The winning strategy in diversification Renco

Strong Group Member

The joint-stock company Slovenské elektrárne was founded on 21 January 2002 as the legal successor of the original Slovenské elektrárne a.s., of which the assets of the Slovak power grid operator SEPS and the heating company Tepláreň Košice were spun off.

As of 31 December 2011, Slovenské elektrárne has two shareholders. The majority shareholder (66 per cent) is the Italian company Enel Produzione SpA. Enel has a presence in 40 countries, has 98 GW of net installed capacity and sells power and gas to 61 mln customers. The minority shareholder is the National Property Fund of the Slovak Republic with 34 per cent.

In 2012, Enel posted revenues around €85 billion, EBITDA of, approximately, 17 billion euros and net ordinary income of around €3.5 billion. The Group has nearly 73,000 employees and operates a wide range of hydroelectric, thermoelectric, nuclear, geothermal, wind, solar and other renewable power plants. Over 42 per cent of the power generated by Enel last year was carbon free.

Enel is strongly committed to renewable energy sources and to the research and development of new environmentally friendly technologies. In line with this commitment, Slovenske Elektrarne invests in clean technologies, renewable sources and safety (such as the 315 kW Dobsina III hydropower plant (HPP) put in operation in January 2014).

Largest private investment

Despite the challenging economic situation and increasingly complex regulatory framework affecting nuclear operators all over the world, the company’s flagship project and single largest investment in the history of Slovakia, the completion of Units 3 and 4 of the Nuclear Power Plant Mochovce, is well under way.

The significance of this investment should not be perceived only in the context of the energy security and independence. The investment proves the Group’s commitment to invest in Slovakia, in order to strengthen the country’s position as the center of nuclear excellence and the Group’s hub for further expansion in the region. Moreover, the project represents a significant economic stimulus for Slovakia providing more than 9,000 jobs and other special spillover benefits in a time of economic instability. Two thirds of works on site is performed by Slovak companies. Each unit will have 471 MWe output and annual production of two units will save over 7 million tonnes of CO2 emissions.

The Slovak government has recently approved an increase in the construction budget for the completion of the two units of €260 million. The new budget increase is part of a €800 million rise in costs required to ensure the compliance of newly built nuclear power plants with the latest and most stringent international safety standards. The company said the cost increases are covered by the company’s own resources with “no burden on the state budget”.

The total cost of construction of the two new units at Mochovce has now increased to €3.25 billion and Enel has requested a further increase of €540 million from the state. This would bring the total cost to €3.8 billion. Mochovce-3 and -4 are both 440 megawatt pressurised water reactors of Russian VVER V-213 design. The units are expected to become commercially operational in 2014 and 2015 respectively.

Slovak commitment

In 2013, the company modified its organizational structure allowing greater focus on sales, core market, profitability and value creation. With the successful accomplishment of these goals, Slovenské elektrárne can focus on improving financial flexibility which directly influences the fulfillment of its ambitious investment plans, which have been formulated fully in line with the company’s vision: to be the safest, most reliable, efficient and competitive producer of electricity in the region. n

THE WINNING STRATEGY IS DIVERSIFICATION

Italy’s Renco SpA has certainly diversified, with activities ranging from oil & gas and construction to asset management and other services. This is the secret of its success, as its current president, Giovanni Gasparini, explains to Industry Europe. Barbara Rossi reports.

Renco SpA is headquartered in Pesaro, central Italy. Here the company was set up as a design and engineering organisation for the oil and gas sector in 1979 by Mr Rinaldo Gasparini, father of the current president. The company grew over the years, diversifying its activity to also include materials supply and construction services. In the 1990s, diversification started on a geographical basis as well, and Renco began building residential facilities in Kazakhstan and Russia. A lot of the

building stock was not sold, but rented out and managed by the company itself.

Renco, whose most recent turnover was €210 million and which employs 4000 worldwide, can boast of having completed 1000 projects globally, in over 50 countries, as well as having 16 subsidiary companies in 10 countries. It regards safety, quality and on-time performance as being the pillars of its activity.

Currently Renco is organised into four divisions: industrial plants, infrastructure, services and asset management. The industrial plants division deals with turnkey EPC contracting services, as well as with installation only, for upstream oil and gas plants, gas compression and storage systems, and power production and distribution systems (especially in terms of small to medium size generating stations). The division also supplies services to the renewable energy industry: for wind farms, photovoltaic systems and hydroelectric facilities.

The service division deals with supplying and managing technical personnel to the oil and gas and energy sector. It offers consultancy services, plant management, staff training, alongside on-site NDT and safety valve hot checks. “We have a database of 15,000 sector experts whom we can supply, wherever they are needed,” Mr Gasparini tells Industry Europe.

“Through our construction division we have built an array of buildings. We started in Russia and Kazakhstan, constructing buildings for renting. To start with we were building residential facilities and offices for expatriate staff working for the oil and gas sectors. We then widened the boundaries of our work, both geographically and in terms of the type of buildings. We have diversified, so as to be able to face the competition from what used to be called emerging countries. We soon understood that the way to do this was to be able to carry out projects with a strong service or technological element. The medical construction sector fits this description; hence we have completed medical centres and facilities in various locations.

“Our newest division deals with asset management. This side of the business was started in 2008 as a spin-off from the construction division. I would say that the real estate stock that we manage is equally divided between hotels and rented flats or offices.”

The main contributor to Renco’s turnover, with a 50 per cent share, is the industrial plants division, while the remainder is equally generated from the rest. The balance among the different divisions varies from year to year, depending on market demand. Recently the company has further widened the boundaries of its work, including financial services in its range. “Every customer and every project is unique and we tailor our offer to them,” says Mr Gasparini. “We are also increasing our service quality, focusing on internal quality procedures.” The company already holds ISO9001, ISO 14001 and OHSAS 18001 certifications.