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Strategy and Business plan

Full confirmation of the strategic bases pursued as in the past, with the focus going to industrial growth, risk management and circularity.

Strategic map

The plan to 2023 expects the Hera Group's uninterrupted path of growth to continue, with a rise in Ebitda over the five years amounting to +219m€ (+10% as compared to the +200m€ foreseen in the previous plan), supported by all growth drivers, both internal and external.

Investments totalling 2.9b€, of which 900m€ dedicated to developing all businesses in the Group's portfolio (540m€ for developing new plants, up +29% over the previous plan).

Dividends to increase with a "yearly" rate of growth (instead of every two years, as in the previous plan), reaching 12 Euro cents in 2023 (+20% over the five years).

Working cash flow to rise (+300m€ accumulated over the five years, compared to the previous plan), sustaining investments, dividends and expansion through M&As and tenders for gas distribution, and maintaining an improved financial solidity, with a Debt/Ebitda ratio coming to 2.8 at the end of the plan (as against 2.9, according to the previous plan). This will leave room to grasp any further investment and M&A opportunities that may arise, in addition to those included in the plan.

A solid risk profile, thanks to the higher visibility ensuing from the tariff method used in all regulated activities (which represent roughly 50% of the Group's business and 75% of its investments over the five years), lower dependency on variables not included in the investment plan and higher visibility concerning long-term sustainability (2030), with respect to the UN's SDGs.

Full confirmation for the strategic bases pursued in the past, with a greater focus going to industrial growth, risk management and circularity.

A concrete commitment towards sustainable growth: 70% of the increase in Ebitda over the five years is expected to come from projects in line with the directives for development set out by the UN.


  • In line with its "open" business model, Hera aims at continuing to pursue internal and external growth. The quantity and proportions of these two growth levers are expected to remain the same as the average recorded over the last 16 years: 64% of growth in Ebitda will come from internal growth (+188m€), able to fully offset the -76m€ "Negatives" (earnings coming from sales to protected customers, and the end of incentives for renewable and similar sources) and 36% from M&As (+107m€).

    The M&A component has already been partially completed by the Asset Swap transaction with Ascopiave, expected to contribute to growth with +38m€, in addition to synergies.

    This growth will be based on a wide and diversified set of levers, and will concern all activities in the Group's portfolio:

    • Greater efficiency in costs, through means including innovation, coming to +55m€ over the five years
    • Increased productivity from employees amounting to +20m€ over the five years
    • Extraction of synergies from already completed M&A transactions, coming to +30m€ over the five years
    • Growth in markets with free competition in energy sales (+50 thousand customers per year on average)
    • Expansion in the waste treatment business (benefitting from the positive trend in market prices, which have risen by 47% on average over the last five years)
    • Plant development (with 540m€ in investments, up +29% over the previous plan)
    • Expansion in Other Businesses (TLC and public lighting)
    • M&As in free market sectors (energy sales and waste treatment) and in the multi-utility sector coming to +107m€ over the five years
    • Tenders for gas distribution in half of the reference ATEMs (out of 11 active ATEMs) within the five years
    • Bonuses for quality and efficiency in regulated sectors.

    Supporting this growth in Ebitda, a 2.86b€ investment plan (with one third dedicated to development) will pursue a strategy of prudent capital allocation, with 73% of investments going to regulated activities having visible cash flows over the medium-long term. Roughly 2b€ in "maintenance", 540m€ for enlarging infrastructures, 190m€ in preparation for gas distribution tenders in 5 ATEMs, and 170m€ in investments for merged/acquired companies included in the plan to 2023.

    A solid financial strategy based on optimising the cost of debt, which is expected to drop to 3.2% (compared to 3.7% in the previous business plan) and taxation, projected at 28% (compared to 30% in the previous business plan). Accumulated operating cash flows are expected to amount to 4.2b€ (+300m€ compared to the previous plan), bringing financial solidity (Debt/Ebitda) to 2.8 at the end of the plan (compared to the target of 2.9 in the previous plan) and leaving ample room to grasp any further opportunities for growth ("on top") offered by the scenario, marked by widespread fragmentation in the reference sectors, which present chances for external growth.

    The First year of the Plan, 2019, which just closed, ended with preliminary results showing growth that "outperformed" by +50m€ in Ebitda (out of the +219m€ expected over the plan to 2023) and the positive conclusion of the transaction with Ascopiave, over and above the normal internal growth drivers, which contribute to an increase in Ebitda beginning in early 2020.

  • With an ERM approach, necessarily extended over the medium-long term in order to anticipate initiatives intended to mitigate the risks to which utilities are exposed, in particular those involving climate change and cybersecurity, the Group's risk management strategy aims at a higher diversification, elaborating prudent expectations and scenarios, promoting management according to a "risk adverse" rationale and lengthening the timeline over which activities are analysed, to further mitigate the risks involved in development, aiming at the directives set out in the UN's SDGs (see "circularity").

    The 2023 Business plan includes expectations for growth in line with the track record shown by the Group over the last 17 years.

    These expectations are marked by a risk that is diversified over all businesses in the Group's portfolio, with a significant portion of the results in Ebitda coming from regulated activities that have recently obtained higher visibility over the medium-long term, thanks to the new tariff methods approved by ARERA.


    Furthermore, the increases foreseen in the business plan are based on a wide and diversified set of levers and projects aimed at growth.

    (+10% compared to the target in the previous business plan)
    External growth levers
    -76m€ 2019-2023
    Internal growth levers
    +188m€ 2019-2023
    External growth levers
    +107m€ 2019-2023
    • End of incentives
      (linked to renewables)

    • earnings for protected customers

    Growth in revenues

    • Expansion treatment mkt
    • Expansion energy mkt
    • Cross selling
    • Bonuses for quality
    • Gas tenders
    • Other services tenders
    • Plant expansion

    Cost reduction

    • Savings in costs
    • Operating efficiencies
    • Synergies with merged companies
    • Increase in personnel productivity
    • Digitalisation
    • Innovation


    • Multi-utilities
    • Energy sales companies
    • Waste treatment

    From the point of view of risk, expectations are less exposed than in the previous plan to external variables (the risk of gas tender postponement in particular).

    Expectations are not exposed to risks involving "Duties", since the growth expected in the plan is 100% related to internal reference markets.

    The higher geographical diversification is due to the expansion of the reference area to include energy sales in the Triveneto region, where, thanks to the transaction with Ascopiave, the Hera Group has achieved a solid market position and thus opened an area that can be more easily served, bringing the benefits derived from a higher critical mass. This is an additional element that reduces risk, for reasons including the region's specific features, such as a high level of GDP per capita and a climate with temperatures that are colder than the national average (favouring energy commodity consumption in the winter months).

    Furthermore, 2019 (the first year of the period covered by the Plan to 2023), provides a solid initial basis, with preliminary data showing a +50m€ growth in Ebitda (equivalent to roughly 23% of the five-year target contained in the Plan to 2023) and leverage coming to 2.5 Debt/Ebitda (based on the same scope of operations as the previous year), overcoming the projections included in our previous plan to 2022. These "outperforming" results will also contribute to the incremental cash generation foreseen for all the years covered by the new plan to 2023.

    The risk profile concerning the influence of the main foreign macro-variables is quite contained, by way of a diversified portfolio of activities ("internal Hedging"), the operating management strategies implemented in all businesses ("risk adverse") pursued since the Group was established. These strategies have proven able to effectively avoid negative effects, ensuring uninterrupted "growth" in results for 17 consecutive years, even in turbulent contexts as regards inflation, spread, commodity prices and financial or economic crises.

  • The growth strategies maintain a high degree of attention towards management sustainability, as is traditional: the plan calls for development and growth projects mainly oriented towards respecting the UN's directives concerning 11 SDGs (applicable to the Hera Group's activities): 70% of the growth in Ebitda will in fact come from sustainable projects that will bring "CSV" Ebitda from 36% to 42% by the end of the period covered by the plan.

  • The strategic priorities of our businesses can be briefly outlined as follows:
  • Growth in Ebitda is expected for the waste treatment sector, going from 252 million in 2018 to 307 in 2023, with 618 million in investments foreseen between 2019 and 2023.

    Industrial growth
    • Renewing concessions for urban waste treatment services
    • Developing the industrial customer portfolio with integrated solutions
    • Synergies in marketing management with Energy Services and the Water Cycle
    • Diversified plant solutions for treatment and recovery

    Risk management
    • Development and implementation of innovative solutions in managing urban waste treatment services
    • Adequate amount of plants in the areas served to prevent crises and remain aligned with EU changes and regulatory requirements

    Circular economy
    • New solutions in recovering types of waste and/or discards for producing biofuel or biomethane
    • Higher volumes and more types of plastic material recycled and molecular recycling of plastics
    • Solutions and engagement activities to improve the quality of sorted waste and new options for recycling

  • In 2023, Ebitda pertaining to the energy sector will amount to 363 million euro, up compared to the 286 seen in 2018, while the investments foreseen over the period covered by the Plan will come to 295 million.

    Industrial growth
    • Internal enlargement of the customer base: marketing development and last resort markets
    • External development: maximisation of potentialities
    • Innovative offer portfolio (VAS) and evolution in customer experience

    Risk management
    • Proactive management of the customer base churn
    • Proactive management of commercial income and gas procurement policies
    • Ex ante management of the risk involved in changes in regulations

    Circular economy
    • Solutions in energy efficiency enhancement inside and outside the Group
    • Development of electric mobility and integrated solutions for self-production/storage
    • Reduction of the carbon footprint, by promoting green solutions and/or CO2 compensation

  • Almost half of the Ebitda expected at the end of the period covered by the Plan will be related to networks, which include services in gas and electricity distribution, the water cycle and district heating: the Ebitda foreseen for 2023 comes to 537 million euro, up compared to the 464 million seen in 2018.

    Industrial growth
    • Investments supporting extensions and technological evolution of networks and meters
    • Competitive challenges for renewing water and gas distribution tenders
    • Increase in the volumes served through district heating networks

    Risk management
    • Increased infrastructure resilience towards climate change and business evolution
    • Ex ante management of the risk involved in changes in regulations

    Circular economy
    • Energy efficiency
    • Research on integrated «Power to Gas» solutions
    • Reuse of purified waste water (local area or industrial processes)
    • Reduction of water consumption and purification sludge production
    • Development of «smart» district heating, fuelled by renewable sources

  • Respecting a rationale based on circularity and attention to resources, aligned moreover with national and European objectives, in Other Services as well the Group aims at developing solutions with offers tailored to the specific needs of each category.

    Circular economy
    • Increase in the amount of lighting points served, by being awarded new concessions, substituting those close to expiry, and integrating areas
    • Enlarging the customer base with new connectivity and data centre offers

    Risk management
    • Specific services dedicated to customers (and to the Group) for data storage and backup, in order to guarantee business continuity
    • Cybersecurity (IT and OT) and the role of data centres

    Industrial growth
    • Measuring material circularity in public lighting activities, through means including the development of dedicated tools



The plan to 2023 sets in place projects aimed at growth in all activities managed, 70% of which move towards «SDGs» («Sustainable Development Goals»).

The new Business plan points yet again towards strong sustainable growth. Attention towards sustainability continues to be a fundamental element in the Group's strategy, in line with the goals set out in the 2030 Agenda that can be applied to its activities (covering 11 of the UN's 17 SDGs).

Almost 3/4 of the growth expected over the period covered by the Plan will be sustained by projects that respond to this "call to action", thus bringing shared value Ebitda - i.e., the value of business activities that, in addition to generating operating income, respond to drivers for sustainable growth - to reach 530 million euro in 2023 (equivalent to 42% of overall Ebitda). Over 955 million euro in investments during the period covered by the Plan will make cities increasingly smart, thanks to innovation and technological evolution, or go towards projects furthering energy efficiency, material recovery/reuse and air protection, furthermore guaranteeing network resilience in order to face climate change.


In order to become increasingly sustainable, in line with the principles of a circular economy, reflecting the very nature of our businesses and the significant role played by sustainability in defining its corporate strategy, Hera has also included in the presentation of its Business plan eight main goals to be met by 2030, which are thus aligned with the deadlines defined by international and national institutions.


The Group aims at progressively reducing the «footprint» left by its activities, paying attention not only to the «classic» carbon footprint but also the ones involving water and natural resources in a broader sense. It is easily understandable that the very nature of our businesses brings us to identify and implement actions that move in this direction.

Objectives in reducing the impact of our activities by 2030 have been defined for all areas in which we operate.


  • -35% Decrease, compared to 2015, of the Carbon intensity in energy produced
  • -10% Decrease, compared to 2013, of energy consumed by Hera
  • +15% Increase in Hera's reuse of waste waters, compared to 2015
  • -25% Decrease, compared to 2018, of Hera's water consumptions
  • +150% Increase, compared to 2017, of plastics recycled by Aliplast
  • 85% Share of waste to energy and material recovery from waste treated in selection plant
  • 90% Share of employees prepared to work digitally
  • TOP10 Positioning in a significant global index of Diversity & Inclusion (today Refinitiv)


The new Plan confirms the attention given to creating value for all stakeholders, beginning with shareholders, and transparency in dividend policies. The dividend pertaining to 2019, set at 10.0 cents per share, will in fact increase to 10.5 cents per share in 2020, 11.0 in 2021 and 11.5 in 2022, ultimately reaching 12.0 cents per share in 2023 (+20% over the last dividend paid in 2018). The rate of growth is thus higher than the one indicated in the previous Business plan, which called for a rise in dividends every two years.



WATCH THE VIDEO Sustainable development in the Hera Group

With the strategic goal of continuing growth in shared value , introduced in 2016, especially by implementing projects inspired by a circular economy, in 2017 the Group was included in the CE100 program, promoted by the MacArthur Foundation. Hera's CEO, Stefano Venier, met Ellen MacArthur to assess the current situation and discuss future prospects.
WATCH THE VIDEO Stefano Venier interviews Ellen MacArthur

Page updated 10 January 2020

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