which is more focused on business where we have significant competitive advantage, and we're getting ready for new opportunities, which are not included in the plan as we did in the past in order to accelerate development.

Javier Suarez from Mediobanca has the first question.

I had a question on the paradigm shift. I think I understood that the company does not have CapEx.

I'm sorry, I can hear an echo and cannot really understand the question.

Can you please provide concrete examples of the CapEx that have been reviewed in order to achieve a profitability, which is similar to the previous plan with a capital intensity, which is significantly lower. This is the first question, which should be answered with regards the philosophy underlying capital allocation. The second question is about the leverage of the company. The 3.5 data is very interesting for me. Previously, I had the impression that you basically rested on laurels in contract terms, but also in structural terms. So with a model which is less capital intensive and more controllable by management, can we say that 3.5 leverage is more comfortable for the company and for the next business plan for the next 5 years of the business plan, maybe it is more comfortable to seize new opportunities this way. And the third question is about the return on investment, which is more competitive on the market, which has been more competitive on the market in recent times. And I've seen that you are expecting a growth on the market. And what are the levers that you think are more effective in meeting the needs of this market, which is more competitive than in the past?

I will answer the first question, then Giovanni will answer the second question. And the third question will be answered by Gianluca. As for your first question is concerned, focusing on the most profitable CapEx and so on and so forth. Well, I think that the right answer is this. We are focusing on water and electrical power grid services. We know that there is a high demand for investments and this will increase our resilience in the light of climate change. With renewables, we have a low return on investment today. The demand for renewables is very high. But we have mentioned the FER X bid, which has implied a strong reduction in the award in price and the FER X decree has not been implemented yet. This is my answer in terms of investments. As for the net profit, our industrial plan provides for approximately EUR 400 million. So it is not really different from the previous plan. So what is the main ratio behind that? The main rationale -- sorry, well, there was an operation, which is the agile operation, which has not been included in the plan. In the previous plan, the operations had a lower impact on the EBITDA because the equity had a cost, which was higher than the debt cost. So we have reshaped the profits aimed at a reduction of the EBITDA because profits in some regards are more important than the EBITDA.

Now as for the second question is concerned, you were talking about a threshold. Well, we're talking about a maximum threshold here. Our aim is to keep a profile, which progressively reduces from 3.2 to 3.0. That area is a flexibility area, allowing us to seize some opportunities for growth that we've talked about. And the financial effort is EUR 50 million, but then these operations will generate cash and -- we believe that this flexibility should be taken advantage of to create new opportunities for growth, both in organic and inorganic terms because that threshold allows us to keep our rating by the agencies, which is BBB stable. So we're not talking about a structural value at 3.5. We're talking about the financial opportunity to bring about development worth in EUR 100 million EBITDA increase. The most effective strategies for the management of supply customers. Well, this is a plan based on a more competitive scenario. There are larger stakeholders increased the churn from 2024 to 2030. The expected reduction per client is EUR 10, EUR 10 is a very ambitious target. For years, we have believed in offering new products and services. We're talking about a portfolio of approximately 400,000 contracts. We're talking about one clients out of 4. We're talking about 50% of clients that have found solutions to improve their lives, be it an insurance policy or more effective generation of electrical power in their house. Please keep in mind that this increases the lifespan of a client. Whenever we sell a product, a service, we have a churn effect of 15% on clients who have already bought some other solutions. We're talking about 4 clients out of 10 and an objective, which is 1 client out of 2.

The quality of our service was the topic of the third question. We have more than 120 stores. The client that sees Iren as somebody, which provides quality services regarding power generation power supply, but also in terms of waste management, in terms of customer service. That is why we continue adopting our multi-utility multiservice platform approach and app. Our app is a great success, which contributes to the quality of our service. Thirdly, which we should prolong the supply chain, our portfolio still contains products, which should be renewed, but we have already started this renewal of contracts. The new contracts are 3, 5 years, 50% with a fixed rate and 50% with a variable rate are a way to provide long-term proposals to our retail segment. And then as for the supply aspect, long-term supplies of gas throughout LNG, throughout re-gasification facilities in 2028 is a cost factor, which, however, will be included in the synergies, which will be brought about by the renewal of the market business unit and be absorbed by the adoption of artificial intelligence and other improvements of the customer services.

Emanuele Oggioni from Kepler Cheuvreux.

I have some questions as well. First of all, the first question is about the market business unit. I believe that since cut of 300,000 clients by 2030, but I think the EBITDA will remain the same. So we have a target of 230. So the profitability would be EUR 30 per client. That means much lower margins. So how can these figures be compatible with the fact that you've adopted a cautious approach with the reduction of margins with 300,000 decrease in clients, I would have expected a reduction -- a greater reduction of the EBITDA. How do you explain that? The second question is about the 2026 margins, EBITDA, net profit and the debt EBITDA ratio for 2026. The third question is a request for specifications on the hydroelectric CapEx. The CapEx related to the hydroelectric segment. You've been mentioning that some CapEx are connected to concession renewal. Also due to the PPPs that you're already discussing and you've been discussing for long, for example, for the Piedmont region. Can you please provide more specific figures? Can you please tell us whether there is the opportunity for repowering to increase capacity, increase the pumping storage, the nominal capacity, night storage, increasing effectiveness. Are these aspects included in the plan? Or maybe you're just waiting for the renewals of concessions to become officials?

Well, Gianluca, Giovanni and then I say one question each.

Now as for the customers, your projection is right. So EUR 240 million of EBITDA. We have a delta of EUR 10 million over the previous plan. And the EUR 10 per client that I was mentioning is the reduction of the trade margins. When also on the market, the reinforced synergies and the cost trends of the business units are reversed, we will see the effects of this. And if you take the EBITDA into consideration, what you say is absolutely correct. Only one further aspect. The competition scenario is stronger. The competition is fiercer. But today, we have an expected margins, which are higher than the previous plan. This is something which should be said. However, there are some trends on the cost of labor, the cost of employees, which are unpredictable, but the dynamics here are more resilient.

Well, the second question, the 2026, the EBITDA is expected to increase by 4%. The guidance for 2025 full year was different the ratio IF EBITDA is expected to keep at 3.1%. It is a better forecast than 3.2% as we had expected at the beginning of the year, EUR 950 million are the returns over the 2025. As for the net profits are concerned, I can confirm a growth which is in line with the 2028 target. Let's say that the CAGR that we provided by 7% will be confirmed.

As for the third question, which is related to hydroelectric power, I would like to stress once again that we are the only energy company in Italy, which has already established a PPP. So our project has already been acquired as a project for the bid for tender that will be launched in a short time. So our position is quite stable, quite solid. We are more than optimistic. We're positive. As for investments are concerned, we expect EUR 320 million on hydroelectric power, tanks, storage tanks and pipelines, a pumping station on the [indiscernible] basin and some repowering projects with limited capacity. And we have 2 bids for tenders, one for larger volumes and another one, which are still underway.

Now, Equita, with Roberto Letizia.

I would like to ask a question on market forecast and on the paradigm shift. For renewables, the sourcing costs were crucial in becoming more effective in the trade proposals. I would like to get to know in the plan period, how do you expect to reabsorb this paradigm shift in the plan period? And secondly, can you please tell us more about the coverage for 2026? And -- some words on the power price because I can see that there is substantial stability of the power prices, but we're starting to see the forward curves that were longer term in the past. Now they're shorter term. And today, you're talking about the policies of renewal of gas contracts with the new policies for 2028 at the international level. We are expecting more availability of gas starting at the international level, starting 2027. So how did you get to a power price, which is in the region that you had mentioned.

Well, first Gianluca, then Giovanni.

Well, sourcing costs, I would like to start from physical sourcing. We're talking about large volumes of investments and new installations of PV power. This means that there is power generation that is lower than the portfolio demand. But then we maintain Turbigo, which counterbalances this. From the point of view of cost advantages, the advantage is that the production is sourced from renewables totally green, Turbigo however is not green. And however, the certified source was green. As for the market margins are concerned, every purchase is targeted on the PUN value regardless of the product values. The production of renewables peaks when you have a [ sand ] from 10 to 6, but not in line with consumption by the retail customers. So hedging coupling with the thermal power -- of thermal power is not in line with solar power. There's always a need for backup as for solar power is concerned. And in order to continue with the provision of green services for our services and our products, we are turning into long-term PPA sourcing from green sources, of course, in order to meet the needs of this segment, which is modulated between the photovoltaic and wind power.

Well, as for coverage is concerned, last year, the coverage was 50% on our renewable sources in 2026, this percentage increased to 60%. And so hydroelectric, solar power, WTE are all sources, which will be maintained in 2026. This was the opportunity to communicate our production power for 2025, which is higher than our target for 2026, which is approximately 100 gigawatts per hour. As for thermal electric power coverage is still low, the forward curves have negative spark spreads starting from the second quarter. In the first quarter, we have positive spark spreads. That's why we started working on the coverage whose values are approximately EUR 3.5 per kilowatt per hour. Our visibility is not so connected to forward curves because they're not reliable when it comes to delivery. This is something we analyzed in October. We had a clean spread, which are quite significant, and they cannot be read according to the forward curves of June, July. So what we know for certain is that the hours that are useful for our power generation are 1,200, 1,300. And as for coverage is concerned, the fixed rate contracts are increasing. However, they are 100% covered as usual.

Now, the next question is by Intesa, Davide Candela.

I'm curious about a couple of things. The first one is waste as for collection is concerned, there is an increase of margins until 2028. And I think it refers to the aggregation of the legacy areas that you were mentioning. Do you think -- do they have a name and surname or maybe there's a risk related to concessions, which may not be granted for waste management. And my second question is about the CapEx plan, EUR 1.2 billion right? And at the end of the plan, are there margins due to the WTEs, which will be kicked off in 2028, 2032, 2033. And finally, can you please specify what you mean by the loss of equity content for the hybrid bond? Is the refinancing expected? These are 2 different scenarios.

Well, Gianluca and then Giovanni.

Well, let's start with the margins. There's an increase of the EBITDA margins on waste collection. Our strength is being a leader in waste collection, and we do not expect further growth at the local level with concessions related to waste collection, which exceeded the more than 4 million inhabitants of the areas we serve. Two drivers are quite important for us. The first is investments, especially first of all, in the Tuscany region for waste collection, there are financial plans for the Tuscany region, which are increasing. The tariffs are increasing up until 2028, and they will consist of the return of investments into collection. We would like to make collection increasingly diversified and customized and automatized and digitalized. At the group level, we have approximately 1,300 vehicles for urban waste collection, which are digitalized, provided with OT systems are optimized by the AI. We have more than 500 facilities with OT sensors, which monitor to which extent the bin is full. It should be avoided. And we're looking to improve automatic systems. We're looking to improve cost reduction through synergies. The collection is not the domain where we are looking to make further investments. As far as thermal waste recovery systems are concerned, you've seen our forecast by 2032, EUR 400 million will be invested in WTE, EUR 340 million of which are destined to the Turin area where we will completely close the waste cycle in the Piedmont region and the remaining part looks to 2030, while the fourth line will enter into force in 2031. In 2030 is also the horizon for the completion of the WTE in Gioia Tauro and Liguria. We're talking about EUR 70 million the magnitude of investments will be completed in 2031, 2032. We expect processes expected is already very advanced. We will complete our plan in 2032, in Liguria in 2033.

Francesco Sala from Banca Akros.

I have a question on waste management, the increase of the EBITDA in this segment. And I would like to know more about the reasons of this improvement. My second question is on the Energy business unit, especially as for renewables are concerned in 2024, in the 2024, 2028 period, we've seen a shift of dynamics. And finally, should we take into account the public financing for the CapEx plan?

Now the 2 questions on waste for Gianluca and the third for Giovanni.

As for waste and EBITDA, the strategic cycles 2021, 2030 included investments for waste management and material recovery, waste recovery, thanks to the collection that we're managing at the local level. And we've seen that quarter after quarter, the kickoff of facilities brought to profits, which were lower than expected, but -- in the fourth quarter of 2025, we've seen improvements. We were able to adjust some technical aspects of our plants. We did so, and we're already recovering profits. We will continue to do so until 2028. As for waste management is concerned, as I was saying before, the [indiscernible] plant, the [indiscernible] facility will generate a new increase in the EBITDA until 2026. However, waste management in our capital allocation plan is a segment where we will aim at maintaining our position that generates significant values and significant EBITDA growth, but we will not expand into further directions.

As for the public funding is concerned, we expect EUR 500 million during the plan period, which are connected to the last resiliency plan initiatives concerning power grids, integrated water networks, but also environmentally sustainable plants, the FORSU plant and waste collection. There are also public funding, which derive from the awarding of some projects. And we will present new projects and the normal, of course, contributions due to new grids and the expansion of existing grids. Are you talking about renewables?

Well, Giovanni, I would like to spend a new words. Our installed capacity today is 240 megawatts. We focused on sun power generation, the authorized pipeline, we see the development of further 200 megawatts. In the past years, we have acquired new capacities. There will be a selection in capital allocation of projects which are already available and will generate profits in line with our capital allocation. They will contribute with EUR 200 million of EBITDA. And we're still waiting for the outcomes of the temporary FER X project, especially as far as the Rovigo facility is concerned. The temporary FER X for Rovigo is still underway. So we're waiting for news. We're positive. We think there will be good news. As for the entire pipeline, we have 200 megawatts. We will generate 200 further megawatts. So that's 400 megawatts in total without the 49% share in renewables. However, this pipeline projects will provide the expected profits with however, these projects are not really profitable. And hence, the reduction by EUR 700 million in investments on sun power.

We have a follow-up by Javier, Mediobanca.

And the Slide #23 is about a hybrid bond for EUR 500 million. How -- what's the story behind this hybrid bond in the construction of your plan and designing of your plan?

Well, this hybrid bond was considered according to international accounting standards. We're talking about net assets, so EUR 500 million. Rating agencies consider 50% as equity and 50% is debt. And we're talking about something which is net assets, not IFN.

Thank you for your attention. I can't see any other questions in the queue. The Investor Relations team is available. If you have further questions, you can contact them directly. I will now give the floor to Gianluca.

Thank you, Giulio. Thank you for your questions. Thank you for your interest. We think that so we've explained the new business plan, the new industrial plan in a very transparent way. It is a very concrete down to earth plan, and we are aiming at becoming more rigorous, becoming more selective in new investments. We're looking for profits, not only EBITDA. This is our mantra for the next years, and we think that the plan is quite solid, and it will last not only during the next year, but also until then... [Statements in English on this transcript were spoken by an interpreter present on the live call.]