By Francesca Landini and Alberto Chiumento
(Reuters) - Italy's ACEA said it would invest 7.6 billion euros ($8.3 billion) to 2028 to grow its activities in regulated sectors including water, power grids and waste management as it pivots to becoming an infrastructure operator.
The company reported on Wednesday earnings before interest, taxes, depreciation and amortisation (EBITDA) of 1.39 billion euros in 2023, up 7% from 2022. It said that it would grow by around 5% on average each year to 2028.
Net income is also expected to increase by 5% yearly to reach 375 million euros in 2028.
"The strong discipline on costs and investments is a key aspect of our strategy to support cash generation combined with optimisation of our financial structure and capital allocation," Chief Executive Fabrizio Palermo said in a statement.
The group pledged to reduce it net debt-to-EBITDA ratio to 3.1 times in 2028 from 3.5 times in 2023 and increase dividend per share by 4% each year from 0.88 euros it would pay on 2023 results, above the previous year.
Shares in the group fell by about 3% to 14.03 euros per share at 0926 GMT as analyst presentation took place in Milan.
In the next few years some 91% of total capital expenditures will be devoted to regulated businesses, increasing the contribution of this activities to EBITDA, while the input from its electricity retail business would shrink as the group moves away from its traditional utility business model.
The group, which is the leading water operator in Italy and the second-biggest in Europe, will dedicate more than 60% of its total investments to this sector and double the capacity of the Rome's Peschiera Aqueduct, the city's main water supply.
It will also boost its electricity grid business, develop its waste treatment activity and increase electricity production from renewable sources.
Italian media reported ACEA was considering selling part or all its electricity retail portfolio, a possibility that the group did not mention in its business plan.
In a separate statement, ACEA said it is targeting 3%-5% EBITDA growth this year, coupled with annual investments of 1.5 billion euros.
($1 = 0.9203 euros)