August 7, 2013 / 6:31 AM / 4 years ago

UPDATE 2-Italy's ERG gets lift from wind business

* CEO signals 2013 core earnings close to 600 mln euros

* Slowly exiting refinery business, selling to Lukoil (Recasts lead, adds CEO comment)

By Stephen Jewkes

MILAN, Aug 7 (Reuters) - Italy’s ERG is increasingly upbeat on the outlook for 2013 as the energy group bets on strong growth in its wind power business to boost earnings.

In a statement on Wednesday, the group confirmed a forecast for 2013 core earnings of more than 500 million euros ($666 million) but its chief executive told analysts in a conference call it could be significantly higher thanks to bright prospects for wind and power generation.

“I agree with you... I hope you are right,” Luca Bettonte said, replying to an analyst’s suggestion that 2013 earnings before interest, tax, depreciation and amortisation (EBITDA) may end up closer to 600 million euros.

ERG, controlled by the Garrone family which also owns Serie A soccer club Sampdoria, is gradually exiting from its refinery business to focus on more profitable wind power.

In the second quarter, adjusted EBITDA at replacement cost rose 29 percent to 120 million euros thanks to a recent acquisition.

ERG completed the purchase of wind power assets from France’s GDF Suez in February to become Italy’s largest wind energy player and one of the top 10 in Europe. The company also bought two wind farms in eastern Europe in the second quarter and is building another wind farm in Romania.

“We will continue growing abroad,” Bettonte said.

Italy’s biggest renewable energy company, Enel Green Power , is also placing a sharper focus on wind power as it looks to new markets outside Europe to help boost profitability.

ERG said it expected adjusted debt for the year to be less than 1.3 billion euros, providing it sells its 20 percent stake in the ISAB refinery in Sicily by year-end.

ERG has slowly sold down its stake in ISAB to Russia’s Lukoil to reduce its exposure to the volatile refining sector. It has an option to sell the remaining 20 percent to the Russian group in October.

ERG posted a 14 million euro EBITDA loss at its refinery business in the second quarter and said it expected refining margins for the year to be lower than the average of 2012.

The outlook for refiners is clouded due to Europe’s sluggish economy and heavy competition from Asia.

“We are exiting (the sector),” Bettonte said.

$1 = 0.7513 euros Reporting by Stephen Jewkes; Editing by David Cowell

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