Nov. 17 (Bloomberg) -- Endesa SA, the Spanish unit of Italian utility Enel SpA, said it’s ruling out the sale or acquisition of any assets because it would be “imprudent” to carry out any transactions amid the European debt crisis.
Endesa will press ahead with investment plans without pursuing any deals to increase or reduce its size as Europe struggles, Chairman Borja Prado said yesterday in an interview. The utility said Nov. 8 its nine-month net income sank 27 percent after gains from asset sales dropped.
“We’re comfortable with our size and we aren’t really looking at any asset disposal to raise funds or any acquisition of assets,” Prado said in Madrid. “It would be imprudent to sell or buy any assets amid this economic environment.”
Spanish and Italian economies have suffered from gains in borrowing costs, leading the European Central Bank to buy up their debt. Moody’s Investors Service cut Spain’s credit rating by two levels on Oct. 18 to A1, with a negative outlook. The ruling Socialist party is struggling to meet deficit goals while unemployment is the European Union’s highest, at 22.6 percent.
Endesa’s nine-month net income dropped to 1.98 billion euros ($2.67 billion) from 2.72 billion euros a year earlier. Gains from selling assets plunged 85 percent to 165 million euros, it said last week.
The decline in earnings hasn’t stopped the Madrid-based utility from carrying out planned investments in Europe and Latin America, and it’s “on track” to meet spending targets, Prado said.
Endesa, Spain’s biggest utility after Iberdrola SA, said in August it had started a project to upgrade its electricity grids in Latin America to bolster security and cut operating costs by 15 percent. The company operates in countries including Peru, Chile, Argentina and Brazil, as well as in Spain and Portugal. The project is scheduled to be carried out through 2013.
Enel owns 92 percent of Endesa after gaining control of the company in 2007. As part of that deal, Endesa transferred some renewable-energy units to Spanish builder Acciona SA and sold assets to Germany’s EON AG. The company has made more divestments to increase savings since the takeover.
Endesa shares have lost 16 percent this year, valuing the company at 17.2 billion euros.
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