Results by business area

The representation of performance by business area presented here is based on the approach used by management in monitoring Group performance for the two periods under review, taking account of the operational model adopted by the Group as described above.
With regard to disclosures for operating segments, beginning with the close of the accounts at September 30, 2019, the Enel Group has changed its primary and secondary reporting segments in accordance with the provisions of IFRS 8. Specifically, bearing in mind that in 2019 management began to report performance by business area, the Group has therefore adopted the following reporting sectors:

  • Primary sector: business area; 
  • Secondary sector: geographical area. 

The business area is therefore the main discriminant in the analyzes performed and decisions taken by the management of the Enel Group, and is fully consistent with the internal reporting prepared for these purposes since the results are measured and evaluated first and foremost for each business area and only thereafter are they broken down by country. The following chart outlines these organizational arrangements.

In particular, the new organization continues to be based on matrix of Business Lines (Thermal Generation and Trading, Enel Green Power, Infrastructure and Networks, End-user Markets, Enel X, Services and Holding/Other) and geographical areas (Italy, Iberia, Europe and Euro-Mediterranean Affairs, Latin America, North America, Africa, Asia and Oceania, Central/Holding).
Finally, it should be noted that with effect from September 2019, the Latin America area connected with the Enel Green Power Business Line also includes the countries Panama, Costa Rica, Guatemala, El Salvador and Nicaragua, which had previously been reported in the North and Central America geographical area (now renamed North America and consisting of the following countries: United States, Canada and Mexico). In order to ensure full comparability of the figures commented here in the light of the new breakdown of the primary and secondary reporting sectors for IFRS 8 disclosure purposes and of the reallocation of countries in the Enel Green Power segment, the comparative figures for 2018 have been restated appropriately.

Results by business area for 2019 and 2018

Results for 2019 (1)

Millions of euro

Thermal Generation and Trading

Enel Green Power

Infrastructure and Networks

End-user Markets

Enel X

Services

Other, eliminations and adjustments

Total

Revenue and other income from third parties

30,519

7,360

20,092

19,482

967

1,901

6

80,327

Revenue and other income from transactions with other segments

1,532

373

1,697

13,062

163

80

(16,907)

-

Total revenue and other income

32,051

7,733

21,789

32,544

1,130

1,981

(16,901)

80,327

Net income/(expense) from commodity risk management

(676)

14

-

(71)

-

-

-

(733)

Gross operating margin

1,395

4,604

8,278

3,287

158

126

(144)

17,704

Depreciation, amortization, and impairment losses

4,889

1,328

3,001

1,124

256

201

27

10,826

Operating income

(3,494)

3,276

5,277

2,163

(98)

(75)

(171)

6,878

Capital expenditure

851

4,293(2)

3,905

449

270

134

45

9,947

(1) Segment revenue includes both revenue from third parties and revenue flows between the segments. An analogous approach was taken for other income and costs for the period.
(2) Does not include €4 million regarding units classified as “held for sale”.

 

Results for 2018 (1)(2)

Millions of euro

Thermal Generation and Trading

Enel Green Power

Infrastructure and Networks

End-user Markets

Enel X

Services

Other, eliminations and adjustments

Total

Revenue and other income from third parties

26,630

7,613

18,250

20,340

849

1,878

15

75,575

Revenue and other income from transactions with other segments

977

443

1,718

13,431

157

60

(16,786)

-

Total revenue and other income

27,607

8,056

19,968

33,771

1,006

1,938

(16,771)

75,575

Net income/(expense) from commodity risk management

640

(162)

-

(11)

-

65

-

532

Gross operating margin

1,117

4,608

7,539

3,079

124

85

(201)

16,351

Depreciation, amortization, and impairment losses

1,235

1,103

2,752

1,121

105

123

12

6,451

Operating income

(118)

3,505

4,787

1,958

19

(38)

(213)

9,900

Capital expenditure

839

2,784(3)

3,830

374

183

106

36

8,152

(1) Segment revenue includes both revenue from third parties and revenue flows between the segments. An analogous approach was taken for other income and costs for the period.
(2)The figures have been restated to ensure comparability with the results for 2019, which are reported using business areas as the primary reporting segment.
(3)Does not include €378 million regarding units classified as “held for sale”.

In addition to the above, the Group monitors performance by geographical area, classifying results by Region/Country. In the table below, gross operating margin is shown for the two periods under review with the goal of providing a view of performance not only by Business Line, but also by Region/ Country

Gross operating margin

Millions of euro

Thermal Generation and Trading

Enel Green Power

Infrastructure and Networks

End-user Markets

Enel X

Services

Other

Total

 

2019

2018

Change

2019

2018

Change

2019

2018

Change

2019

2018

Change

2019

2018

Change

2019

2018

Change

2019

2018

Change

2019

2018

Change

Italy

(14)

22

(36)

1,240

1,220

20

3,906

3,679

227

2,314

2,233

81

13

31

(18)

169

119

50

-

-

-

7,628

7,304

324

Iberia

590

425

165

358

361

(3)

2,025

1,965

60

715

676

39

38

51

(13)

66

80

(14)

-

-

-

3,792

3,558

234

Latin America

642

469

173

2,218

2,201

17

2,259

1,763

496

243

158

85

64

56

8

(123)

(104)

(19)

-

-

-

5,303

4,543

760

Argentina

165

142

23

51

46

5

271

173

98

2

(16)

18

-

-

-

(1)

(1)

-

-

-

-

488

344

144

Brazil

107

7

100

335

395

(60)

1,144

815

329

149

100

49

(1)

-

(1)

(49)

(42)

(7)

-

-

-

1,685

1,275

410

Chile

211

124

87

899

877

22

222

228

(6)

17

19

(2)

26

19

7

(72)

(61)

(11)

-

-

-

1,303

1,206

97

Colombia

14

51

(37)

620

544

76

399

364

35

60

42

18

38

37

1

-

-

-

-

-

-

1,131

1,038

93

Peru

145

145

-

162

156

6

223

183

40

15

13

2

1

-

1

(1)

-

(1)

-

-

-

545

497

48

Panama

-

-

-

112

113

(1)

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

112

113

(1)

Other countries

-

-

-

39

70

(31)

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

39

70

(31)

Europe and Euro-Mediterranean Affairs

209

233

(24)

112

115

(3)

107

152

(45)

15

12

3

-

3

(3)

5

1

4

-

-

-

448

516

(68)

Romania

(2)

-

(2)

75

62

13

107

152

(45)

15

12

3

6

3

3

5

1

4

-

-

-

206

230

(24)

Russia

209

233

(24)

(1)

(1)

-

-

-

-

-

-

-

(2)

-

(2)

-

-

-

-

-

-

206

232

(26)

Other countries

2

-

2

38

54

(16)

-

-

-

-

-

-

(4)

-

(4)

-

-

-

-

-

-

36

54

(18)

North America

(18)

(6)

(12)

737

538

199

-

-

-

-

-

-

80

3

77

-

-

-

-

-

-

799

535

264

United States and Canada

(16)

(6)

(10)

658

398

260

-

-

-

-

-

-

80

3

77

-

-

-

-

-

-

722

395

327

Mexico

(2)

-

(2)

79

140

(61)

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

77

140

(63)

Africa, Asia and Oceania

-

-

-

62

58

4

-

-

-

-

-

-

(1)

(4)

3

-

-

-

-

-

-

61

54

7

South Africa

-

-

-

58

54

4

-

-

-

-

-

-

-

(4)

4

-

-

-

-

-

-

58

50

8

India

-

-

-

8

9

(1)

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

8

9

(1)

Other countries

-

-

-

(4)

(5)

1

-

-

-

-

-

-

(1)

-

(1)

-

-

-

-

-

-

(5)

(5)

-

Other

(14)

(26)

12

(123)

115

(238)

(19)

(20)

1

-

-

-

(36)

(16)

(20)

9

(11)

20

(144)

(201)

57

(327)

(159)

(168)

Total

1,395

1,117

278

4,604

4,608

(4)

8,278

7,539

739

3,287

3,079

208

158

124

34

126

85

41

(144)

(201)

57

17,704

16,351

1,353

Thermal Generation and Trading

Operations

Net electricity generation

Millions of kWh

   
 

2019

2018

Change

Coal-fired plants

37,592

64.366

(26,774)

-41.6%

Fuel-oil and turbo-gas plants

20,887

24,832

(3,945)

-15.9%

Combined-cycle plants

44,980

38,134

6,846

18.0%

Nuclear plants

26,279

24,067

2,212

9.2%

Total net generation

129,738

151,399

(21,661)

-14.3%

of which Italy

22,604

27,757

(5,153)

-18.6%

of which Iberia

51,312

62,020

(10,708)

-17.3%

of which Latin America

23,388

22,441

947

4.2%

of which Europe and Euro-Mediterranean Affairs

32,434

39,181

(6,747)

-17.2%

The decrease in net generation was essentially due to a sharp decrease in coal generation in the amount of 26,774 million kWh, including Iberia (14,673 million kWh), Italy (7,941 million kWh) and Russia (5,239 million kWh) as a result of the decline in their competitiveness. This was partially offset by an increase of 6,846 million kWh in combined-cycle generation, mainly in Italy (3,013 million kWh), Iberia (2,731 million kWh) and Latin America (1,092 million kWh). The increase in nuclear generation can be attributed to the increased use of nuclear energy in Iberia due to poor water availability.

Net efficient generation capacity

MW

    
 

at Dec. 31, 2019

at Dec. 31, 2018

Change

Coal-fired plants

11,695

15,828

(4,133)

-26.1%

Fuel-oil and turbo-gas plants

12,211

12,250

(39)

-0.3%

Combined-cycle plants

14,991

15,021

(30)

-0.2%

Nuclear plants

3,318

3,318

-

-

Total

42,215

46,417

(4,202)

-9.1%

of which Italy

13,480

13,613

(133)

-1.0%

of which Iberia

15,957

16,192

(235)

-1.5%

of which Latin America

7,523

7,734

(211)

-2.7%

of which Europe and Euro-Mediterranean Affairs

5,255

8,878

(3,623)

-40.8%

The decrease in net efficient generation capacity reflects the reduced use of coal-fired plants, especially in Russia (3,623 MW) following the disposal of the Reftinskaya plant mentioned earlier. More generally, “thermal” and “coal” revenue, i.e., from thermal and coal-fired plants respectively, has been declining steadily as a result of corporate strategic choices inspired by a sustainable business model pursuing objectives to combat climate change and achieve decarbonization, as shown in the following table (including percentage out of total):

 Millions of euro

2019

2018

«Thermal» revenue

10,322

10,894

«Coal» revenue

2,827

4,043

Nuclear revenue

1,296

1,079

Percentage of thermal revenue out of total

12.8%

14.4%

Percentage of coal revenue out of total

3.5%

5.3%

Percentage of nuclear revenue out of total

1.6%

1.4%

Performance

Millions of euro

   
 

2019

2018

Change

Revenue

32,051

27,607

4,444

16.1%

Gross operating margin

1,395

1,117

278

24.9%

Operating income

(3,494)

(118)

(3,376)

-

Capital expenditure

851

839

12

1.4%

The following tables show a breakdown of performance by Region/Country in 2019.

Revenue

Millions of euro

   
 

2019

2018

Change

Italy

23,688

18,954

4,734

25.0%

Iberia

6,261

6,329

(68)

-1.1%

Latin America

1,915

1,726

189

11.0%

of which Argentina

323

227

96

42.3%

of which Brazil

289

270

19

7.0%

of which Chile

828

739

89

12.0%

of which Colombia

110

126

(16)

-12.7%

of which Peru

365

364

1

0.3%

North America

29

3

26

-

Europe and Euro-Mediterranean Affairs

956

1,054

(98)

-9.3%

- of which Romania

42

55

(13)

-23.6%

of which Russia

911

999

(88)

-8.8%

of which other countries

3

-

3

-

Other

54

81

(27)

-33.3%

Eliminations and adjustments

(852)

(540)

(312)

-57.8%

Total

32,051

27,607

4,444

16.1%

The change in revenue is mainly attributable to the item “Sale of commodities under contracts with physical delivery”, reflecting reclassifications, with no impact on margins, linked to the application of the IFRIC Agenda Decision of March 2019 to non-financial transactions with physical delivery measured at fair value in accordance with IFRS 9. For more information, please see section 4.3 of the notes to the consolidated financial statements.    

Gross operating margin

Millions of euro

   
 

2019

2018

Change

Italy

(14)

22

(36)

-

Iberia

590

425

165

38.8%

Latin America

642

469

173

36.9%

of which Argentina

165

142

23

16.2%

of which Brazil

107

7

100

-

of which Chile

211

124

87

70.2%

of which Colombia

14

51

(37)

-72.5%

of which Peru

145

145

-

-

North America

(18)

(6)

(12)

-

Europe and Euro-Mediterranean Affairs

209

233

(24)

-10.3%

- of which Romania

(2)

-

(2)

-

of which Russia

209

233

(24)

-10.3%

of which other countries

2

-

2

-

Other

(14)

(26)

12

46.2%

Total

1,395

1,117

278

24.9%

The increase in the gross operating margin in 2019 is mainly due to:

  • an increase of €173 million in the margin in Latin America, mainly attributable to the indemnity in the amount of €80 million received from a major customer for having exercised the withdrawal option in advance and to the improvement in the margin of the Fortaleza plant (€108 million) due to a decrease in provisioning costs; 
  • an increase of €165 million in Iberia, essentially attributable to the following factors: 
    • an increase of €279 million in the margin on nuclear generation, mainly due to an increase in volumes generated and in prices, as well as a reduction in taxes on nuclear generation (€43 million); 
    • a reduction of €63 million in taxes and duties on thermal generation due, above all, to suspension of taxes on power generation and on the consumption of hydrocarbons used to generate power in accordance with Royal Decree no. 15/2018 of October 5, 2018; 
    • an increase in writedowns of fuel, consumables and spare parts inventories at a number of coal-fired plants that underwent impairment testing, totaling €103 million, because their value was deemed non-recoverable through operations; 
    • deterioration of €90 million in the results on commodity contracts measured at fair value; 
  • decrease of €36 million in the margin in Italy, mainly due to:
    • an increase in writedowns of fuel, consumables, and spare parts inventories at a number of coal-fired plants, totaling €205 million, because their value was deemed non-recoverable through operations; 
    • recognition of a gain of €108 million by Enel Produzione on the disposal of the Mercure power plant, which was only partially offset by an increase in provisions for environmental costs in accordance with the contract and related to the industrial site; 
    • a decrease of €65 million in costs for environmental compliance in thermal generation; 
  • a decrease of €24 million in the margin posted for Europe and Euro-Mediterranean Affairs, recognized mainly in Russia.

Operating income

Millions of euro

   
 

2019

2018

Change

Italy

(1,908)

(248)

(1,660)

-

Iberia

(1,650)

(274)

(1,376)

-

Latin America

68

266

(198)

-74.4%

of which Argentina

100

89

11

12.4%

of which Brazil

94

(1)

95

-

of which Chile

(233)

30

(263)

-

of which Colombia

(2)

37

(39)

-

of which Peru

109

111

(2)

-1.8%

North America

(19)

(6)

(13)

-

Europe and Euro-Mediterranean Affairs

30

170

(140)

-82.4%

- of which Romania

(1)

-

(1)

-

of which Russia

31

170

(139)

-81.8%

of which other countries

-

-

-

-

Other

(15)

(26)

11

42.3%

Eliminations and adjustments

-

-

-

-

Total

(3,494)

(118)

(3,376)

-

The decrease in operating income is due to the increase of €3,654 million in depreciation, amortization and impairment, despite the improvement in the gross operating margin. More specifically, the increase in depreciation, amortization and impairment mainly concerned:

  • impairment in Italy, Spain, Chile and Russia for coal-fired plants totaling €4,010 million, as described in detail in the “Operating income” section of “Group performance”; 
  • an increase in depreciation and amortization in application of IFRS 16 (€34 million).

Capital expenditure

Millions of euro

   
 

2019

2018

Change

Italy

189

172

17

9.9%

Iberia

388

345

43

12.5%

Latin America

193

251

(58)

-23.1%

Europe and Euro-Mediterranean Affairs

79

70

9

12.9%

Other

2

1

1

-

Total

851

839

12

1.4%

The increase in capital expenditure is mainly attributable to Italy (€17 million) and Iberia (€43 million) and concerns, above all, plant maintenance and safety upgrading. These effects were partially offset by a decrease of €58 million in capital expenditure in Latin America, particularly in Argentina and Chile, regarding coal-fired and combined-cycle plants.

Enel Green Power

Operations

Net electricity generation

Millions of kWh

   
 

2019

2018

Change

Hydroelectric

62,580

65,893

(3,313)

-5.0%

Geothermal

6,148

5,881

267

4.5%

Wind

26,668

22,161

4,507

20.3%

Solar

3,974

4,897

(923)

-18.8%

Other sources

21

108

(87)

-80.6%

Total net generation

99,391

98,940

451

0.5%

- of which Italy

24,308

25,476

(1,168)

-4.6%

- of which Iberia

10,090

12,172

(2,082)

-17.1%

- of which Latin America

48,448

48,137

311

0.6%

- of which Europe and Euro-Mediterranean Affairs

2,005

1,895

110

5.8%

- of which North America

12,969

9,752

3,217

33.0%

- of which Africa, Asia and Oceania

1,571

1,508

63

4.2%

Net electricity generation 2019 increased slightly from 2018 due to increases in wind and geothermal production, which were partially offset by decreases in hydroelectric and solar power generation. The most significant changes in wind power came in the United States and in Iberia, where production increased by 4,496 million kWh and 439 million kWh, respectively. These increases were partially offset by decreases in wind power generation in Mexico (down 759 million kWh) due, in part, to the sale of a number of companies in September 2018.
The increase in geothermal generation came mainly in the United States (up 285 million kWh). The decrease in hydro generation was due mainly to reduced water availability in Italy and Iberia, only partially offset by an increase in Latin America (up 458 million kWh), where output varied throughout the region. Of particular note were increases in Brazil (+940 million kWh), Colombia (+857 million kWh), and Peru (+462 million kWh), and these increases were offset by decreases in Argentina (-350 million kWh), Chile (-899 million kWh), and Panama (-308 million kWh).

  

Net efficient generation capacity

MW

    
 

at Dec. 31, 2019

at Dec. 31, 2018

Change

Hydroelectric

27,830

27,844

(14)

-0.1%

Geothermal

878

804

74

9.2%

Wind

10,327

8,190

2,137

26.1%

Solar

3,094

2,322

772

33.2%

Other sources

5

43

(38)

-88.4%

Total net power efficiency

42,134

39,203

2,931

7.5%

of which Italy

13,972

14,011

(39)

-0.3%

of which Iberia

7,391

6,525

866

13.3%

of which Latin America

13,676

13,869

(193)

-1.4%

of which Europe and Euro-Mediterranean Affairs

1,037

883

154

17.4%

of which North America

5,282

3,220

2,062

64.0%

- Africa, Asia and Oceania

776

695

81

11.7%

Net power efficiency capacity for 2019 increased from 2018, mainly in the United States due to the acquisition by Enel Green Power North America (EPGNA, now named Enel North America) of 13 companies that own wind, geothermal and solar plants, as well as to an increase in power generation capacity at the High Lonesome and Roadrunner plants. Wind and solar power generation capacity also increased in Iberia.

Performance

Millions of euro

   
 

2019

2018

Change

Revenue

7,733

8,056

(323)

-4.0%

Gross operating margin

4,604

4,608

(4)

-0.1%

Operating income

3,276

3,505

(229)

-6.5%

Capital expenditure

4,293(1)

2,784(2)

1,509

54.2%

(1) The figure does not include €4 million regarding units classified as “held for sale”.
(2) The figure does not include €378 million regarding units classified as “held for sale”.

   

The following tables show a breakdown of performance by country in 2019.

     

Revenue(1)

Millions of euro

   
 

2019

2018

Change

Italy

1,918

2,084

(166)

-8.0%

Iberia

653

716

(63)

-8.8%

Latin America

3,692

3,843

(151)

-3.9%

- of which Argentina

64

59

5

8.5%

- of which Brazil

694

676

18

2.7%

- of which Chile

1,489

1,584

(95)

-6.0%

- of which Colombia

1,007

941

66

7.0%

- of which Peru

201

334

(133)

-39.8%

- of which Panama

169

151

18

11.9%

- of which other countries

68

98

(30)

-30.6%

North America

1,115

860

255

29.7%

- of which the United States

956

564

392

69.5%

- of which Mexico

159

296

(137)

-46.3%

Europe and Euro-Mediterranean Affairs

271

255

16

6.3%

- of which Romania

175

173

2

1.2%

- of which Greece

86

73

13

17.8%

- of which Bulgaria

8

9

(1)

-11.1%

- of which other countries

2

-

2

-

Africa, Asia and Oceania

107

101

6

5.9%

Other

105

316

(211)

-66.8%

Eliminations and adjustments

(128)

(119)

(9)

-7.6%

Total

7,733

8,056

(323)

-4.0%

(1) These figures have been adjusted for the purposes of comparison with those of December 2019 to take account of the fact that Panama, Costa Rica, Guatemala, El Salvador and Nicaragua, which were previously included in the North and Central America geographical area, are now included within Latin America.

 

Gross operating margin(1)

Millions of euro

   
 

2019

2018

Change

Italy

1,240

1,220

20

1.6%

Iberia

358

361

(3)

-0.8%

Latin America

2,218

2,201

17

0.8%

- of which Argentina

51

46

5

10.9%

- of which Brazil

335

395

(60)

-15.2%

- of which Chile

899

877

22

2.5%

- of which Colombia

620

544

76

14.0%

- of which Peru

162

156

6

3.8%

- of which Panama

112

113

(1)

-0.9%

- of which other countries

39

70

(31)

-44.3%

North America

737

538

199

37.0%

- of which the United States

658

398

260

65.3%

- of which Mexico

79

140

(61)

-43.6%

Europe and Euro-Mediterranean Affairs

112

115

(3)

-2.6%

- of which Romania

75

62

13

21.0%

- of which Russia

(1)

(1)

-

-

- of which Greece

35

49

(14)

-28.6%

- of which Bulgaria

6

6

-

-

- of which other countries

(3)

(1)

(2)

-

Africa, Asia and Oceania

62

58

4

6.9%

Other

(123)

115

(238)

-

Total

4,604

4,608

(4)

-0.1%

(1) These figures have been adjusted for the purposes of comparison with those of December 2019 to take account of the fact that Panama, Costa Rica, Guatemala, El Salvador and Nicaragua, which were previously included in the North and Central America geographical area, are now included within Latin America.

Gross operating margin decreased by €4 million from 2018, which was essentially due to the following:

  • an increase of €199 million in the margin in North America, mainly due to:
    • an increase of €260 million in the margin the United States due essentially to the increase (€92 million) related to the change in the scope of consolidation following the acquisition by Enel North America (formerly Enel Green Power North America) of 13 companies sold by Enel Green Power North America Renewable Energy Partners LLC (EGPNA REP) and to the negative goodwill on the transaction (€106 million); to the negative goodwill related to the purchase of Tradewind Energy (€75 million), which was partially offset by the company’s negative margin (-€53 million); to the gains on the disposal of the projects Outlaw (€22 million) and Gratiot (€20 million); to the increase in tax partnership income related to the companies High Lonesome Wind Power (€87 million) and Roadrunner Solar Project (€67 million), which were partially offset by decreases in such income from Diamond Vista (-€40 million) and Rattlesnake Creek (-€39 million); 
    • a reduction of €61 million in the margin in Mexico due mainly to the change in the scope of consolidation following the sale of eight companies from Project Kino at the end of September 2018;
  • an increase of €17 million in the margin in Latin America, mainly due to:
    • the increase of €76 million in the margin in Colombia, due essentially to an increase in revenue on electricity sales (€73 million) as a result of an increase in average prices and in quantities traded on the power exchange, and lower costs for electricity purchases and transport (€78 million) related to lower quantities purchased, and to a decrease in fuel consumption (€15 million), partially offset by an increase in costs for ancillary services related to the electricity business (€82 million); 
    • an increase of €22 million in the margin in Chile, essen tially attributable to recognition of €80 million in penalty revenue by Enel Generación Chile due to a major industrial client exercising the right to early withdrawal from a long-term electricity provisioning agreement, partially offset by a loss on the electricity margin (€62 million) as a result of a decrease in production; 
    • a decrease of €60 million in the margin in Brazil, where the increase in revenue from electricity sales as a result of greater generation, partly eroded by a reduction in spot prices, was more than offset by an increase in costs for the purchase of electricity and the change in the scope of consolidation related to the disposal of three plants; 
    • decrease of €31 million in the margin in other countries due mainly to a decline in revenue from the sale of electricity in Costa Rica and Guatemala as a result of decreases in quantities generated and the change in the scope of consolidation that took place in Uruguay in December 2018; 
  • an increase of €20 million in the margin in Italy due essentially to an increase in the sales price of electricity despite the lower volume of hydro generation, partially offset by the effect of the recognition in the previous year of the gain on the sale of EF Solare Italia (€65 million); 
  • a reduction of €238 million in the margin that mainly reflected the recognition in the previous year of the gain on the sale of eight Project Kino companies in Mexico at the end of September 2018, as well as the fair value measurement of the Group’s 20% interest in the companies (€190 million) and the gain on the sale of a number of companies in Uruguay (€18 million).

Operating income(1)

Millions of euro

   
 

2019

2018

Change

Italy

909

828

81

9.8%

Iberia

183

208

(25)

-12.0%

Latin America

1,809

1,776

33

1.9%

- of which Argentina

38

39

(1)

-2.6%

- of which Brazil

250

309

(59)

-19.1%

- of which Chile

728

699

29

4.1%

- of which Colombia

560

488

72

14.8%

- of which Peru

123

107

16

15.0%

- of which Panama

96

98

(2)

-2.0%

- of which other countries

14

36

(22)

-61.1%

North America

418

364

54

14.8%

- of which the United States

367

270

97

35.9%

- of which Mexico

51

94

(43)

-45.7%

Europe and Euro-Mediterranean Affairs

58

195

(137)

-70.3%

- of which Romania

49

40

9

22.5%

- of which Russia

-

(1)

1

-

- of which Greece

10

154

(144)

-93.5%

- of which Bulgaria

3

3

-

-

- of which other countries

(4)

(1)

(3)

-

Africa, Asia and Oceania

24

19

5

26.3%

Other

(125)

115

(240)

-

Eliminations and adjustments

-

-

-

-

Total

3,276

3,505

(229)

-6.5%

(1) These figures have been adjusted for the purposes of comparison with those of December 2019 to take account of the fact that Panama, Costa Rica, Guatemala, El Salvador and Nicaragua, which were previously included in the North and Central America geographical area, are now included within Latin America.

In 2019, operating income, taking account of depreciation, amortization and impairment losses in the amount of €1,328 million (€1,103 million in 2018), decreased by €229 million compared with 2018 due to an increase in depreciation and amortization in the United States (€116 million) related mainly to the change in the scope of consolidation noted earlier and the start of operations at the Rattlesnake, Hilltopper and Diamond Vista plants, the impairment losses on the assets of a number of wind projects that are no longer viable, and the fair value adjustment of hydroelectric projects classified as HFS (€36 million), as well as the recognition in the previous year of the reversal of impairment on the Hellas CGU (€117 million).

Capital expenditure(1)

Millions of euro

   
 

2019

2018

Change

Italy

240

252(3)

(12)

-4.8%

Iberia

765

246

519

-

Latin America

1,055(2)

654

401

61.3%

North America

1,744

1,322(4)

422

31.9%

Europe and Euro-Mediterranean Affairs

189

139

50

36.0%

Africa, Asia and Oceania

274

142

132

93.0%

Other

26

29

(3)

-10.3%

Total

4,293

2,784

1,509

54.2%

(1) These figures have been adjusted for the purposes of comparison with those of December 2019 to take account of the fact that Panama, Costa Rica, Guatemala, El Salvador and Nicaragua, which were previously included in the North and Central America geographical area, are now included within Latin America.
(2) The figure does not include €4 million regarding units classified as “held for sale”.
(3) The figure does not include €3 million regarding units classified as “held for sale”.
(4) The figure does not include €375 million regarding units classified as “held for sale”.

Capital expenditure increased by €1,509 million compared with the previous year. More specifically, the change is attributable to:

  • an increase of €519 million in capital expenditure in Iberia attributable mainly to wind farms (€364 million) and photovoltaic plants (€153 million); 
  • an increase of €422 million in capital expenditure in North America, mainly attributable to an increase of €237 million in the United States and of €74 million in Mexico for solar plants and to increases in capital expenditure for wind farms (€112 million) following a sharp increase in Mexico (€224 million), partially offset by a decrease in capital expenditure in the United States (€198 million); 
  • an increase of €401 million in capital expenditure in Latin America attributable mainly to wind farms (€274 million) and photovoltaic plants (€170 million), which was partially offset by a decrease in capital expenditure on hydroelectric plants (€90 million). The increase in capital expenditure was concentrated in Brazil;
  • an increase of €132 million in capital expenditure in Africa, Asia and Oceania related mainly to wind farms (€82 million) following an increase in South Africa (€101 million), which was partially offset by decreases in capital expenditure in India (€19 million) and for solar plants (€50 million), mainly in Australia (€38 million);
  • an increase of €50 million in capital expenditure by Europe and Euro-Mediterranean Affairs, mainly on wind farms in Russia and Greece.

Infrastructure and Networks

Operations

Electricity distribution and transport networks

Millions of kWh

   
 

2019

2018

Change

Electricity transported on Enel’s network(1)

504,027

484,377

19,650

4.1%

of which Italy

224,587

226,460

(1,873)

-0.8%

- I of which beria

126,454

124,865

1,589

1.3%

of which Latin America

137,295

117,412

19,883

16.9%

of which Europe and Euro-Mediterranean Affairs

15,691

15,640

51

0.3%

End users (no.)

73,258,840

72,945,664

313,176

0.4%

End users with active smart meters (no.)

44,668,538

43,770,085

898,453

2.1%

(1) The figure for 2018 reflects a more accurate measurement of amounts transported.

The increase in energy transported on the network is mainly attributable to:

  • Latin America (+16.9%) following the acquisition of Enel Distribuição São Paulo, a Brazilian electricity distribution company, on June 7, 2018; 
  • Romania (+0.3%), where the increase was mainly due to new connections of business customers (+21.4 GWh), which was partially offset by a decrease for residential customers (-21.1 GWh); 
  • Italy (-0.8%), where electricity distributed to end users totaled 224.58 TWh, a slight decrease from the previous year’s figure of 226.46 TWh. This reduction reflects declining demand among medium-voltage (-1.2 TWh) and high-voltage customers (-1 TWh). Demand was stable among low-voltage customers; 
  • Iberia (+1.3%), where the increase was due essentially to an increase in electricity transported by Edistribución Redes Digitales SL.

Average frequency of interruptions per customer

 

2019

2018

Change

SAIFI (average no.)

    

Italy

1.9

1.8

0.1

5.6%

Iberia

1.4

1.6

(0.2)

-12.5%

Argentina

6.0

6.7

(0.7)

-10.4%

Brazil

5.8

6.2

(0.4)

-6.5%

Chile

1.6

1.5

0.1

6.7%

Colombia

6.8

9.0

(2.2)

-24.4%

Peru

2.8

2.8

-

-

Romania

4.1

3.8

0.3

7.9%

Average duration of interruptions per customer

 

2019

2018

Change

SAIDI (average min.)

    

Italy

48.5

47.2

1.3

2.8%

Iberia

75.8

79.5

(3.7)

-4.7%

Argentina

1,214.1

1,485.4

(271.3)

-18.3%

Brazil

728.8

716.8

12.0

1.7%

Chile

184.1

178.0

6.1

3.4%

Colombia

666.6

710.0

(43.4)

-6.1%

Peru

418.9

436.0

(17.1)

-3.9%

Romania

169.6

173.8

(4.2)

-2.4%

As indicated in the tables, the most significant service interruptions occurred in Argentina, due in particular to faults in high-voltage transmission systems not operated by the Group.

 

2019

2018

Change

Network losses (avg. %)

    

Italy

4.7

4.7

-

-

Iberia

7.5

7.5

-

-

Argentina

15.5

14.9

0.6

4.0%

Brazil

12.8

12.4

0.4

3.2%

Chile

5.0

5.0

-

-

Colombia

7.7

7.7

-

-

Peru

8.2

7.9

0.3

3.8%

Romania

9.7

9.8

(0.1)

-1.0%


Performance

 

Millions of euro

   
 

2019

2018

Change

Revenue

21,789

19,968

1,821

9.1%

Gross operating margin

8,278

7,539

739

9.8%

Operating income

5,277

4,787

490

10.2%

Capital expenditure

3,905

3,830

75

2.0%

The following tables shows a breakdown of performance by country in 2019.

Revenue

Millions of euro

   
 

2019

2018

Change

Italy

7,647

7,672

(25)

-0.3%

Iberia

2,724

2,671

53

2.0%

Latin America

11,033

9,275

1,758

19.0%

- of which Argentina

1,166

1,033

133

12.9%

- of which Brazil

6,946

5,629

1,317

23.4%

- of which Chile

1,467

1,348

119

8.8%

- of which Colombia

641

533

108

20.3%

- of which Peru

813

732

81

11.1%

Europe and Euro-Mediterranean Affairs

386

385

1

0.3%

Other

60

43

17

39.5%

Eliminations and adjustments

(61)

(78)

17

21.8%

Total

21,789

19,968

1,821

9.1%

Gross operating margin

Millions of euro

   
 

2019

2018

Change

Italy

3,906

3,679

227

6.2%

Iberia

2,025

1,965

60

3.1%

Latin America

2,259

1,763

496

28.1%

- of which Argentina

271

173

98

56.6%

- of which Brazil

1,144

815

329

40.4%

- of which Chile

222

228

(6)

-2.6%

- of which Colombia

399

364

35

9.6%

- of which Peru

223

183

40

21.9%

Europe and Euro-Mediterranean Affairs

107

152

(45)

-29.6%

Other

(19)

(20)

1

5.0%

Total

8,278

7,539

739

9.8%

The gross operating margin increased as a result of:

  • an increase of €496 million in the margin in Latin America despite the effects of adverse exchange rate developments of €133 million, an increase that is mainly attributable to: 
    • in Brazil, the consolidation of Enel Distribuição São Paulo (€313 million); 
    • in Argentina, the Edesur agreement with the government resolving mutual pending issues arising during the period from 2006 to 2016 in the amount of €209 million. This increase was partially offset by a reduction in sales revenue following a decrease in quantities transported; 
  • in increase in the gross operating margin in Italy following a reduction in costs for the purchase of energy efficiency certificates due to both a decrease in purchase prices and in volumes purchased (€191 million) and a reduction in personnel costs due essentially to actuarial gains in application of Article 4 of Law 92/2012 (€31 million). It should also be noted that, in 2019, e-distribuzione recognized an additional indemnity of €50 million related to the sale of Enel Rete Gas to F2i, following the indemnity of €128 million recognized in 2018; 
  • an increase in the margin in Iberia due mainly to an increase in electricity-transport revenue (€56 million) and a gain on the sale of the right to use the fiber-optic network (€24 million). These effects were partially offset by a decrease in revenue from services provided to third-party end users;
  • a decrease in the gross operating margin of Europe and Euro-Mediterranean Affairs due to an increase in costs in Romania, mainly for personnel (€12 million), services (€12 million) and electricity purchases (€16 million).

Operating income

Millions of euro

   
 

2019

2018

Change

Italy

2,647

2,508

139

5.5%

Iberia

1,288

1,220

68

5.6%

Latin America

1,349

1,025

324

31.6%

- of which Argentina

240

98

142

-

- of which Brazil

487

362

125

34.5%

- of which Chile

173

178

(5)

-2.8%

- of which Colombia

292

261

31

11.9%

- of which Peru

157

126

31

24.6%

Europe and Euro-Mediterranean Affairs

13

54

(41)

-75.9%

Other

(20)

(20)

-

-

Total

5,277

4,787

490

10.2%

The increase in operating income in 2019 was due to the increase in gross operating margin, which was only partially offset by an increase of €249 million in depreciation, amortization and impairment losses. More specifically, the increase in depreciation, amortization and impairment mainly concerned:

  • an increase of €172 million in depreciation, amortization and impairment in Latin America, which was essentially due to the change in the scope of consolidation with the addition of Enel Distribuição São Paulo and the recognition in Brazil of the writedown of the Funac fund in the amount of €96 million, which became necessary after the repeal by the state of Goiás of the obligation to meet the liabilities, even if not recognized, resulting from the administrative and judicial dispute of Enel Distribuição Goiás; 
  • an increase of €88 million in depreciation, amortization and impairment in Italy due to an increase in capital expenditure and to the application of IFRS 16 (€38 million).

Capital expenditure

Millions of euro

   
 

2019

2018

Change

Italy

1,753

1,685

68

4.0%

Iberia

647

668

(21)

-3.1%

Latin America

1,335

1,315

20

1.5%

Europe and Euro-Mediterranean Affairs

169

159

10

6.3%

Other

1

3

(2)

-66.7%

Total

3,905

3,830

75

2.0%

The increase in capital expenditure is mainly attributable to:

  • Italy and capital expenditure for low-voltage plants; > Iberia and the reduction in capital expenditure for the distribution network and for software applications, an effect which was partially offset by an increase in capital expenditure for substations, transformers, and the replacement of metering equipment; 
  • Latin America, and Argentina specifically, in order to improve the quality of service provided to users through works aimed at strengthening the low-, medium- and high-voltage networks.

End-user Markets

Operations

Electricity sales

Millions of kWh

   
 

2019

2018

Change

Free market

152,588

152,619

(31)

-

Regulated market

149,088

142,813

6,275

4.4%

Total

301,676

295,432

6,244

2.1%

- of which Italy

97,539

104,318

(6,779)

-6.5%

- of which Iberia

89,441

89,639

(198)

-0.2%

- of which Latin America

104,962

91,075

13,887

15.2%

- of which Europe and Euro-Mediterranean Affairs

9,734

10,400

(666)

-6.4%

This positive performance of electricity sales in 2019 essentially reflects the increase in quantities sold in Latin America, mainly in Brazil following the acquisition of Enel Distribuição São Paulo. This change was only partially offset by the reduction of electricity sold in Italy due to a decrease in sales on the regulated market following the transfer of 1.8 million customers to the free market. This factor is seen as the cause for the reduction in quantities sold in Romania as well. In Spain, the change was essentially due to reduced consumption. The Group’s retail customers totaled 69,914,992, of which 22,780,590 on the free market. At December 31, 2018, those figures were 71,117,743 and 21,478,721 respectively.

     

Natural gas sales

Millions of m3

   
 

2019

2018

Change

Business to consumer

3,698

3,704

(6)

-0.2%

Business to business

6,802

7,474

(672)

-9.0%

Total

10,500

11,178

(678)

-6.1%

- of which Italy

4,736

4,761

(25)

-0.5%

- of which Iberia

5,750

6,409

(659)

-10.3%

- of which Europe and Euro-Mediterranean Affairs

14

8

6

75.0%

The reduction in natural gas sales was mainly due to the aforementioned reductions in consumption in Spain.

Performance

Millions of euro

   
 

2019

2018

Change

Revenue

32,544

33,771

(1,227)

-3.6%

Gross operating margin

3,287

3,079

208

6.8%

Operating income

2,163

1,958

205

10.5%

Capital expenditure

449

374

75

20.1%

The following tables shows a breakdown of performance by country in 2019.

Revenue

Millions of euro

   
 

2019

2018

Change

Italy

16,042

16,367

(325)

-2.0%

Iberia

13,867

14,920

(1,053)

-7.1%

Latin America

1,504

1,443

61

4.2%

- of which Argentina

30

6

24

-

- of which Brazil

398

299

99

33.1%

- of which Chile

268

255

13

5.1%

- of which Colombia

769

848

(79)

-9.3%

- of which Peru

39

35

4

11.4%

Europe and Euro-Mediterranean Affairs

1,131

1,040

91

8.8%

Eliminations and adjustments

-

1

(1)

-

Total

32,544

33,771

(1,227)

-3.6%

Gross operating margin

Millions of euro

   
 

2019

2018

Change

Italy

2,314

2,233

81

3.6%

Iberia

715

676

39

5.8%

Latin America

243

158

85

53.8%

- of which Argentina

2

(16)

18

-

- of which Brazil

149

100

49

49.0%

- of which Chile

17

19

(2)

-10.5%

- of which Colombia

60

42

18

42.9%

- of which Peru

15

13

2

15.4%

Europe and Euro-Mediterranean Affairs

15

12

3

25.0%

Total

3,287

3,079

208

6.8%

The increase in the gross operating margin is mainly attributable to:

  • an increase in margins in Latin America due to:
    • the consolidation of Enel Distribuição São Paulo beginning in June of last year (€51 million); 
  • an increase in revenue in Argentina following the Edesur settlement agreement with the government resolving mutual pending issues arising during the period 2006-2016 (€24 million); 
  • an increase of €108 million in the margin on the free market in Italy, which was only partially offset by a reduction of €27 million on the regulated market; > a decrease in the cost ratio in Iberia.

Operating income

Millions of euro

   
 

2019

2018

Change

Italy

1,609

1,379

230

16.7%

Iberia

491

494

(3)

-0.6%

Latin America

77

87

(10)

-11.5%

- of which Argentina

(35)

(16)

(19)

-

- of which Brazil

44

52

(8)

-15.4%

- of which Chile

6

16

(10)

-62.5%

- of which Colombia

52

29

23

79.3%

- of which Peru

10

6

4

66.7%

Europe and Euro-Mediterranean Affairs

(14)

(2)

(12)

-

Eliminations and adjustments

-

-

-

-

Total

2,163

1,958

205

10.5%

In 2019, operating income, including €1,124 million in depreciation, amortization and impairment, increased due, above all, to performance improvements in Italy, mainly for Enel Energia following the improvement in margins noted above and the decrease of €149 million in depreciation, amortization and impairment, which was essentially related to the decrease in allowances for doubtful accounts.
This positive performance was impacted by the loss recognized in other countries. In Romania, the loss of €14 million reflected an increase in the impairment of trade receivables compared with 2018.      

Capital expenditure

Millions of euro

   
 

2019

2018

Change

Italy

324

248

76

30.6%

Iberia

110

107

3

2.8%

Latin America

-

1

(1)

-

Europe and Euro-Mediterranean Affairs

15

18

(3)

-16.7%

Total

449

374

75

20.1%

The change in capital expenditure is mainly attributable to the increase in Italy, particularly with regard to Enel Energia. This increase was due to the capitalization of costs related to the acquisition of new customer contracts.

Enel X

 


Operations

  

2019

2018

Change

Demand response (MW)

6,297

6,215

82

1.3%

Lighting points (no.)

2,424

2,467

(43)

-1.7%

Storage (MW)(1)

12

3

9

-

Charging points (no.)

79,565

48,967

30,598

62.5%

(1) Storage for the year pertaining to Enel X.

In 2019, the Group further developed the charging infrastructure for electric vehicles, particularly in Italy.

Performance

Millions of euro

   
 

2019

2018

Change

Revenue

1,130

1,006

124

12.3%

Gross operating margin

158

124

34

27.4%

Operating income

(98)

19

(117)

-

Capital expenditure

270

183

87

47.5%

The following tables shows a breakdown of performance by country in 2019.

Revenue

Millions of euro

   
 

2019

2018

Change

Italy

282

247

35

14.2%

Iberia

261

247

14

5.7%

Latin America

186

161

25

15.5%

- of which Argentina

4

-

4

-

- of which Brazil

17

15

2

13.3%

- of which Chile

81

70

11

15.7%

- of which Colombia

77

70

7

10.0%

- of which Peru

7

6

1

16.7%

North America

328

338

(10)

-3.0%

Europe and Euro-Mediterranean Affairs

35

7

28

-

Africa, Asia and Oceania

52

-

52

-

Other

66

50

16

32.0%

Eliminations and adjustments

(80)

(44)

(36)

-81.8%

Total

1,130

1,006

124

12.3%

Gross operating margin

Millions of euro

   
 

2019

2018

Change

Italy

13

31

(18)

-58.1%

Iberia

38

51

(13)

-25.5%

Latin America

64

56

8

14.3%

- of which Brazil

(1)

-

(1)

-

- of which Chile

26

19

7

36.8%

- of which Colombia

38

37

1

2.7%

- of which Peru

1

-

1

-

North America

80

3

77

-

Europe and Euro-Mediterranean Affairs

-

3

(3)

-

Africa, Asia and Oceania

(1)

(4)

3

75.0%

Other

(36)

(16)

(20)

-

Total

158

124

34

27.4%

The increase in gross operating margin came mainly in North America as a result of an adjustment to the amount paid for the purchase of eMotorWerks (€98 million) in application of certain clauses of the related contract. These effects were only partially offset by an increase in operating expenses connected with structural growth in Italy, Spain and Latin America.

Operating income

Millions of euro

   
 

2019

2018

Change

Italy

(45)

(9)

(36)

-

Iberia

(13)

37

(50)

-

Latin America

58

54

4

7.4%

- of which Brazil

(4)

(1)

(3)

-

- of which Chile

24

19

5

26.3%

- of which Colombia

37

36

1

2.8%

- of which Peru

1

-

1

-

North America

(50)

(31)

(19)

-61.3%

Europe and Euro-Mediterranean Affairs

(3)

2

(5)

-

Africa, Asia and Oceania

(5)

(8)

3

37.5%

Other

(40)

(26)

(14)

-53.8%

Total

(98)

19

(117)

-

In 2019, operating income decreased despite the improvement in the gross operating margin, essentially as a result of an increase of €151 million in depreciation, amortization and impairment losses. This mainly concerned the impairment of intangible assets (€83 million) in respect of obsolete technologies that are no longer in use.

Capital expenditure

Millions of euro

   
 

2019

2018

Change

Italy

52

54

(2)

-3.7%

Iberia

64

39

25

64.1%

Latin America

40

29

11

37.9%

North America

61

38

23

60.5%

Europe and Euro-Mediterranean Affairs

4

3

1

33.3%

Africa, Asia and Oceania

1

-

1

-

Other

48

20

28

-

Total

270

183

87

47.5%

Capital expenditure increased in Spain, the United States and Italy due to the purchase of new software licenses to support new business initiatives (demand response, charging systems, e-mobility, public lighting).

     

Services and Other


Performance

Millions of euro

   
 

2019

2018

Change

Revenue and other income (net of eliminations)

2,229

2,140

89

4.2%

Gross operating margin

(18)

(116)

98

84.5%

Operating income

(246)

(251)

5

2.0%

Capital expenditure

179

142

37

26.1%

The tables below show performance by geographic area in 2019.

Revenue

Millions of euro

   
 

2019

2018

Change

Italy

1,359

1,389

(30)

-2.2%

Iberia

597

514

83

16.1%

Latin America

27

35

(8)

-22.9%

Europe and Euro-Mediterranean Affairs

28

22

6

27.3%

Other

291

231

60

26.0%

Eliminations and adjustments

(73)

(51)

(22)

-43.1%

Total

2,229

2,140

89

4.2%


Gross operating margin

Millions of euro

   
 

2019

2018

Change

Italy

169

119

50

42.0%

Iberia

66

80

(14)

-17.5%

Latin America

(123)

(104)

(19)

-18.3%

Europe and Euro-Mediterranean Affairs

5

1

4

-

Other

(135)

(212)

77

36.3%

Total

(18)

(116)

98

-84.5%

 

The increase in gross operating margin for 2019 is due to:

  • an increase of €50 million in the margin in Italy, the result mainly of a reduction in costs for leases and rents due to application of IFRS 16 and their consequent inclusion in the value of right-of-use assets;
  • an increase in the margin on the “Other” segment related to the increase in services provided by the holding company to the other Business Lines of the Group and to a decrease in costs for reversal of the provision related to the closing of an Enel SpA arbitration in Romania (€13 million).

   

Operating income

Millions of euro

   
 

2019

2018

Change

Italy

17

39

(22)

-56.4%

Iberia

19

39

(20)

-51.3%

Latin America

(122)

(105)

(17)

-16.2%

Europe and Euro-Mediterranean Affairs

3

-

3

-

Other

(163)

(224)

61

27.2%

Total

(246)

(251)

5

-2.0%

The operating loss in 2019 improved by €5 million, after an increase in depreciation, amortization and impairment losses of €93 million, which mainly reflected the depreciation of right-of-use assets following application of the new IFRS 16.

   

Capital expenditure

Millions of euro

   
 

2019

2018

Change

Italy

78

68

10

14.7%

Iberia

46

28

18

64.3%

Latin America

9

9

-

-

Europe and Euro-Mediterranean Affairs

1

1

-

-

Other

45

36

9

25.0%

Total

179

142

37

26.1%

The increase in capital expenditure in 2019 can be attributed to increases in Italy and Spain.