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

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%

Sustainability report - Financial metrics

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%

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%

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%

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.

Results by business area

Results by business area for 2019 and 2018

Results for 2019 (1)

Results for 2018 (1)(2)

Gross operating margin

Thermal Generation and Trading

Operations

Net electricity generation

Net efficient generation capacity

Performance

Revenue

Gross operating margin

Operating income

Capital expenditure

Enel Green Power

Operations

Net electricity generation

Net efficient generation capacity

Performance

Revenue(1)

Gross operating margin(1)

Operating income(1)

Capital expenditure(1)

Infrastructure and Networks

Operations

Electricity distribution and transport networks

Average frequency of interruptions per customer

Average duration of interruptions per customer

Performance

Revenue

Gross operating margin

Operating income

Capital expenditure

End-user Markets

Operations

Electricity sales

Natural gas sales

Performance

Revenue

Gross operating margin

Operating income

Capital expenditure

Enel X

Operations

Performance

Revenue

Gross operating margin

Operating income

Capital expenditure

Services and Other

Performance

Revenue

Gross operating margin

Operating income

Capital expenditure

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Results for 2019 ⁽¹⁾

Results for 2018 ⁽¹⁾⁽²⁾

Revenue⁽¹⁾

Gross operating margin⁽¹⁾

Operating income⁽¹⁾

Capital expenditure⁽¹⁾