Message from the Executive Chairman

These half-year results confirm the Hera Group’s trend of uninterrupted growth and fully respect its track record, thanks to organic growth and the numerous projects implemented in internal and external development.

The increase in Ebitda, the profits gained and the attentive management of financial operations allowed the Group to fully cover both investments and annual dividend payments to our Shareholders, which rose to 10 cents per share (+5.3%).

The further increase in waste treatment plants managed and the joint venture with Ascopiave in the energy sector, currently being formalised, will allow us to implement plans for growth as early as the second half of 2019 on the one hand, and on the other to expand in the Triveneto area, strategically important for a further development of the Group’s activities, already ensuring at present, after only 18 months, 60% of the growth in Ebitda foreseen within 2022 by the Business plan.

Tomaso Tommasi di Vignano
Executive Chairman


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Areas of activity

Total EBITDA Group 545.9 mn €, + 4.3% vs. 1H '18


  • EBIT MLN €

    Hera operates according to its habitual model of development, which makes the most of both scale economies and synergies (internal growth) and expansions in its scope of operations (external growth), integrating other sector companies.
    This strategy has been coherently pursued since the company was established, and continues to prove its effectiveness.


    The Group’s national leadership in all activities managed:

    • first operator in the waste management sector
    • second operator in the integrated water service
    • third operator in gas distribution
    • third operator in energy sales to final customers

    The Group’s business plan to 2022 foresees:

    • an ambitious investment program totalling roughly 3.1 billion euro
    • growth in Ebitda coming to 200 million euro, to reach the goal of 1.185 billion euro by 2022

    Three quarters of the Group’s investments to 2022 (3.1 billion euro) will be dedicated to regulated activities:

    • 70% will go towards networks
    • roughly 6% will go towards urban waste collection

    1.1 billion euro will be invested exclusively in growth:

    • new plants and network modernisation
    • tenders for renewing gas concessions
    • M&A operations

    The Group’s goals can be reached, thanks to:

    • the opportunities offered by the scenario to continue along its path of growth
    • its good position in markets and accumulated financial resources
    • one of the sector’s most solid financial structures
    • visible and increasing cash generation

    The creation of value for all stakeholders guaranteed:

    • lines of development oriented towards pursuing at least 10 of the 17 objectives on the UN’s 2030 Agenda
    • almost 3/4 of growth seen over the five years included in the plan will be sustained by projects implemented to respond to these ten calls to action
    • 470 million euro in shared value Ebitda by 2022 (40% of overall Ebitda)

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Summary Report

Broker Analysts' comments on financial results
Banca Akros "The H1 19 release is sound and in line with the year trend. We confirm our positive stance on this high quality local multi-utility with an Accumulate rating and a target price of EUR 3.80."
Banca IMI "Results were above our estimates, especially at the bottom line level. We judge results positively, as the company confirmed its solid operating performance, as the results are well on track in its business plan execution, and confirmed its solid cash generation. Following the last M&A actions and 1H19A results, we could consider our current FY19E estimates as conservative.
Further upside potential on our estimates could also come from more visibility from the recent M&A actions and investments. We maintain our positive stance on the stock."
Equita Sim "Hera reported a healthy 2Q19 with numbers above expectations and a good growth at operating level thanks to the contribution of all business lines. Interesting indications from the call give more visibility on profits outlook. Hera has entered the ownership of 3 new landfills, for a total capacity of 2.4mn tonnes, of which 2 internally developed and the third acquired. Hera expects some 16 €mn of potential Ebitda contribution at regime. Hera already achieved 60% of strategy targets in just 1.5 years (over a 5 years strategy period).
The expected loss in profitability of the Last Resort clients in 1H has been fully recovered. The cost of debt in further reduction from 3.7% to 3.5%. We believe all the above are positive indications. As a consequence, we have increased our EPS expectation in the region of 5%-7% in the period 2019-2022 as well as our target price by +9% up to €3.7/share."
Intermonte "Hera reported a positive set of 2Q19 results that beat our estimates and consensus expectations at operating and bottom line level. Hera has announced 2.4mn tons of additional waste treatment capacity, which has a minimal effect on 2019 while boosting EPS for 2020 and following years by some 3%. Our target moves to Eur 3.90, partly to reflect the impact of a lower risk-free rate (-50bp) on our DCF. We continue to believe that the group is well placed to benefit from the lack of capacity in the waste sector, the growth of the energy supply customer base, and the slow-but-certain market consolidation. The stock is trading in line with the local utilities sector in terms of EV/EBITDA, despite higher visibility on results"
Kepler Cheuvreux "Solid numbers, on the road to reach our full-year estimates. Q2 EBITDA above our estimate, mainly thanks to the higher performance of the gas and water businesses."
MainFirst "Hera reported a strong set of Q2-19 results, higher than our and consensus estimates. Results confirmed the ability of the company to manage its business portfolio in an integrated way. Hera also announced an increase in its landfill
capacity, which would determine upside pressure on our estimates as of 2020. Our Neutral rating on the stock is mainly based on valuation. Hera trades at a premium in terms of multiples versus the other Italian local utilities.
We understand that those multiples are justified by strategic and managerial consistency, which has determined a growth trend that has been continuing for several years."
Mediobanca "1H19 EBITDA growth at +4% is higher than consensus (+2%), and is coming from both the regulated & non-regulated businesses, mainly due to better numbers from water distribution and expansion in the electricity client base and also the contribution from gas default clients & higher contribution from public lighting as well. From the conference call, key highlight is the approval of new waste land-fields that comes to resolve one of the strategic bottlenecks of the company. We continue to believe that Hera is particularly well-positioned to benefit from the on-going consolidation process among local multi-utilities. Outperform."
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The company was established to last, to help society improve and the grant a better environment for future generations, according to the following strategic priorities:

  • Innovation: The pivotal point of the main projects foreseen by each business area over the duration of the Plan consists in the opportunities made available by technological innovation.
  • Excellence: Hera has always given attention to pursuing a high service level in all business areas in which it is active, with the aim of surpassing the quality standards imposed by the Authority. Service quality is a key element in constructing a long-term relation with our stakeholders, and also represents a source of economic value.
  • Agility: Within the context of an increasingly dynamic sector, this lever is useful in facing change in the best possible way and is therefore also applied to the Group’s leadership model.
  • Efficiency: The reference context as regards competition requires a boost in efficiency, achieved through internal and external levers.
  • Growth: The Group’s growth has historically been guaranteed by a balanced mix of internal and external growth, and ensures that the services offered are efficiently managed, both in terms of its ability to deal with adverse conditions and discontinuity, and as the drive needed to maintain a leading role in consolidating sectors that remain extremely fragmentary.

The Hera share

Share performance and investor relations

Over the period in question, Hera stock, which became part of the Ftse Mib index as of 18 March, outperformed both the Italian stock exchange and its reference sector, rising by +25.7% and reaching an official price of 3.359 euro. The trend seen in the price of Hera shares reflects the strategy, clearly geared towards growth, contained in the Business plan to 2022, along with the Group’s valid fundamentals as confirmed by its year-end and first-quarter results, and its announcement of a transaction aimed at external growth by reinforcing its partnership with Ascopiave Spa in the energy sales sector.


Share performance

Semester overview

Ebitda settles at 545.9 million euro (+4.3% over 30 June 2018). This growth is due to the good performances seen in all of the Group’s activities, above all the water cycle and gas. Positive results also reached in the electricity, waste management and public lighting areas.

In an increasingly challenging and competitive context, some activities carried out over the half-year made a decisive contribution towards these results, confirming once again the company’s resilience and reliability.


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Business organic growth

The Business plan to 2022 has been presented in January 2019
investments and innovation identified as focal points

Relying on the strong position of leadership it has gained, Hera now wishes to grasp the opportunities offered by the current scenario, guaranteeing further prospects for growth in terms of Ebitda and ensuring the creation of value for shareholders.

The Plan for the upcoming five years, which will see numerous significant events, expects Ebitda to grow by 200 million euro, reaching the target of 1.185 billion euro in 2022. Considering the Group’s market position and the financial resources it has accumulated, investments coming to roughly 3.1 billion euro have been foreseen. This is only possible thanks to its solid financial position and increasing cash generation, able to finance dividends, internal growth in infrastructures and expansion through gas distribution tenders.

Expansion through M&As will be pursued and financed with its considerable available financial leverage, which is expected to remain under 3.0. To guarantee growth, 1.1 billion euro will be dedicated exclusively to investments in new plants, network modernisation, M&A transactions and tenders for gas concession renewals.

The Group’s strategy is focused on the Ecosystem, Circularity and Technology

Over the next 5 years, roughly 3/4 of the growth foreseen in the Plan will be sustained by projects devised to respond to the “call to action” for change, following the targets set out in the UN Agenda. The portion of Ebitda linked to shared value will thus rise to over 40% of overall Ebitda (approximately 470 million euro) by 2022.

Hera is prepared for the challenge of upcoming gas distribution tenders
Increasing competition in the activities managed by Italian utilities has been confirmed once again, in both regulated and free market businesses

A significant amount of the efforts made in the first half of 2019 was concentrated on renewing tenders in safeguarded electricity and default gas services, as well as public lighting.

In late 2018, tenders were held for renewing concessions in safeguarded electricity and default gas services, in which the Group was confirmed for the upcoming two years as Italy’s main operator, gaining over 70% of the market.

For the period between October 2018 and September 2019, Hera Comm was awarded, through tenders, 5 portions of the last resort gas service and 7 portions of the default gas distribution service, covering all of Italy’s regions except for Lombardy, Veneto and Trentino-Alto Adige. As regards safeguarded electricity services, for the 2019-2020 two-year period, the company was awarded 7 portions out of 10, concerning 15 of Italy’s regions.

In recent months, Hera Luce, a Group company and Italy’s second public lighting manager, was awarded various contracts in public lighting. This company, that operates according to criteria mainly involving energy efficiency and innovation, won 7 tenders out of the 9 in which it participated. The areas served now include the Municipalities of Cervia (RA), Boltiere (BG), Paliano (FR), Tavullia (PU), Ferrara (FE), Roncofreddo (FC) and Pedrengo (BG).

Furthermore, it presented 10 Financing Projects, a highly effective tool that Hera Luce often offers to public administrations to give concrete shape to their plans in upgrading public lighting. It is thus possible to create projects tailored to each local area, based on the goals set out by each single Administration. 

In addition to ensuring that plants and switchboards comply with regulations and operate safely, thanks to the use of advanced technology, Hera Luce’s interventions almost always lead to energy savings coming to over 70% compared to the initial condition of the systems.

This process optimisation leads to a significant reduction in carbon dioxide emission. Switchboards provided with astronomical clocks that regulate when they are turned on and off and are provided with remote control, smart pedestrian crossings and last-generation LEDs are only a few of the innovations offered to the municipalities served by this company.

The Hera Group currently manages 513.5 lighting points, guaranteeing an efficient public lighting service in 174 municipalities spread out over 10 regions. 51% of the lighting points use systems aimed at optimising consumption, by reducing their intensity or partially turning them off, and 35% use low energy consumption light bulbs.

In some areas, Hera also manages traffic lights, whose total comes to ten thousand. While in 2018, thanks to the interventions carried out, 1,634 TOEs were saved, which in terms of benefits to the environment correspond to over 3,500 tons of greenhouse gas avoided, activities currently in progress points towards additional savings coming to 1,300 TOEs in 2019.

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M&A and Shareholders

Group's external growth
Hera has acquired companies, reinforced pre-existing partnerships and consolidated its expansion strategy by inaugurating new plants

The first half of 2019 came to a close with the inauguration of the new Cordenons plant, in the Province of Pordenone, for non-dangerous waste treatment. Conceived and created on the basis of the most advanced knowledge nationwide, it will be able to process roughly 700,000 tons of waste over a 7-year period (2019-2026). It thus gives concrete expression to the Group’s strategy of expansion in the North-East, pursued as of 2016 with the acquisition of the environmental assets of Geo Nova Spa.

The plant, which represents an overall investment of 16 million euro, included in the Business plan, will allow waste coming from the local economic system to be correctly treated, without jeopardising the quality of the surrounding environment. Furthermore, form the point of view of a circular economy, the waste brought to the new plant will produce biogas; this 100% renewable fuel will be collected, stored and treated with clean technologies.

An equally important recent acquisition concerns Pistoia Ambiente, the company managing the Serravalle Pistoiese landfill and the annexed liquid waste treatment plant, with a residual capacity of over 1 million cubic metres of waste treated over roughly 10 years.

This transaction, included in the Plan, enlarges the Group’s scope of operations in Tuscany. In an area rich in production plants, this structure, mainly dedicated to industrial waste treatment, allows waste that cannot be recovered by plants to be safely treated. The Group will thus be able to ensure service continuity and competitiveness to local enterprises, offering an increasingly wide range of waste treatment solutions and complying with the principles of a circular economy.

These transactions, along with the acquisition in May of quotas of Cosea Ambiente S.p.A., an urban and similar waste management services company operating in 20 municipalities of the Tuscan-Emilian Apennine area, further reinforce the Group’s national leadership in the waste sector.

The Group thus offers its services to 3.3 million citizens in over 170 municipalities, and manages all types of waste, thanks to roughly 90 plants that bring together efficiency and competitiveness in terms of costs and sustainability.

In the energy sector, a project launched in March is aimed at integrating the activities of CMV Servizi and CMV Energia e Impianti within the Hera Group, going respectively to Inrete Distribuzione Energia as regards natural gas distribution and Hera Comm for energy sales. The transaction concerns roughly 25,000 customers and 30,000 delivery points for natural gas distribution and will allow a solid industrial project to be developed in the Ferrara area as well.

The Group’s presence in the energy market was unquestionably consolidated in this half-year by a reinforcement of the pre-existing commercial partnership between Hera and Ascopiave, through EstEnergy S.p.a., a leading company in energy markets in North-Eastern Italy. As of 31 July, the date at which the deal will be finalised, the Hera Group will reach 52% and Ascopiave will represent 48%.

This joint venture will allow Hera to considerably expand its sales operations in the Veneto, Friuli-Venezia Giulia and Lombardy regions, reaching the goal of 3 million energy customers 3 years in advance compared to the content of the Business plan to 2022, thanks to this acquisition of roughly 700,000 new customers.

This transaction, which will be completed within 31 December 2019, also involves Amgas Blu, a sales company entirely held by Ascopiave that operates in the province of Foggia, with roughly 50,000 customers, which will be acquired directly by Hera Comm.

New record high for Hera stock, only 8 days after the dividend payment.

Even after the 10€c dividend payment, due for 2018, Hera stock outperformed, reaching a new record high

On 18 March, Borsa Italiana officially recognised Hera stock as part of the FTSE Mib index, the stock market that brings together Italy’s largest 40 companies by capitalisation and liquidity.

Hera stock, which continues to outperform both the Italian market and its reference sector, reached a record high of €3.55 immediately after the half-year closed, rising by 30.83% over the beginning of the year and recovering the dividend payment in only 8 days.

The trend seen in the price of Hera stock reflects the clear growth strategy contained in the business plan to 2022 as well as the valid bases confirmed by the Group’s year-end and quarterly results, published respectively in March and May.

The joint effect of the rising price of the stock and the continuous payments made to shareholders through dividends led the total shareholders’ return, accumulated since the stock was listed in July 2003, to remain consistently positive and to settle, at the end of the half-year, at over +275%

In late June, shareholders collected the 2019 dividend for the 2018 fiscal year, which came to 10 cents, increasing compared to the one paid in June 2018 (9.5 cents per share), as resolved in the Shareholders meeting held on 30 April 2019.

The +16% rise over the dividend paid one year ago reflects the previously communicated content of the Business plan, which expects dividends per share to reach 11 cents in 2022.

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Sustainable finance

With Hera, finance is increasingly green
With the Group’s new bond, the green securities listed on Borsa Italiana’s bond markets sees an additional significant European corporate issuance.

Banks and institutional investors are increasingly aware that investing financial resources over the medium-long term is a decision that must be weighted according to various factors, based on multifaceted and complex analyses. Companies oriented towards social and environmental sustainability are gradually being rewarded, and this sort of orientation is integrated in the strategies pursued by Hera’s management.

The creation of “shared value”, as theorised by Porter, has for some years now been a quantified target, commonly referred to by the Group’s employees, who are constantly involved in teamwork on a range of inter-functional projects. For example, the goals contained in the UN’s 2030 Agenda take shape in Hera’s various business areas, because the impact of a company’s activities on people and on the environment is an integral part of its operating and financial evaluation.

The Sustainability Report offers a highly detailed idea of the many initiatives and projects underway, and of the efficiency reached by the Group’s plants.

Sustainability also calls for careful long-term planning in the area of financial resources, cash flow and debt. Only with a vision covering long periods of time, indeed, can one plan tangible interventions in the financial, social and environmental spheres. The Hera Group’s Finance function has fully embraced such a path, by identifying long-term financial resources on international markets with innovative instruments.

Hera was in fact the first Italian company to issue a green bond, in 2014. In 2017, financing was obtained from the European Investment Bank, dedicated to the principles underlying a circular economy and environmental activities, and 2018 saw the first “sustainable financing” in Italy. The latter, which took the form of an ESG-Linked Revolving Credit Facility, allows Hera to enjoy a subsidised interest rate according to the degree to which certain environmental KPIs are reached.

The Integrated Governance Index has rewarded this informed and responsible course of action. This index measures the integration of ESG factors within the strategies pursued by Italy’s major companies, and for the second consecutive year ranked Hera first in the country for green finance, also seeing it rise to fourth place in the overall 2019 ranking. The Group thus occupies an excellent position among Italian companies that bring their own strategies together with a commitment towards sustainability.

In June 2019, Hera issued a new green bond, amounting to 500 million euro overall, payable over 8 years (2027) with a coupon set at 0.875% and a return coming to 1.084%.

The bond was listed on Dublin and Luxemburg’s regulated markets, as well as Borsa Italiana’s Extra MOT PRO platform. The strong demand, coming to seven times the offer, and the quality of the orders received, allowed the price of the bond to be set at an excellent level.

The transaction saw significant participation coming from international investors (France, Germany, Great Britain, Holland), mainly “green” and “sustainable”.

Hera among the first companies in Europe
to have a “Green Financing Framework” (GFF)
the policy document is aligned with “Green Bond Principles”

A roadshow consisting in numerous meetings, in addition to presenting the new green bond, allowed investors to focus on the new “Green Financing Framework”, a policy document for the Hera Group’s “green” and “sustainable” financial instruments.

The Green Financing Framework sets out, among other things: the process that led the issuer to define its Green Projects, a description of the macro-categories of Green Projects to be financed or refinanced thanks to the funds raised, the process through which cash flows will be allocated and traced, in addition to the reporting process and the projects’ KPIs.

The funds raised with the green bond issued in June 2019 will be used to finance or refinance numerous projects, whether ongoing or included in the Business plan to 2022, that pursue one or more of the goals included in the UN’s 2030 Agenda, subdivided into 3 areas:

  1. Energy efficiency (responding to SDGs 7 and 13): from installing smart meters to developing remote heating networks and projects in the area of public lighting.
  2. Circular economy and sustainable waste management (respecting SDG 12), through innovative projects in waste collection systems, extending unit pricing, creating plants and structures for recycling, recovering and reusing materials, plants for biological/chemical waste treatment and WTE plants, similar to the biomethane production plant in Sant’Agata Bolognese (BO).
  3. Water infrastructures (aligned with SDGs 6 and 14): projects for managing waste water, sewerage and water infrastructures for resilience and adaptation to climate change.

The company’s financial instruments are thus becoming a fundamental key with which to communicate with ESG investors, in order to continue along the Hera Group’s path of operating, financial, social and environmental sustainability, preparing for future challenges and climate change.

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