Snam (SRG) Q2 2024 earnings summary

Executive summary

• Adjusted EBITDA rose 16.1% year-over-year to €1,417 million, and adjusted net income increased 11.3% to €691 million, driven by gas infrastructure growth and regulated revenues.

• Investments surged 62.3% to €1,159 million, mainly in gas infrastructure projects such as Ravenna LNG and the Adriatic Backbone.

• Net debt increased by €1.08 billion to €16.35 billion, with an average net cost of debt at 2.5%.

• Edison Stoccaggio acquisition agreement signed for ~€560 million, expected to close by March 2025, consolidating storage market share.

• Progress on energy transition projects, including hydrogen and CCS, with 32% of capex taxonomy-aligned.

Financial highlights

• Total revenues fell 6.1% year-over-year to €1.80 billion, as energy transition business revenues declined sharply.

• Gas infrastructure revenues grew 17.8% to €1.64 billion, while energy transition revenues dropped 70.1% to €156 million due to the end of Superbonus incentives.

• Adjusted EBIT rose 19.8% to €918 million; reported net profit was €634 million, down 9.2% due to special items.

• Cash flow from operations was €1.05 billion, nearly covering net investments of €1.12 billion, resulting in negative free cash flow of €68 million.

• Net financial expenses increased 49.4% to €130 million, reflecting higher average debt and interest rates.

Outlook and guidance

• FY 2024 guidance confirmed: €3.0 billion investments, adjusted EBITDA above €2.75 billion, adjusted net profit around €1.23 billion, and net debt expected at €17.5 billion.

• Economic results to benefit from RAB growth, WACC update, and new ROSS regulation.

• High visibility due to approved regulation, tariffs, and investments.

• Direct emissions expected to fall 17% from 2022 baseline by year-end.

• National energy and climate plan targets 58 bcm gas demand by 2030, with growth in biomethane, hydrogen, and CCS.