Outlook
Login    

Outlook

Achieving global climate goals will lead to significant investments in decarbonising the energy industry over the next thirty years. Many countries, accounting for around 90% of global emissions, have defined measures to contain and, if possible, reverse the process of global warming and the resulting climate change. Snam has set itself the goal of being the global leader in green gas infrastructure and the first company in the sector in Europe with a target to reduce indirect Scope 3 emissions by 2030 in order to achieve carbon neutrality by 2040. This target is in line with the 1.5°C global warming target of the Paris Climate Agreement and reinforced by the recent Glasgow Pact. Snam’s infrastructure is an enabler of the energy transition and will allow the company to contribute to an overall emissions reduction. The company envisages to transport entirely decarbonised gas by 2050, making of Italy a hub for renewable energies. Moreover, Snam is committed to establishing a market positioning across the value chain for both hydrogen and biomethane, thereby contributing to the energy transition also through the supply of energy efficiency services to the residential, industrial and public administration sectors as well as promoting sustainable mobility. In line with this objective, in 2020, Snam’s corporate purpose “Energy to inspire the world”, has been introduced in the company Articles of Association, to reflect “the company’s commitment to supporting the energy transition through resource use and energy sources compatible with protecting the environment and with progressive decarbonisation”.

Environment, Social, Governance (ESG) factors will continue to play a central role in defining the company’s strategy and in its management. In this regard, Snam has updated its “ ESG scorecard” to 2050 on 14 areas with 23 material quantitative indicators, to provide stakeholders with a holistic view of the commitment and growing sensitivity towards ESG, enabling them to monitor the results.

In the 2021-2025 period, Snam has planned 8.1 billion euros in investments, an increase of 700 million euros over the 7.4 billion euros in the previous plan, due to the acceleration of storage and green project investments. The plan provides for the maintenance, modernisation and development of its infrastructure, investment in net zero and the acceleration of the energy transition.

The most recent projections for the evolution of natural gas demand in Italy this year point to a decline compared with 2021, mainly due to the effect of the increase in energy prices in the industrial sector and forecasts for warmer temperatures.

The optimisation of the financial structure over the past six years lowered the average cost of gross debt to an average of less than 1% in 2021, compared with 2.4% in 2016. Current market conditions and interest rate and credit spreads are expected to impact the remainder of the year, albeit to a limited extent thanks to the funding and liability management operations finalised in early 2022, as well as revolving credit lines obtained in the second quarter of 2022 and in July 2022. These actions made it possible to complete funding as planned for 2022, leaving the second half of the year open for possible prefunding initiatives.

With regard to the Russia-Ukraine conflict, note that Snam is not active in the Russian market and does not hold investments in Russian companies of any sort, including joint ventures. At the moment, flows from Russia to Europe have declined and a number of interruptions have occurred. The persistent uncertainty and fear of additional possible impacts on supply continue to drive a significant rise in gas prices. TAG (joint control) and GCA (associate) are the foreign investees with the greatest exposure to Russian gas supplies through transport contracts. A modest impact on the Group’s overall performance could emerge if prolonged interruptions of imports should occur and/or if existing long-term contracts should be cancelled (although these are generally partially covered by bank guarantees).

Regarding the operational management of ordinary activities and the implementation of the 2022 investment programme, the announced level of expenditure has been confirmed, with particular regard to regulated businesses, in order to support Snam’s industrial growth. The guidance for 2022 net profit has been increased to at least 1.13 billion euros, thanks primarily to the good performance of associates, assuming the stability of the contribution of the Austrian associates.

Furthermore, in November 2021, Snam confirmed the growth of the dividend per share of 5% until 2022, and extended to 2025 the minimum growth of 2.5% in 2022-2024.

Expectations on the management of the COVID-19 pandemic in Italy confirm the progressive reduction in the restrictive measures, while remaining cautious to the circulation of variants which might give rise to a slowdown in the process of normalizing the domestic and international economic context. Snam's attention continues to be focused on measures aimed to protect safety in the control rooms, in the plants and on the regional sites to guarantee ordinary operation and the energy security of the country. To date, based on the information available, the company is anticipating a limited impact overall on the economic and financial results of the current year. Possible future impacts on the Group's economic and financial performance and asset position and on the business development plans will be assessed in the light of the development and duration of the pandemic both in Italy and abroad. The same considerations may be made with regards to possible impacts on development initiatives and on suppliers or customers, and on the assets held by the Snam Group abroad.

 

(Last update August 2022)

Page Alert
updated
04 August 2022 - 10:05 CEST