From energy savings to EBITDA and company value

A cost removed carries no variable costs

A euro of additional revenue brings goods, staff, logistics and taxes with it: only a fraction reaches the margin. A euro of cost removed arrives in full, because it requires no additional production.

In Italian food retail, energy accounts for 1.9 per cent of sales against a sector EBIT margin of 2.7 per cent (Mediobanca, 2024 data). The calculation that matters follows from those two figures: generating the same margin as one euro of energy saved takes about 37 euros of additional sales. It is simply the reciprocal of the operating margin.

It is also why an efficiency project should be presented with the margin figure alongside the consumption figure: kilowatt-hours matter to the technical function, the effect on the income statement matters to whoever approves the decision.

Where the saving lands in the P&L

Lower energy spend affects EBITDA in full, being a cash operating cost. Below that line the effect depends on how it was obtained:

• as a subscription or service: the cost of the tool stays within EBITDA, so the figure to present is the net one, saving minus fee;
• through capital investment: EBITDA improves by the full saving, EBIT carries the depreciation, and the capital employed must be weighed against the expected return. The tax treatment changes too, and should be confirmed with your own adviser against the rules in force for the year in question.

The distinction looks like an accounting detail, but it determines how well the case holds: a gross saving presented as a net benefit is reconstructed by management control at the first review, and the project is weakened by it.

From margin to company value

A structural reduction in consumption is not a benefit for the year: it is a permanent increase in EBITDA, and recurring EBITDA is the base to which valuation multiples are applied.

The figures below are EV/EBITDA multiples for listed European companies as of January 2026, in the relevant sectors.

Sector, as named by the source	Companies in sample	EV/EBITDA
Grocery and food retail (Retail — Grocery and Food)	34	9.7
Restaurants and dining (Restaurant/Dining)	38	12.1
Hotels and gaming (Hotel/Gaming)	103	10.9
Food processing (Food Processing)	173	12.4

Listed companies trade at higher multiples than those observed in transactions involving private companies, which close at materially lower levels. Even assuming the bottom of the range, however, the order of magnitude remains significant.

Recurring saving	at 4×	at 6×	at 8×
€50,000/year	€200,000	€300,000	€400,000
€100,000/year	€400,000	€600,000	€800,000
€250,000/year	€1,000,000	€1,500,000	€2,000,000

For a company heading towards a capital raise, a generational handover or a sale, lower energy spend is not merely a cost line managed better: it enters the valuation base.

The three conditions that make the figure usable

The multiple applies to a saving that meets three requirements, each of which can be verified.

It must be measured, not estimated. The difference between this year’s spend and last year’s is not a saving: it is the combined effect of the project, the weather, prices and opening hours. A baseline and an adjustment under a recognised protocol are required. The method is described in How to prove savings to a CFO.

It must be repeatable. A saving that depends on one attentive person at one site does not multiply, because it does not survive a change of staff. A saving produced by an automatic rule, applied identically across every site, does. This is what separates an isolated result from a structural benefit.

It must not have been obtained at the expense of service. Two degrees less in the dining room, a chiller held closer to its temperature limit, lighting reduced where it was needed: these are cost reductions whose burden shifts onto the customer or onto the stock. Before taking a percentage to the board, it is advisable to document that comfort and continuity remained within the stated parameters.

The summary to bring to the meeting

The project comes down to three statements, each of which must be demonstrable:

1. a recurring cost of X euros a year has been removed, measured with a baseline and weather adjustment;
2. generating the same margin through sales would take about 37 times X, at the sector’s operating margins;
3. at the multiples the sector is valued on, that saving corresponds to 4 to 8 times X in company value.

If the first statement is not measured, the other two do not hold.