Operator: Hello, and welcome to Iren's conference call. [Operator Instructions] I will now hand the floor over to Dubini Dacco, Head of IR, to begin today's call. Please go ahead.
Carlo Dubini Dacco: Good afternoon, everybody. Thank you for joining this conference call to present the results as of December 31, 2025 for Iren. The results will be presented by the Executive President, Luca dal Fabbro; and by the CFO, Giovanni Gazza. At the end of the presentation, there will be the usual Q&A session. I will now give the floor to Luca to present the results of the period.
Luca Fabbro: Thank you, Carlo. Good afternoon to all of you, and thank you for joining us today. The Board of Directors meeting today approved results as of December 31, 2025, showing a growth at the EBITDA level of up 6%, exceeded the EUR 1,050 million and 12% at group net profit, reaching about EUR 300 million. The increase of the EBITDA is supported by the organic growth for the investments over the last few years, of the synergy plans and the consolidation of the group EGEA. That contributed to the growth for about EUR 60 million. 22% of EBITDA of the group was by regulated or semi-regulated activities, confirming the strengthening and the strategic positioning of the core regulated businesses, and this is a stability element in such uncertain period. The net financial position grew by about EUR 140 million, reaching about EUR 4.2 billion. The increment at 2% allowed decrease in the debt to EBITDA ratio at 3.1x, as anticipated in the last guidance last November. Operating cash flow fully covered more than EUR 120 million in technical investments. There's also the group in line with the strategic plan presented in November '25, allow us to propose in the next shareholders meeting a dividend amounting to EUR 0.1386 per share. Growing by 8% compared to last year with a payout of about 6%. Sustainability, which is one of the pillars of our group strategy, continues to guide the strategic choices of investment. That's why at the end of the year, I would like to share with us the main results reached. During 2025, 73% of investments were invested to projects. The support of the transition plan towards 2040. Concerning the transition, we confirm what we anticipated in November during the Transition Plan toward 2040. That is, for some indicators, we need more time so that the planned interventions can really become measurable results. This is the case, for example, that remain stable compared to last year. The investments made in the environmental sector, a further increase of 1% point, in separate waste collection, bringing to 70.5%. There's a slight decrease in materials recovery to facilities due to the unavailability of the plastic recovery plant in Calle Bosca, following the fire that occurred in August 2024. 2025 was particularly important due to standing in our local presence, thanks to the consolidation of EGEA. This contributed to an increase in the municipalities served in waste collection customer base and the volumes for district heating. Finally, the services is the base of the management of our activities that are stable with a stable customer satisfaction at excellent level with [indiscernible] up 21% due to the extension of the management period. And thanks to the excellent services of IrenPlus and the wind energy sold at the final customers, as foreseen in the investor plan. As usual, moving to Page 4 in our presentation, we can see the main economic financial indicators and the moving parts of the period. EBITDA reaches EUR 1.25 billion, up 6%. The positive contribution of EGEA for EUR 60 million are more positive results than foreseen at the beginning of the year, thanks to EUR 5 million synergies. The efficiency gains were, in fact, made possible by the early full consolidation of EGEA at 100%, which enabled an acceleration of integration of activities, this in line with various holding financials and the direct coordination business operations. In 2026, we foresee that we will complete the integration at the company level. And today, we already integrated the Market and the Environment business units and also at operating level. The second element is the positive contribution to organic growth of regulated businesses, around EUR 22 million, driven by the full execution of planned investments and the strategy, understanding the group's presence in regulated segments, the strong focus on improving service quality. The third item is synergies that are in line with the planned expectations at about EUR 20 million. And the amount of the synergies in 2025 is 2.5x higher than in 2024, signaling that this is a good lever for an increase in the profitability. The energy value chain reported an overall increase of EUR 7 million despite being negatively affected by several factors: the absence of the strong margins recorded in 2024 gas segment, low hydroelectric generation volumes and lower prices for renewable technologies compared to the previous year. EBIT amounts at EUR 430 million, up 2%, due to the higher amortization and provisions about that. Group net profit instead amounts to EUR 301 million, up to 12%. And it benefits from the acquisition of the minority interest of the Iren Acqua company and the reduction of the tax rate. Overall investments of the year amount to EUR 1.35 billion, of which EUR 125 million in technical investments, up 12%, mainly destined to the development of the hydroelectric electricity network, waste treatment and the completion of waste treatment plants. The financing of these investments of about EUR 500 million hybrid bond may be possible to contain the increase in net financial debt to EUR 4.2 billion, resulting in a reduction in EBITDA ratio at 3.1x. I will now give the floor to Giovanni for an in-depth analysis of business dynamics.
Giovanni Gazza: Thank you, Luca, and good afternoon, everybody. We'll now go more in depth in the business unit performance, starting with the Networks business unit that you can see at Page 5. The EBITDA increase of 11% amounted to EUR 51 million. That was generated by all 3 business lines. In general, we can see that the organic growth generated EUR 22 million, partially offset by the reduction of WACC on the gas energy distribution, down of EUR 7 million, and the consolidation of EGEA that contributed for EUR 12 million. Finally, the efficiency plan delivered a positive contribution of approximately EUR 8 million. More in detail. We can see the integrated service and the organic growth and the consolidation of contributing for EUR 50 million overall. The positive result of the period is also supported by 2 nonrecurrent extraordinary items: EUR 8 million related to the area award for technical quality and EUR 3 million for our previous adjustment. These positive elements offset the absence of extraordinary recovery of the inflation amounted to EUR 9 million that was accounted for in the first quarter of 2024. In the Electricity and Energy business line, an increase of EUR 30 million is mainly due to the increase of strength due to an increase of RAB, up 7%. Finally, the gas distribution business, the result is by EUR 21 million, benefiting from the consolidation of EGEA's networks for EUR 5 million, the external recovery of operating costs recognized for the 2020-2025 period under ARERA Resolution 570, amounting to approximately EUR 30 million, and from other minor items totaling EUR 4 million. The investments made during the period exceeding EUR 387 million registered 8% growth compared to 2024. This demonstrates the strategy of the group, which is aimed at strengthening the regulated businesses. These investments are focused on improving the quality of the services provided with the aim of ensuring high-quality standards and continuity in achieving the incentives established by ARERA. Moving to the Environment business units on Page 6. EBITDA 2025 reached EUR 277 million, growing by 8% compared to 2024. Waste collection activities recorded an increase of EUR 60 million driven by the consolidation of EGEA, up EUR 3 million, and the one-off recognition of past operating costs in the latter part of the year amounting to EUR 30 million. Treatment and disposal activities positively contributed to the business unit's results with higher contribution going back to 2024 of EUR 5 million. This result was achieved mainly thanks to the launch of the efficiency plan of waste treatment and material recovery plants. These positive elements for the period include also the contribution for environmental remediation activities and the lower volumes of waste disposal of inland fills due to saturation and the lower prices for electricity generated from WTE plants offset the positive factors. Overall, the volumes of waste managed during the year increased by 3%, supported by growth, both in municipal and special waste, mainly as a result of the integration of EGEA. Continuing the analysis with the Energy business unit on Page 7. We note reversal of the trend at the end of the year compared to previous periods due to a contraction in prices and high relative volumes, which led to a decrease of EUR 6 million in the fourth quarter of 2025 alone. Looking at the overall effects according to the year, which result in a decline for renewables generation of EUR 35 million. We note that PUN values were lower than in 2024, hydroelectric production was down by 165 GWh, and we also recorded a lower solar radiation, offset by the full contribution of the 38.5 MW photovoltaic plant, which had only became operating in the second half of 2024. Regarding photovoltaic capacity, 20 MW plant DCC became active in October. At the beginning of this month, an 8.5 MW plant was in province Bologna and became operational. Thermal and cogeneration production reported growth of EUR 90 million due to the higher capital spreads and increase production volumes, up 170 GWh, also thanks to the full availability and efficiency of the new 400 MW thermal unit in Turbigo. The higher contribution from the capacity market, up EUR 17 million, was almost entirely offset by the decline in the ancillary services market, MSD, with a performance that was EUR 15 million lower than in 2024. Heat increased by EUR 9 million, driven by higher volumes resulting from networks in function and the consolidation of EGEA. These factors were partially offset by a slight decline in unit margins. In particular, the reduction in thermal spark spread is linked to the high margins achieved in 2024, supported by particularly favorable and repeatable hedging operations. Finally, also the segment of energy efficiency is a positive, up EUR 3 million due to increase in building activities. We conclude the rest of the business units with the Market segment on Page 8, which reports an increase of EUR 12 million, up 5%, driven by the consolidation of EGEA, up EUR 29 million and by synergies achieved due to the optimization of commercial processes. This model offset both the lower margins on electricity sales and the absence of the extra margins recorded last year in gas sales. Volumes sold increased both for electricity, up 18%, and gas, up 10% as a result of the consolidation of EGEA. And the customer base increased by 3%, exceeding 2,350,000 the customers served. The contactor strategy implemented after the 2022 energy crisis allows us to be more resilient to potential commodity price fluctuations with 72% of contracts with variable prices and only 28% at the fixed prices. Market competition remained high with higher rates than in previous years. However, towards the end of the year, we observed some stabilization in the indicator, which did not increase compared to September's level. Finally, we confirm a positive commercial trend in the sale of high value-added products and services, which recorded an increase of EUR 2 million compared to 2024. Moving to Slide 9. We can identify the main elements that enable the group to achieve a net profit of EUR 301 million in more detail. Depreciation and amortization increased by EUR 61 million, driven by investments as well as consolidation of EGEA, which contributed to EUR 43 million. Provisions for bad debt increased by EUR 12 million mainly in the Environment BU due to the shift in revenue recognition for environmental sanitation services from tax collected [indiscernible] to a fee collected directly from customers by the group. The average cost of debt stood at 2.4% higher than in 2024, mainly due to the interest rate differential between new bond issuances and those that were paid, which are particularly favorable rates. We recorded a higher contribution from cost consolidated companies at equity, up EUR 7 million. Net profit attributable to the group for the period amounted to EUR 301 million, up 12% compared to last year, thanks to the higher the EBITDA, a lower net profit attributable to minorities and a lower tax rate, which as already highlighted during the year, stands at 27.8%, benefiting from nonrecurring tax items related to the consolidation of EGEA. I conclude the economic and financial analysis with the evolution of the net financial position, which stands at EUR 4.22 billion, up 2% compared to 2024. It should be noted that the operating cash flow amounted to EUR 943 million, fully covered the EUR 925 million cash-out for tactical investments. Within operating cash flow, we recorded an increase for Superbonus of EUR 43 million as the credits accrued from rebuilding activities exceeded the credits sold and offset. The increase in net working capital by EUR 148 million is mainly attributable to three factors. One, tariffs receivables in regulated businesses, the so called extra cap due beyond 12 months, amounted to approximately EUR 80 million, of which around EUR 40 million were related with the service and EUR 25 million to waste collection, plus other smaller receivables related to deferred incentive collections. Two, EUR 60 million due to a reduction in trade payables linked to the seasonal factor of investments. In 2025, they were more concentrated in the first part of the year, but also to the decline in energy prices that characterized the latter part of the year. Three, finally, around EUR 10 million receivables to be collected for contributions relating to RRN funded projects. The cash outflow from M&A transactions acquisition of minority stake in Iren Acqua and EGEA was offset by the issuance of our hybrid bond in January 2025. I will now hand the floor back to Luca for the conclusion of the presentation.
Luca Fabbro: Thank you, Giovanni. To conclude the presentation, we will now look at the 2026, the current year, which we characterize, according to us, by the implementation of the strategic plan, primarily focused on regulated businesses with the rollout of the first actions and the finer sharpening our business model; two, the maintenance of financial targets and the current rating assessments; three, the continuation of the efficiency plan, which was a target of approximately EUR 20 million in additional synergies by the year-end. Regarding energy production, in the first quarter of 2026, we can see that while gas price generation and heat production are broadly line with last year. Hydroelectric production is down by approximately 80 GWh. This trend is attributable to the start of 2026 with hydro reservoirs depleted due to scheduled maintenance works on the reservoirs. Therefore, 2026, we expect and EBITDA growth of 4% compared to 2025, taking investments of approximately EUR 950 million and, thus, a stable EBITDA ratio of 3.1x. We will now move to the Q&A session. Thank you very much.
Operator: [Operator Instructions] The first question comes from Javier Suarez from Mediobanca.
Javier Suarez Hernandez: I have two questions. The first is a bit about the context in a situation of emergency for Europe due to the geopolitical crisis, how do you see the impact for the company like Iren of the measures introduced by the government in the energy sector? Can you give us an update about your forecast for '26 and '27, and how the strategy may compensate higher volatility in the sector in energy crisis. This was the first question. The second question was related to the net income guidance. What do you think may be the impact in 2026 and 2027? Can you share guidance on the net impact also for 2026? And third and last question. I would like to have an update on the supply business. The dynamics, that you mentioned, but I would like to have a more insights on the first quarter of 2026, what you're seeing at the moment. And do you think there should be updates or changes to your policies and activities?
Luca Fabbro: I will give an introduction and then I will give the floor to Giovanni. Talking about the context, it is a very volatile context. And concerning the impact of the government measures on the energy sector, we are waiting to see what they will say about ABS, but we cannot see a high economic impact. I will now give the floor to Giovanni.
Giovanni Gazza: In 2026, we already did an important hedging strategy. So concerning supply, we cover contracts with a fixed rate at 5%. And concerning production, we covered all our renewables production at 65% with a price of EUR 105. We would also like to note that a small part of our production would not be subject to these provisions due to the green certificates. So this hedging strategy allows us to say that we have about 600 GWh uncovered and that are subject to interventions to regulated prices in a very low [ weight ]. Referring to bills, the increase of 2% of Europe on the energy consumption was estimated at EUR 7 million. So we expect that this provision will be cut. With this percentage, there will be a negative result of EUR 7 million. Will we foresee in 2026 regarding supply. As we already said, we see a stable [ CR ]. Especially in the last part of 2026, we foresee a slight reduction of margins of about EUR 5 per customer compared to 2025. We can say that the first quarter is not marked by particular dynamics regarding churn rate on the supply side. On the production side, as we already said, we point out a reduction on the 2 production compared to last year of about 80 GWh. So these are the main aspects in the Energy line that will be related to the first quarter.
Operator: The next question comes Roberto Letizia by Equita.
Roberto Letizia: I would like to do a follow-up on some of the questions because you gave the position open for 2026. I would like also some indications about 2027, and if you could clarify if, in 2027, there is more margin for -- more benefits in power generation because the measures of the government can only compensate what the scenario will develop into. If there is an intervention on the side of the government, there could also be positive results. So I would also like you to comment on how you will manage the spark spread dynamic that at the moment had a breakdown, had a collapse. So the gas distribution with the gas is not good, and there was a collapse at 10 GWh in gas production. So how do you foresee the situation to develop. And concerning the scenario, I would like you give us an explanation about gas procurement. So if you have contracts that could have any issues due to force majeure or if there are any issues related to the volumes or to the dynamics of [ guarantee ] liquidation as we saw in 2022. And next question, if you can remind us what could be the elements of 2025 compared to 2026?
Unknown Executive: Yes. Compared to 2027, we can already explain our coverages. For 2027, we expect our renewable production of 2.1 GWh. And at the moment, we have covered 20%. So we cover 20% at a price of about 105 MWh. This 2.1 TWh, we have a covered part, a part that we covered by green certificates and with incentives. So we have about 1.5, 1.6 terawatt per hour. And so we could have an advantage related to the prices for 2027. So these are the volumes. Concerning the spark spread, as you said, the dynamics are highly volatile. The forward won't give any signals of results. The spot prices become more positive as we go near every day to the delivery, and they are strongly marked by the gas prices. So on the terminal fixed side, in 2026, we cover 20% of terminal production because this will mean losing the possibility of margins that we generate every day with a high volatility on the delivery phase. Concerning gas procurement, our supply contracts foresee at TSW Italia. We have no force majeure . So they are only to the national territory. So this contractor position puts us in a safer position concerning risks of supply. Also consider the fact that from Qatar, we receive 4% of liquid gas every day. So this is a low volume. And so we don't have force majeure closes unless we have the one on Italian soil.
Operator: Next question comes from Francesco Sala by Banca Akros.
Francesco Sala: One is on the investments for 2026, concerning the target, they are a bit below the average that you estimated for the following year. And where will the investments be focused in 2026? The second question concerns hydroelectric concessions. Are there any updates on the renewables process? And how do you intend to proceed?
Unknown Executive: Yes. Concerning CapEx, we foresee [indiscernible] the investment plan. This is a business unit that we would like to develop and focus on. About EUR 140 million, EUR 150 million for Environment, EUR 250 for million Energy and then EUR 260 million for the Market side. The investments are corporate investments. So also an upgrade of IT systems, also in line with the new directive, which must be complied with by 2026. Concerning hydroelectric aspects, the current directives were put in doubt, and we are now discussing with the government the possibility of us calling [ fourth way ], which is an extension of the concessions by paying a fee to the companies or to the families. This is something that we are monitoring and this applies to all operators, not only to us. So we are expecting the decisions of the institutions by the government by the ARERA.
Operator: Next question comes from Emanuele Oggioni from Kepler Cheuvreux.
Emanuele Oggioni: I also have a few questions. The first one is a follow-up about the guidance. Concerning EBITDA, could you please sum up the 4% of growth foreseen and a confirmation of the guidance of the comp market of net profit in 2026? I don't know if you already answered these questions. And also the one-off increase of Europe. This is the first question about the guidance. The second question is about [ separation ]. Could you please describe the reasons, the decision to sell the assets? I don't know if only a part of our majority of the renewable assets, in particular, [indiscernible] assets? And could you give a the reason for this decision? And then something more about the numbers for hydro production. I don't know if the reduction GWh is only to a part or to the whole 2026, so in the volume of GWh [indiscernible] and what is the total volume you refer to in 2026? [indiscernible] 2.1 For 2027, but I didn't catch the numbers for 2026. And then I've seen that there was an increase on bad debt of about EUR 10 million. I would like to understand if you have a guidance on 2026, if this was a one-off to 2025 or if this will be -- or if this will continue or it will increase in the 2026? And finally, last question. I saw EUR 43 million concerning credits generated by Superbonus. Could you please remind us if there is still a residual part in 2026 or in the following year?
Unknown Executive: Yes. So let me start with the target of hydroelectric production in 2026. This reduction for the first quarter is a reduction of about 550 GWh on year production because it is due to lower reservoirs at the beginning of the year. There were maintenance works on the reservoirs. So we started with little water in the reservoirs. What we foresee for 2026 is 1.2 tera of hydroelectric production, about a 580 GWh for [indiscernible] photovoltaic because we have higher power installed. So as we have said, plant in Sicilia and Bologna plant will be operational. So we have a higher capacity. And we foresee our target of 250, 270 GWh and then the usual 150 GWh from thermo. Concerning provisions, we had an increase due to the change from tax to tariff to a fee. So this was implemented in the foreseen municipalities. And we foresee that there will remain an amount that is stable also for 2026. As for Superbonus, we can say that the activities were terminated. So we don't have more initiatives, only limited initiatives already to nonprofit organizations. So we foresee in 2026 to liquidate the credit generated, EUR 43 million generated in 2025, and also to liquidate a fare amount of about EUR 90 million. This will compensate the increase in working capital linked to extra cap that will characterize 2026 as well. Regarding EBITDA, the growth of 4% is driven by synergies. In 2025, we reached EUR 50 million we are planning to add another EUR 20 million in 2026. And we also activated our specific project for the performance improvement in addition to the ones we had in previous years, and this will contribute for EUR 20 million. Concerning business dynamics, we have organic growth on the Networks, a slight increase in the Environment business unit by recovering the margins for the treatment plants. We believe we can also have generated EUR 5 million in 2026. The Energy side is driven by the price and by a higher contribution of the capacity market of about EUR 50 million more than 2025. And concerning the Market business unit, we foresee a reduction, as we said before, about EUR 5 per customer and overall a reduction of EUR 10 million. Regarding net profit, we don't give a guidance. We'll give during the first quarter analysis as is for us. I will give the floor to the President for the asset rotation.
Luca Fabbro: Concerning asset rotation, I confirm that no decision was taken that differentiates from the plan. Of course, with the aim of optimizing and the asset allocation, at the moment, we didn't take any decision. We don't foresee to sell photovoltaic, and we will assess opportunities should there be an opportunity. But this doesn't mean we would like to stop investing in renewable energies. We are one of the major suppliers of hydroelectric in Italy. And in this stage, with the Hormuz crisis, we should look at the opportunities in sale and also in acquisition. I have also had in the [indiscernible], but there are no decisions already made.
Operator: Next question comes from Davide Candela, Intesa Sanpaolo.
Davide Candela: I have a couple of questions related to debt. The first one is a clarification about approximately EUR 90 million that you reported as a guidance for 2026 in the guidance for extra capital. I would like to ask if this is something that is not [ recurrable ], so about EUR 30 million more than the EUR 60 million. Or if you are investing more and, thus, creating a regulatory capital. And if you have a plan to recover this that at the moment we are not recovering. And also concerning that, in light of the scenario that we are seeing in these weeks, do you see anything that has an impact on the medium term? Or does this force you to ask for credit lines, and this will impact also the financial burdens on the short term?
Unknown Executive: Concerning security capital, it is the correct interpretation that this extra cap credit are recognized on an economic and financial point of view will be recovered a little bit. On this credit, the inflation is foreseen. So we foresee to invest about EUR 15 million on the networks and this will generate credits. And this will be recovered in the following years, I will say starting from 2028. So in 2027, there should be less credits, so the amount should be lower. And in 2028, 2029, we should recover the tariffs. These credits are recognized also in the concessions. So the new -- if there will be a succession, the new [indiscernible] should recognize that this is appraisal. Concerned 2026, we don't have significant margin cost because our operations are mainly on the DC market and very low on hedges. So we don't foresee any negative impact on trade. So we are waiting for the conversion of the pre to see if there should be any additional measures that at the moment are not known on the invoice in mechanism.
Operator: Thank you. There are no further questions. I would like to give the floor back to the speakers for concluding.
Luca Fabbro: Thank you very much for your attention, for your questions. And I would like to wish you a good afternoon. And we will hear from each other next time. Bye. [Statements in English on this transcript were spoken by an interpreter present on the live call.]
