Enel ApA, Italy's largest utility, boosted first-quarter profit 6.5 percent after buying Spain's Endesa SA, adding customers and power plants on four continents and raising debt to 57 billion euros ($88.2 billion).
Net Income rose to 1 billion euros from 943 million euros, Enel said in a statement distributed by the Italian stock exchange today. That beat the 978 million-euro median estimate of 10 analysts surveyed by Bloomberg.

The Rome-based utility and partner Acciona SA bought Endesa in October, bolstering Enel in markets where electricity demand is increasing faster than in Italy. Enel expects to boost operating results this year and cut debt to less than 50 billion euros, Chief Executive Officer Fulvio Conti said in the statement.

"From a debt point of view, it's turned Enel's financial structure upside down," Alessandro Frigerio, a fund manager at RMJ Sgr in Milan, said in an interview with Bloomberg Television. "It's absolutely necessary they sell assets to cut debt."

Enel added 1.6 percent to 7.02 euros as of 9:13 a.m. in Milan. The shares are down 14 percent this year.

Earnigs before interest, tax, depreciation and amortization rose 48 percent in the quarter to 3.45 billion euros, beating analysts' estimates for profit on that basis of 3.38 billion euros. Financial costs that increased almost sixfold to 748 million euros because of the higher debt eroded some of those gains.

Sell Assets

The company, which added generation in Central and South America, Europe and North Africa, plans to sell assets including high-voltage power lines and may sell its natural gas distribution network. Enel wants to raise as much as 15 billion euros by selling assets by 2012, Conti said in a March presentation.

Endesa said May 12 first-quarter net income rose 4.6 percent to 662 million euros as higher power prices in Spain made up for lower output in Latin America and emission permit costs.

Enel's debt rose to about 56 billion euros at the end of 2007 from 11.7 billion euros in 2006. It agreed in March to sell assets in Spain and Italy to E.ON AG of Germany, cutting borrowings by about 9 billion euros.

The utility will create a separate division for some of its renewable-energy assets and may sell a minority stake in that business, Conti said in March. The division will consist of 3,112 megawatts of renewable-power capacity, including wind, geothermal and small hydroelectric plants. It doesn't include the nearly 17,000 megawatts of large hydroelectric plants Enel owns in Italy.

Boost Capacity

Enel plans to more than double the division's generation capacity to 7,382 megawatts by the end of 2012, mainly through projects in the Americas and wind farms in Italy and France.

European competitors including Electricite de France SA have separated and sold stock in energy businesses as they look for cleaner ways to generate electricity and governments offer incentives for power plants that don't emit polluting gases.

Enel said in March it will invest 37.2 billion euros over the next five years to boost earnings by upgrading power plants, adding generation and integrating its businesses.

The five-year investment plan will help boost earnings before interest, tax, depreciation and amortization to 13.8 billion euros next year and 16.6 billion euros in 2012, Enel said.

The company may save about 1 billion euros at its Spanish and Latin American units by 2012 after incorporating Endesa, Luigi Ferraris, Enel's head of administration and planning, said in a Bloomberg Television interview in London in March.

Enel CEO Conti is also seeking growth in Russia, where the company controls electricity company OAO OGK-5 and bought stakes in natural-gas fields with partner Eni SpA. He has led Enel in expanding generation and distribution in eastern Europe and in buying renewable-power assets in Latin America and the U.S.