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, WACC uplift, and RAB expansion.

• Investments surged between 57.9% and 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 approximately €560 million, expected to close by March 2025, consolidating storage market share.

• Progress on energy transition projects, including H2 and CCS market tests, and strong sustainability performance with 32% of capex taxonomy-aligned.

Financial highlights

• Total revenues declined 6.1% year-over-year to €1.80 billion, mainly due to a 70.1% drop in energy transition business revenues.

• Gas infrastructure revenues grew 17.8% to €1,643 million, with regulated revenues up 20.1%.

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

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

• 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.

Outlook and guidance

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

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

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

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

• Financial structure optimization and diversification of funding sources remain priorities amid persistent high interest rates.