ERG has very carefully managed the staff employed across its production sites through the adoption of appropriate organisational safety measures (aimed at ensuring social distancing and the reconfiguration of operational and logistical activities) and prevention and protection measures (training and information, personal protective equipment, personal hygiene measures and cleaning/sanitisation of workplaces), in compliance with recommendations by the competent authorities, and in agreement with trade union organisations. Across all operating sites
, the organisational, logistical and facilities measures required to safeguard the health of workers and protect the core activities have been prepared and regularly updated in order to ensure the continuity of service and the safe running of plants.
The security protocols issued by the authorities are detailed in the two documents issued respectively on 15 and 30 April 2020, entitled "Protocol for the regulation of measures to combat and contain the spread of the COVID-19 virus in the workplace" (15 April) and "Protocol for the regulation of measures to combat and contain the spread of the COVID-19 virus in the workplace – PHASE 2" (30 April). These protocols have been integrated into the Risk Assessment Documents (DVRs) of the various group companies, which have therefore been updated with the prevention and protection measures taken to comply with the provisions of the above-mentioned protocols. The document issued on 30 April 2020 was updated on 11 September 2020 and is available, like all others, on the company intranet.
ERG also appointed an independent Third-Party Company, accredited to carry out field audits to verify the application of Anti-Covid safety protocols. No staff reductions have been planned or carried out during this period. Moreover, the company has not had to make use of so-called ‘social shock absorbers' nor has it had to implement the forced reduction of working hours. Intead the Group welcomed 29 new hires from March to September, and introduced a COVID-19 health insurance policy for all employees
, valid until the end of 2020.
Engagement and partnership activities with the areas in which ERG is present have continued and specific financial resources have been allocated by group companies and employees themselves to meet the most urgent needs of healthcare facilities. In brief, ERG's response to the COVID-19 crisis closely reflects its own business model, which has always been oriented towards the creation and sharing of sustainable value for shareholders, employees and the community in general.
Finally, as regards the impacts in the first nine months of 2020, reference is made to the comments provided in the following pages. As regards guidance for the full financial year 2020,
ERG continues it strategy of international development in Wind and the programme for the Repowering of its wind farms in Italy, against the new complex and difficult background of the health crisis linked to the two waves of COVID-19.
The main social and economic implications of the crisis affecting the management of ERG, which operates in a sector considered essential, concern the downward trend in energy prices, following limitations on production systems, and a general slowdown in authorisation processes, connection to networks and construction of installations. In the light of the above and of the results in the first nine months in line with the previous expectations, we hereby report the outlook for the main scenario and performance indicators expected for 2020:
|WIND || |
The result abroad will be higher than in 2019 in view of the better wind conditions recorded in the early months of the year, albeit with declining prices, particularly in Eastern Europe, and thanks to the contribution of the increased installed capacity, including the newly acquired wind farms in France (38 MW). In Italy, EBITDA is expected to be reduced, due to the lower wind speeds recorded in the first part of the year compared to our forecasts and, above all, the particularly high values of 2019. The total EBITDA of the Wind sector is expected to be down slightly compared with the previous year.
|SOLAR || |
The result in 2020 will benefit from better radiation, the effect of the above-mentioned price hedges and the in-sourcing of some activities previously carried out by third parties capitalising on its own industrial skills in the operational consolidation of the assets managed. The EBITDA for the entire year 2020 is forecast to grow with respect to 2019.
|HYDRO || |
For the last months of 2020, the figures also assume lower volumes than the ten-year statistical average, resulting in a lower overall output than the already particularly low output in 2019. The volume effect will be only partially mitigated by the increased incentive value on a portion of the output, and by the operations of Energy Management, with particular reference to hedging activities and production modulation, in order to concentrate sales in the most profitable hours. Therefore, EBITDA for the hydroelectric sector is expected to decrease compared to the already low values of 2019.
| THERMO || |
The forecast for the 2020 result will be affected, compared to 2019, by a lower price and margin scenario, and by a reduction in the production of energy efficiency certificates, as a result of the exit of one of the two modules of the plant from the high-efficiency cogeneration period from the beginning of 2020, for which repowering is under way in order to re-start the incentive period for a further 10 years. In the last quarter of the year, results are expected to be higher than in the same period of last year, although EBITDA for the full year 2020 is expected to fall slightly compared to 2019.
Overall, therefore, the guidance of the 2020 EBITDA at consolidated level as reported in the previous quarter is confirmed
, estimating an overall result in the range of EUR 480 to 500 million. Capital expenditure for 2020
relates mainly to progress in the construction of greenfield projects relating to wind farms under construction in the United Kingdom for around 250 MW, Poland for 60 MW and France for around 50 MW; this also includes capital expenditure for plant modernisation activities and the simultaneous renewal of the High-Efficiency Cogeneration (HEC) qualification for module 1 of the CCGT, the above-mentioned acquisition of the 38 MW in France and the usual fleet maintenance investments.
The amount is lower overall than in 2019, which was characterised by significant M&A transactions, and will be in the range between EUR 150 and 180 million, confirming, also in this case, the guidance communicated last quarter.
Taking into account the above-mentioned EBITDA and capital expenditure, we also confirm the guidance on year-end indebtedness reported last quarter. Cash generation, net of the above-mentioned capital expenditure, will allow ERG to reduce indebtedness, which will be in a range of EUR 1.35 and 1.43 billion (EUR 1.48 billion at the end of 2019)
, also due to lower financial expenses thanks to the full effects of liability management operations after the issues of the Green Bonds in 2019 and 2020