European Utilities Key Player Profiles: Edison

Table of Contents

• CATALYST
• SUMMARY
• METHODOLOGY
• ANALYSIS
  • European Utilities Key Player Profile: Edison
  • Key Player Scorecard examines 31 leading utilities drawn from across Europe' s competitive arenas
    • Key Players dominate power generation capacity market share in the Wmed competitive arena
    • Key Players dominate power generation output market share in the Wmed and CEE competitive arenas
    • Despite ongoing industry consolidation, in no competitive arenas do Key Players dominate power supply volume market share
    • Despite ongoing industry consolidation, in no competitive arenas do Key Players dominate gas volume market share
  • The Key Player Scorecard assesses utilities across four pillars: Performance, Scale, Growth and Exposure
    • The Performance pillar combines 5 financial metrics to measure business performance
    • The Scale pillar combines financial and operational metrics to measure the size of a utility
    • The Growth pillar measures the rate of growth of a utility' s financial and energy resources
    • The Exposure pillar combines both operational and financial measurements of risk
  • Edison scores 24.7/100 on Datamonitor' s European Utility Scorecard and ranks 27 out of the 31 Key Players covered
    • Edison underperforms the Key Player average in each of the four pillars
    • Edison achieves an overall ranking of 27, with a utility score of 24.7
    • Edison scores higher in Performance and Growth, but less so in Exposure and Scale
    • Edison underperforms, yet with an average level of risk
    • Edison underperforms the Key Player average and the top ten utilities in both Scale and Growth
  • Edison' s Performance ranking of 25 is lifted only slightly by an above average operating profit margin
    • Edison' s weakest Performance metrics are return on fixed assets and return on investment
    • Edison underperforms the Key Player average in return on sales and fixed assets, and operating profit margin
    • Edison also scores below the Key Player average on return on investment and energy volume
  • Edison underperforms the Key Player average in Scale, with a rank of 21
  • In Scale, Edison ranks 21 with a score of 1.6
    • In terms of generation capacity Edison ranks 16, with 6.6 GW
    • Edison' s gas supply volume is 1.25 times its power supply volume, making it one of the most balanced integrated utilities
    • Edison has a less than one percent share of Key Player power customers
    • At 53 TWh, Edison ranks 13 in terms of power volume
    • Edison supplies less than one percent of Key Player gas customers
  • Edison lags the Key Player average in terms of gas volume, with a rank of 14
    • Edison ranks 19 and 22 in terms of revenue and net income respectively
  • Edison' s low Growth ranking of 27 is due to underperformance in all but profit growth
    • Edison' s profit growth ranks 6 amongst all Key Players
    • Edison' s price earnings ratio is just above the Key Player median
    • From 2001 to 2005, Edison' s annual profit growth (28.6%) far exceeded its revenue growth (8.4%)
    • Edison' s operating cash flow (-55.2%) and gas supply volume (-38.1%) have declined dramatically from 2004 to 2005
  • Edison' s Exposure ranking of 22 can be attributed to high debt leverage and very poor operating cash flow growth
    • But for its gas NTR, Edison lags the Key Player average on Exposure metrics
    • Edison' s gas supply obligations outweigh its gas equity position, resulting in a gas NTR of -85%
    • Edison' s power NTR deficit of -36.6% results in a rank of 20
    • Edison is more highly leveraged than many top ten utilities
    • Edison has a debt to equity ratio of 154.2%
    • Edison' s operating cash flow has declined at twice the rate of its energy volume
  • Edison' s operations are centred in Italy
    • Gas is the main source of Edison' s power generation capacity, followed by hydro power
    • Edison' s power customers are in Italy, and the company a less than one percent market share of Key Player power customers
    • Edison focuses on large customers and wholesale markets, resulting in a small market share of Key Player gas customers
• APPENDIX
  • Databook
  • Definitions
  • Definitions
  • List of Tables
    • Table 1: The Key Players are drawn from across a diverse range of markets
    • Table 2: The Performance pillar combines 5 financial metrics to measure business performance
    • Table 3: The Scale pillar combines financial and operational metrics to measure the size of a utility
    • Table 4: The Growth pillar measures the rate of growth of a utility' s financial and energy resources
    • Table 5: The Exposure pillar combines both operational and financial measurements of risk
    • Table 6: Edison scores 24.7/100 on Datamonitor' s European Utility Scorecard and ranks 27 out of the 31 Key Players covered
    • Table 7: Edison lags the average score in each pillar
    • Table 8: Edison scores 1.6/25 on the Scale pillar, and ranks 21 out of 31 on this measurement
    • Table 9: Edison scores 6.6/25 on the Growth pillar, and ranks 27 out of 31 on this measurement
    • Table 10: Edison scores 8.2/25 on the Exposure pillar, and ranks 22 out of 31 on this measurement
    • Table 11: Edison' s Performance ranking of 25 is lifted only slightly by an above average operating profit margin
    • Table 12: Edison underperforms the Key Player average in Scale, with a rank of 21
    • Table 13: Edison' s low Growth ranking of 27 is due to underperformance in all but profit growth
    • Table 14: Edison' s Exposure ranking of 22 can be attributed to high debt leverage and very poor operating cash flow growth
    • Table 15: Return on fixed assets
    • Table 16: Return on sales
    • Table 17: Operating profit margin
    • Table 18: Return on energy volume
    • Table 19: Return on investment
    • Table 20: Generation Capacity / EU25 market total
    • Table 21: Power Supply Volume / EU25 market total
    • Table 22: Gas Supply Volume / EU25 market total
    • Table 23: Net income / Net income of 94 leading utilities
    • Table 24: Revenue / Revenue of 94 leading utilities
    • Table 25: Revenue growth, 2001-2005 CAGR
    • Table 26: Profit growth, 2001-2005 CAGR
    • Table 27: Growth in operating cash flow, 2004 to 2005
    • Table 28: Gas supply volume growth, 2004-2005
    • Table 29: Growth in power supply volume, 2004 to 2005
    • Table 30: Power NTR / Power supply volume
    • Table 31: Gas NTR / Gas supply volume
    • Table 32: Debt leverage
    • Table 33: Growth in operational cash flow - Growth in energy volume
  • List of Figures
    • Figure 1: Datamonitor' s Key Player Scorecard examines 31 leading utilities drawn from across Europe' s competitive arenas
    • Figure 2: Key Players dominate power generation capacity market share in the Wmed competitive arena
    • Figure 3: Key Players dominate power generation output market share in the Wmed and CEE competitive arenas
    • Figure 4: Despite ongoing industry consolidation, in no competitive arenas do Key Players dominate power supply volume market share
    • Figure 5: Despite ongoing industry consolidation, in no competitive arenas do Key Players dominate gas volume market share
    • Figure 6: Edison achieves an overall ranking of 27, with a utility score of 24.7
    • Figure 7: Edison scores higher in Performance and Growth, but less so in Exposure and Scale
    • Figure 8: Edison underperforms, yet with an average level of risk
    • Figure 9: Edison underperforms the Key Player average and the top ten utilities in both Scale and Growth
    • Figure 10: Edison' s weakest Performance metrics are return on fixed assets and return on investment
    • Figure 11: Edison underperforms the Key Player average in return on sales and fixed assets, and operating profit margin
    • Figure 12: Edison also scores below the Key Player average on return on investment and energy volume
    • Figure 13: In Scale, Edison ranks 21 with a score of 1.6
    • Figure 14: In terms of generation capacity Edison ranks 16, with 6.6 GW
    • Figure 15: Edison' s gas supply volume is 1.25 times its power supply volume, making it one of the most balanced integrated utilities
    • Figure 16: Edison has a less than one percent share of Key Player power customers
    • Figure 17: At 53 TWh, Edison ranks 13 in terms of power volume
    • Figure 18: Edison supplies less than one percent of Key Player gas customers
    • Figure 19: Edison lags the Key Player average in terms of gas volume, with a rank of 14
    • Figure 20: Edison ranks 19 and 22 in terms of revenue and net income respectively
    • Figure 21: Edison' s profit growth ranks 6 amongst all Key Players
    • Figure 22: Edison' s price earnings ratio is just above the Key Player median
    • Figure 23: From 2001 to 2005, Edison' s annual profit growth (28.6%) far exceeded its revenue growth (8.4%)
    • Figure 24: Edison' s operating cash flow (-55.2%) and gas supply volume (-38.1%) have declined dramatically from 2004 to 2005
    • Figure 25: But for its gas NTR, Edison lags the Key Player average on Exposure metrics
    • Figure 26: Edison' s gas supply obligations outweigh its gas equity position, resulting in a gas NTR of -85%
    • Figure 27: Edison' s power NTR deficit of -36.6% results in a rank of 20
    • Figure 28: Edison is more highly leveraged than many top ten utilities
    • Figure 29: Edison has a debt to equity ratio of 154.2%
    • Figure 30: Edison' s operating cash flow has declined at twice the rate of its energy volume
    • Figure 31: Gas is the main source of Edison' s power generation capacity, followed by hydro power
    • Figure 32: Edison' s power customers are in Italy, and the company a less than one percent market share of Key Player power customers
    • Figure 33: Edison focuses on large customers and wholesale markets, resulting in a small market share of Key Player gas customers