Release Date: November 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Snam SpA (SNMRF, Financial) reported a strong growth in adjusted EBITDA, up more than 12% year-on-year, reaching EUR 2,089 million.
- The company has approved an interim dividend for 2024, reflecting a 3% increase compared to 2023.
- Snam SpA (SNMRF) successfully issued a EUR 1 billion hybrid instrument to finance acquisitions and maintain financial flexibility.
- The company is progressing on its strategy to become a multi-molecule infrastructure operator, with significant investments in gas infrastructure and energy transition projects.
- Snam SpA (SNMRF) has a robust transition plan aligned with the Paris Agreement, aiming to reduce its carbon footprint and enable energy system decarbonization.
Negative Points
- Net debt increased to EUR 15.9 billion, with an average net cost of debt at 2.5%.
- The Italian gas market saw a decline in demand by 2.7% in the first nine months due to low thermo-electric production and mild weather.
- The energy transition business reported a negative contribution of EUR 6 million in the first nine months of 2024.
- Higher net financial expenses were reported, driven by increased interest rates and higher net cost of debt.
- The company faces potential risks related to gas volume decline and the need for infrastructure repurposing in the long term.
Q & A Highlights
Q: What are your expectations for the regulatory framework for carbon capture and storage (CCS) in Italy?
A: Stefano Venier, CEO, explained that the Ministry of Energy and Environment is working on technical and legal frameworks for CCS. The outcome will be published for consultation by year-end. Snam expects a regulated market for transportation and segregation, allowing them to play a direct role in these activities.
Q: Can you provide insights into the upcoming national hydrogen strategy and its impact on Snam's plans?
A: Stefano Venier, CEO, stated that the strategy, expected by the end of November, will focus on demand development, supply, and infrastructure. Snam anticipates continued government support for hydrogen projects, including the South H2 Corridor, which will serve both domestic and European markets.
Q: How does the potential development of small nuclear reactors impact Snam's energy scenarios for 2040 and 2050?
A: Stefano Venier, CEO, noted that small nuclear reactors could cover about 10% of Italy's demand. However, this development is not expected to significantly alter Snam's energy scenarios, which have already accounted for such possibilities.
Q: What is the anticipated Weighted Average Cost of Capital (WACC) for 2025?
A: Luca Passa, CFO, indicated that the WACC for transport regulation is expected to be 5.5%, assuming no changes in beta or tax rate. Even with potential adjustments, the impact would be minimal, around 20 basis points.
Q: Why hasn't Snam increased its net income guidance despite positive financial developments?
A: Luca Passa, CFO, clarified that while there are positive elements like lower net cost of debt, there are also increased financial expenses unrelated to debt, such as lower default interest rates on receivables, which balance out the potential for guidance increase.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
