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Strategic approach

Hera’s strategic objective has always been the creation of value from a multi-stakeholder perspective, in the medium- and long-term, competing autonomously and effectively in liberalised markets. The objective is to replicate the “unique” business model for expanding the Group and managing primary services in an increasingly efficient manner in order to satisfy the main stakeholders.

In 2002, the newly-formed multi-utility was a composite reality and de facto not integrated, which needed to deal with the critical problems of “protecting” the reference territories from the imminent breaking down of protective barriers in several core activities. The dimensions of the newly-formed Group were, however, limited compared with those necessary to deal with the competitive context opening up to large players, including international ones.

Against this background, Hera formulated a strategy based on its strong points, in other words an “open” organisational model, capable of allowing an efficient increase in size through external lines, national leadership in the waste sector and a loyal, extensive customer base concentrated in the reference area.

Maintaining the customer base was chosen as a “strategic imperative”; quality of service, after-sales service and an integrated offering including a complete range of primary services were deemed to be the competitive tools to achieve this aim. The multi-business portfolio (with traditional gas, water, waste and electricity services) was seen as key in protecting the customer base, capable of allowing the Group the time needed to improve the quality and competitiveness of its services and achieve more sustainable dimensions. The development strategy was also directed at maintaining a balance between the various activities of providing all the services to the customer base and guaranteeing a low variability profile of the multi-utility portfolio results.

Hera’s strategic plan was made up of five priorities, which guided the Group’s management on a continuous and linear path throughout the first ten-year period:

  1. Pursuing a process of extracting synergies from corporate mergers, through the complete integration of the businesses that are incorporated into Hera
  2. Implementing the plan for constructing large plants and developing networks, balancing the growth of all businesses to increase the efficiency and quality of services
  3. Preserving a sound, low-risk economic-financial profile, capable of satisfying stakeholders through a sustainable approach in the medium- to long-term
  4. Pursuing merger and acquisition opportunities in the liberalised sectors (waste treatment, energy sales and generation), both to consolidate the leadership position in the environmental sector and to expand, from a defensive perspective, the range of services to customers with electricity services in line with the development guidelines pursued by large international groups. The acquisition of the assets needed to achieve the goal has supported growth in the electricity business, only present at the birth of the Group in an embryonic stage
  5. Rolling out the innovative Hera aggregation model in multi-utility businesses in neighbouring areas with a territorial continuity logic, focused on compatible activities and with economic-financial profiles capable of guaranteeing the financial soundness of the Group.

To ensure greater efficiency and exploit economies of scale, the mergers were integrated in the original model based on a business holding company. At the same time, “direct operational supervision” of all local territories was guaranteed to preserve the crucial competitive advantages of proximity to customers and local roots.