Snam Spa’s Earnings Call Highlights Growth and Challenges

Snam Spa ((SNMRY)) has held its Q3 earnings call. Read on for the main highlights of the call.

Snam Spa’s recent earnings call painted a picture of robust financial health and strategic advancements. The company showcased strong growth in LNG imports and sustainable financing, alongside high storage levels. Despite facing challenges such as regulatory uncertainty and a pending acquisition in Germany, the overall sentiment was positive, with growth and financial stability taking center stage.

Increased Gas Demand

Gas demand in Italy rose by 2% compared to the same period last year. This increase was driven by significant growth in the thermoelectric sector and a sharp rise in exports, underscoring the critical role of gas-fired power generation in the country’s energy landscape.

Significant Increase in LNG Imports

LNG imports saw a remarkable 38% year-on-year increase, now accounting for over 30% of Italy’s gas imports. This surge was fueled by the full return to operation of the OLT terminal and the startup of the new terminal in Ravenna, marking a significant milestone in Italy’s energy import strategy.

Strong Financial Performance

Snam reported a 6.6% increase in adjusted EBITDA, reaching EUR 2.227 billion, and a double-digit growth in adjusted net income to EUR 1.096 billion. These results were driven by higher regulatory revenues and contributions from associates, highlighting the company’s strong financial footing.

Successful Bond Issuance

The company successfully issued its first U.S. dollar multi-branch sustainability-linked bond totaling $2 billion, alongside a EUR 1 billion EU Green bond. This move underscores Snam’s commitment to sustainable financing and its strategic progress in this area.

Interim Dividend Increase

Snam’s Board approved an interim dividend increase for 2025, raising it by 4% to EUR 0.1208 per share. This decision reflects the company’s confidence in its financial stability and growth prospects.

High Storage Levels

Italy’s gas storage levels reached an impressive 92%, well above the European average, with expectations to improve further to around 95%. This preparedness ensures the country is well-equipped for the upcoming winter season.

Improved Net Debt and Cost of Debt

Snam reduced its net debt to EUR 17.4 billion, maintaining a stable average cost of debt at 2.6%. This financial prudence highlights the company’s effective debt management strategies.

Challenges in German Acquisition

The acquisition of OGE in Germany faces ongoing foreign direct investment clearance, with uncertainty surrounding the final decision as the long stop date approaches. This poses a challenge to Snam’s expansion plans in Germany.

Regulatory Uncertainty

Uncertainty looms over the WACC update for 2026 and other regulatory components, which could potentially impact Snam’s future financial performance. The company remains vigilant in navigating these regulatory challenges.

LNG Volume Guarantees

Concerns were raised about the need for guaranteed volumes for LNG terminals, as current levels stand at only 64%, affecting investment confidence. Addressing this issue is crucial for ensuring continued growth in LNG imports.

Forward-Looking Guidance

Snam updated its full-year guidance, projecting an EBITDA of EUR 2.950 billion and net income of EUR 1.420 billion for 2025. The company plans approximately EUR 1.8 billion in CapEx, with a focus on energy transition projects and maintaining a stable cost of debt at 2.6%. The strategic emphasis on energy transition, including CCS projects, remains a priority.

In conclusion, Snam Spa’s earnings call reflected a strong financial performance and strategic progress, despite facing regulatory and acquisition challenges. The company’s focus on sustainable growth and energy transition positions it well for future success, with positive sentiment prevailing throughout the call.