⁽¹⁾ The margins in the ordinary income statement are calculated in accordance with the indications given in the section “Definition of performance measures”. The summary of results presents a reconciliation of reported figures with ordinary figures for the following aggregates: gross operating profit, operating profit, and profit for the year (attributable to owners of the Parent).

In 2023, revenue decreased by €44,952 million (-32.0%) from the €140,517 million of 2022. Specifically, this reduction is related both to the lower quantities of electricity sold on the wholesale and retail markets and to the trends in average selling prices of commodities in the two years compared, which also significantly impacted the recognition of sales contracts with physical settlement.
The reduction in revenue also reflects the effects deriving from the deconsolidation of certain companies sold in the second half of 2022 (specifically Enel Transmisión Chile, Celg Distribuição SA - Celg-D (Enel Goiás) and Fortaleza CGT in Brazil) and in early 2023 (Enel Generación Costanera and Central Dock Sud in Argentina), effects of which were only partially offset by the greater revenue recorded in generation from renewable sources, especially in Italy and Spain, from hydroelectric plants and, in Latin America, from wind and solar plants.
It should also be noted that “other income” recognized in 2023 includes revenue totaling €557 million deriving from the partial sale, with loss of control, of assets in Australia (€103 million) and in Greece (€160 million), from the sale of certain renewable energy companies operating in Chile (€195 million), and from the end-of-concession gain of Enel CIEN for €99 million. In 2022, income included revenue deriving from the sale of transmission assets in Chile (€1,051 million) as well as ordinary income related to Stewardship transactions involving the sale of investments in Ufinet (€220 million), Gridspertise (for a total of €520 million), and a number of companies to Mooney Group SpA (€67 million).

Costs decreased by €50,620 million, mainly due to the general reduction in the average prices of energy commodities, also connected to a reduction in volumes.
This reduction was also affected by a decrease in transport costs in Italy due to lower volumes and in Spain due to a change in rates, by lower ancillary costs in the gas business in Chile associated with lower sales, by lower costs for service concession arrangement in Brazil, a decrease in purchases of CO₂ allowances and lower costs for material purchases as a result of the change in the consolidation scope. These effects were partially offset by higher costs for early- retirement incentives and by the effects of regulatory measures related to the clawback in Italy and Spain, as well as an increase of €515 million in costs in Spain related to an arbitration dispute with a Qatari gas supplier.

It should also be noted that, in 2023, charges deriving from the sale of Enel Generación Costanera SA, Central Dock Sud SA, and the El Chocón plant, in Argentina, were recognized for a total of €363 million, as well as from the adjustment of the price related to the sale of Celg Distribuição SA - Celg-D (Enel Goiás) (€23 million).

The table below presents gross operating profit/(loss) by business line.

Ordinary gross operating profit amounted to €21,969 million in 2023, an increase of €2,286 million compared with 2022 (+11.6%), mainly due to the increase of €2,627 million in profit deriving from the operation of Integrated Businesses (the combination of the business of Thermal Generation and Trading, Enel Green Power and End-user Markets) and the performance of Enel Grids, where the changes in the consolidation scope as a result of the sale of certain distribution assets in Brazil and Chile were more than offset by the positive impact of rate adjustments in Latin America. In addition, the Integrated Businesses margin includes the recognition, in 2023, of charges related to the definition of an arbitration award for the supply of gas in Spain (€515 million) and the benefit of €481 million recognized in 2022 following an agreement with Shell in Chile. Excluding these two factors, Integrated Businesses performance improved by €3,623 million. The overall change in ordinary gross operating margin also reflects revenue from Stewardship transactions completed during the two years compared. More specifically, the positive effects of the 2023 divestments of Enel Green Power Australia (€103 million) and Enel Green Power Hellas (€422 million) were more than offset by the impact of proceeds from 2022 divestments relating to Ufinet (€220 million), the sale of the finance companies of Enel X to the Mooney Group (€67 million) and the partial disposal of Gridspertise (€520 million).

Enel has chosen to pursue an integrated strategy in our core countries (i.e. Italy, Spain, the United States, Brazil, Chile and Colombia), where the Group has a widespread presence and a customer base to which to distribute the electricity generated.

This integrated strategy aims to maximize the margin on electricity sold, particularly by relying on gradual reductions in sourcing costs (i.e. the cost of generating and/or procuring the commodity), connected to the increase in renewable energy in our generation mix, in addition to the expansion of volumes linked to the electrification of consumption, with consequent benefits for the Group, for our customers, and for all stakeholders generally.
The ordinary gross operating margin relating to the Integrated Businesses encompassed by this strategy (the “Integrated Businesses margin”) therefore stems from the integration of the electricity value chain and includes the results from electricity generation (i.e. Enel Green Power, Thermoelectric Generation and Trading) and the sale of electricity and services (End-user Markets).

In greater detail, the main businesses included in this Integrated Businesses margin are the following:

1. Electricity – free market, which consists of:
   – Integrated energy business: including electricity business on the free market and generation from renewable and thermal sources;
   – Enel X: including all services provided to customers;
   – Mobility: encompassing the activities of innovation, development and commercialization of electric mobility solutions.
2. Electricity – regulated market, which refers to regulated generation activities (capacity market, essential plants, incentives received for renewable energy, etc.) and to the commercialization of energy on regulated markets.
3. Gas, which includes the retail and wholesale commercialization of natural gas.
4. Trading and services, which includes portfolio optimization and generation balancing services.

These are the businesses included in the Integrated Businesses margin, which, as mentioned, are as follows:

• Thermal Generation and Trading;
• Enel Green Power;
• End-user Markets, which includes Retail, Enel X and Enel X Way.

The following table presents the Integrated Businesses margin by business line and by geographical area, excluding the impact of Stewardship transactions

The Integrated Businesses margin increased by €2,627 million due mainly to the improvement of margins on free market sales, especially in Italy and Spain as average sales prices rose compared with the previous year, which was characterized by significant price instability. This factor was only partially offset by changes in consolidation scope between the two periods and by the reduction in the generation margin. With regard to generation, the increase in renewable energy (+14.5 TWh), mainly from hydroelectric sources in Italy, Chile, Colombia and Spain, together with the different sales price in trading activities, partially offset the effects of lower amounts of electricity generated from conventional sources and the recognition of regulatory measures related to the clawback in Italy in the amount of €357 million.

The gross operating profit for 2023 amounted to €20,255 million, an increase of €337 million compared with the previous year. This change essentially reflects the effects mentioned in relation to ordinary gross operating profit, excluding the effects attributable to discontinued operations, as well as the non-recurring results largely deriving from the disposal of certain investments in the two years being compared. For 2023, the latter are attributable to the disposals of thermal generation operations in Argentina (a total charge of €363 million) and the sale of certain renewable plants in Chile (a gain of €195 million), while for 2022 they regarded the sale of the companies Enel Transmisión Chile in Chile and of the thermal generation company CGT Fortaleza and the distribution company Celg Distribuição SA - Celg-D (Enel Goiás) in Brazil. These divestments resulted in recognition of a gain of €1,051 million for Enel Transmisión Chile and charges for Enel Goiás (€208 million) and CGT Fortaleza (€135 million).

Ordinary operating profit for 2023 increased by €1,913 million as a result of the factors commented above in relation to ordinary gross operating profit, taking into account the increase in depreciation and amortization recognized during the year in the area of distribution, particularly in Italy and Spain, and the increase in impairment losses recognized on trade receivables compared with the previous year in the same geographical areas.

Operating profit decreased by €361 million compared with the previous year. This change reflects the factors commented above in relation to gross operating profit, the effects of which were more than offset by the increase in depreciation, amortization and impairment recognized in 2023. During the year, net impairment losses amounted to €1,736 million, of which €1,234 million in respect of a number of wind and photovoltaic generation plants in the United States. Those plants underwent verification of the recoverability of their carrying amounts, mainly due to the continuation of adverse economic conditions connected with dispatching costs for electricity generated in certain markets, which gradually consolidated during the year, accompanied by a general deterioration of the macroeconomic environment and the initiation and implementation by management of specific restructuring plans in the country, which have had a significant impact on the recoverable values of those assets. Other impairment losses were recognized in North America on the assets of Enel X (€57 million) and Enel X Way (€69 million).
Finally, in 2023, an impairment loss of €171 million was recognized on the Colombian Windpeshi wind project, subject to reclassification among net assets held for sale, in accordance with the provisions of IFRS 5. Impairment losses totaling €1,361 million were recognized in 2022, in accordance with IFRS 5, on assets involved in disposals, mainly related to Celg Distribuição SA - Celg-D (Enel Goiás) (€827 million) and CGT Fortaleza (€73 million) in Brazil and Enel Generación Costanera (€174 million) and Central Dock Sud (€116 million) in Argentina.

Discontinued operations posted a net loss of €371 million, which, in 2023, includes the profits and losses relating to the net discontinued operations of the companies that make up the geographical areas of Russia, Romania and Greece, classified as such based on the requirements of “IFRS 5 - Non-current assets held for sale and discontinued operations”.

It should be noted that, in addition to the financial performance of these companies (a net profit of €161 million), the figure includes the charges related to the sale of assets owned in Romania in the amount of €670 million and charges connected with the sale of Rusenergosbyt in Russia in the amount of €124 million. These effects were partly offset by the gain recognized at the end of 2023 on the sale of assets in Greece (€262 million).
In 2022, in addition to the financial performance of these companies (a net loss of €1,180 million), the figure reflected effects of the loss on the divestment in Russia in the amount of €1,054 million.

Group ordinary profit for 2023 amounted to €6,508 million, an increase of €1,117 million (+20.7%) compared with the €5,391 million of the previous year. This increase in ordinary operating profit and the decrease in non-controlling interests in ordinary profit more than offset the increase in net financial expense due to the trend in interest rates. In absolute terms, taxes also increased as a result of the improvement of pre-tax profit, while the tax rate increased mainly as a result of the writedown of deferred tax assets in the United States, Mexico and Peru (€180 million).

Group profit in 2023 came to €3,438 million (€1,682 million in 2022), an increase of €1,756 million compared with 2022. The table below provides a reconciliation of Group profit with Group ordinary profit, indicating the non-recurring items and their respective impact on performance, net of the associated tax effects and non-controlling interests.

Of note is the impact on Group profit of the “Caro bollette” and solidarity levies introduced in Italy, Spain and Romania, for a total of €149 million in 2023 and of €724 million in 2022.