Half Year 2024 Terna Rete Elettrica Nazionale SpA Earnings Call Transcript
Key Points
- Terna SpA (TERRF) reported a strong growth in all P&L lines and CapEx, with group revenues and EBITDA increasing by 18% and 23%, respectively, compared to the same period last year.
- The company achieved a record group CapEx of over EUR1 billion in the first six months of 2024, reflecting a 26% increase from the first half of 2023.
- Renewable energy sources covered about 53% of the national net total production in the first half of 2024, overtaking fossil fuel production for the first time.
- The Tyrrhenian Link, SACOI 3, and Adriatic Link projects have all obtained full authorization and signed procurement contracts, ensuring progress in the CapEx plan.
- Terna SpA (TERRF) generated an operating cash flow of EUR931 million, covering almost all CapEx spending for the period and reducing net debt to EUR10.3 billion.
- Total operating costs increased by 6.7% compared to the same period last year, driven by higher costs for raw materials and services.
- Net financial expenses rose to EUR63 million, primarily due to new financing and increased interest rates.
- The company faces potential risks related to regulatory changes, including the implementation of the Ross-Integral framework and the assessment of the 2024 deflator.
- Despite the strong financial performance, the challenging macroeconomic environment and high interest rates could impact future cost of debt, expected to be around 2.5% by the end of 2024.
- The increase in grid-connection requests and the need for additional infrastructure development could pose challenges in managing CapEx and project execution.
Let's move to the Tyrrhenian Link, the biggest product in our plan in terms of investment. The project is at double underwater cables that will link the Italian mainland, Italy and Sardinia. It will increase the security of supply for our two main islands, enable the integration of new renewable energy sources and consequently contribute to the energy transition of Italy. Both links have already obtained full authorization and procurement contracts for both HVDC cables and patents have been awarded and signed.
Two other relevant projects in our CapEx plan, the SACOI 3 and the Adriatic link has also obtained full authorization and the main procurement contracts signed. SACOI 3 is a subomary connection between Savina, Corsica, and the Italian mainland, that will continue to increase the security of supply in Sardinia and allow us to eliminate bottlenecking area. The Adriatic link is a submarine connection between a broadband market, which will increase market efficiency and allow for the
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