November 6, 2013 / 7:21 PM / 6 years ago

Enel Green Power looks to Africa, Latin America for growth

MILAN (Reuters) - Enel Green Power, one of the world’s biggest renewable energy companies, is looking to Africa and South America to fuel future growth as it shifts its focus away from core European markets.

“Latin America and Africa will drive future earnings growth,” Chief Executive Francesco Starace said on Wednesday.

Enel Green Power, controlled by Europe’s No. 2 utility, Italy’s Enel, is shunting more of its investments away from Italy and Spain to emerging economies.

In Latin America, where Enel’s Spanish unit Endesa already has a strong presence, the company is seeking to develop 700 megawatts of renewable capacity in Brazil and 500 megawatts in Chile by 2017.

Enel Green Power recently won projects to supply 513 megawatts of solar and wind energy in a third round of bidding in South Africa and does not want to stop there.

“We certainly will be participating in the next two tenders with wind and solar power projects,” Starace said.

Population growth in South America and Africa is a spur to energy demand and countries in both continents have abundant wind and sun.

Enel Green Power, which is also expanding its presence in North America, is committed to diversifying its geographical footprint and technologies to help spread risk.

It has previously said it is planning to spend less in its core markets of Italy and Spain because of stagnating power demand and unclear regulatory frameworks.

Business in North America helped boost core earnings in the third quarter by 8.3 percent to 338 million euros ($457 million) as the company confirmed its outlook for the year.

Net profit jumped 142 percent, helped by gains from an asset sale.

According to Thomson Reuters Starmine data, Enel Green Power trades at 17.3 times its earnings per share (P/E) on a forward 12-month basis, a premium to its main European rival Iberdrola which has a P/E of 13.1 times.

“The stock trades at premium on P/E but we believe that the double-digit growth of its bottom line on our estimates justifies this premium,” one analyst said, asking not to be named.

($1 = 0.7392 euros)

Reporting by Stephen Jewkes; Editing by Anthony Barker

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