Company profile and strategy
Snam and its business model
Snam is one of the world’s leading energy infrastructure operators and ranks among Italy’s largest listed companies, by market capitalization. Through a sustainable and technologically advanced network, Snam guarantees the security of supply and is a key enabler in the energy transition. Through its international footprint Snam operates in Albania (AGSCo), Austria (TAG, GCA), France (Teréga), Greece (DESFA), Italy, UAE (ADNOC Gas Pipelines) and UK (Interconnector UK) and has recently started activities in China and India. Snam is also one of the leading shareholders in TAP (Trans Adriatic Pipeline). The Group has the largest natural gas transportation network (over 41,000 km including international assets) and storage capacity (approx. 20 bcm including international assets) among its European peers and is also a leading player in regasification, through the LNG terminal in Panigaglia (GNL Italia) and its stakes in the Livorno (OLT) and Rovigo (Adriatic LNG) terminals in Italy and in the Revithoussa (DESFA) terminal in Greece.
In its 2020-2024 strategic plan, Snam plans an increase in investments to 7.4 billion euros and more focus on the energy transition businesses: biomethane (Snam4Environment), energy efficiency (Renovit), sustainable mobility (Snam4Mobility) and hydrogen. The company also operates in forestation (Arbolia) and is committed to achieving carbon neutrality (Scope 1 and Scope 2) by 2040. The Group's business model is based on sustainable growth, transparency, the promotion of talents and diversity and the social development of local areas also through the initiatives of Fondazione Snam.
Net zero by 2040 and scorecard ESG
Snam is committed to achieving carbon neutrality by 2040, in line with the 1.5° C containment target set by the Paris Agreement, thus further consolidating its ESG (Environmental, Social and Governance) leadership. Furthermore, Snam raises its reduction target to 50% of Scope 1 and Scope 2 equivalent CO₂ emissions (direct and indirect) by 2030 (vs 2018), compared to the previous target of -40% vs 2016. Almost half of the overall reduction in emissions will derive from the dual fuel compressor stations project, while the remaining share will be achieved thanks to the reduction of methane emissions by 45% by 2025 (vs 2015), in line with UNEP objectives (UN Environment Program), with which a protocol was signed. Snam’s commitment on indirect Scope 3 emissions (emissions outside the direct control of the company, in Snam’s case mainly attributable to suppliers and investee companies) is also significant. In this an area the company has strengthened collaboration initiatives with subsidiaries and started the development of additional joint projects with suppliers to achieve a progressive and significant reduction. Snam has also developed and published a “scorecard” on 13 areas with 22 material and quantitative objectives to provide stakeholders with a holistic view of the commitment and growing sensitivity in the ESG field, allowing them to monitor the results.
Snam pursues a sustainable model of growth, in order to create value through these main strategic drivers: committed to net zero by 2040 and ESG leader; long-term RAB growth; execution capabilities and technology edge; energy transition businesses; international footprint; strong balance sheet and disciplined approach.
Snam’s new capex plan envisages an increase in investments of almost € 1 billion compared to the € 6.5 billion of the 2019-2023 plan, bringing them to approximately € 7.4 billion in the 2020-2024 period. The growth is attributable both to the core business of regulated infrastructures (€ 6.7 bn in investments) and to the new activities of the energy transition (over € 0.7 bn in investments, almost doubled compared to the previous plan). 50% of the investments in the plan is dedicated to a “hydrogen-ready” infrastructure (replacement and development of new assets with hydrogen-ready standards). Most of the investments envisaged in the plan are aimed at decarbonisation to achieve the carbon neutrality goal by 2040 and seize the opportunities offered by the energy transition. Approximately 40% of the plan investments are aligned to the European taxonomy criteria under finalisation.
New businesses of the energy transition
In recent years, Snam has created a wide and diversified platform of activities (energy efficiency, biomethane production and infrastructure, sustainable mobility and hydrogen along the entire value chain) to be a “system integrator” able to offer green solutions and contribute to development of renewable gases. For the period 2020-2024, Snam’s investments in energy transition activities will amount to approximately € 720 million, almost doubled compared to the previous plan, with an annual contribution to EBITDA of € 150 million from 2024.
Almost all Snam's revenues are regulated. The Regulatory Authority for Energy, Networks and Environment (ARERA) regulates the different tariff system for transportation, storage and regasification services, defining the criteria for setting the tariffs in each regulatory period, which normally lasts for 4 years. The regulation ensures that the services are provided to third parties according to non-discriminatory criteria. Snam is therefore able to maintain a limited risk profile and to provide its shareholders with attractive and sustainable returns.
In the course of 2020, Snam further strengthened its position as leader in energy infrastructures at an international level, thanks to the acquisition of the stake in ADNOC Gas Pipelines, the consolidation of its presence in China and the entry in India and Israel. These initiatives allow the company to evolve towards a portfolio strategy, coherent with Snam’s broader vision. The strategy is based on four pillars: increase efficiency and flexibility for the associates that operate in mature markets; seize the opportunities relating to the energy transition; benefit from gas demand growth in key geographies, also driven by fuel switching to gas from more carbon intensive fuels; develop services in areas that offer interesting growth potential.
In the 2020-2024 period, the positioning along the entire value chain of the energy transition, the continuous improvement of the results of the core business and new activities, the greater internationalization and the strong supervision of the optimization of the financial structure will allow Snam to obtain sustainable growth in the main indicators.
Finally, Snam confirms its commitment to guarantee to shareholders an attractive and sustainable remuneration and the payment of an interim dividend. The growth of the dividend per share of 5% until 2022 is confirmed, with a further minimum growth of 2.5% in the period 2023-2024. Snam expects that for the 2020 financial year, a total dividend of € 0.2495 per share will be distributed in 2021.
25 March 2021 - 13:15 CET