Company profile and strategy
Snam and its business model
Snam is one of the world’s leading energy infrastructure operators and one of the largest Italian listed companies in terms of market capitalization. The company’s sustainable and technologically advanced network guarantees security of supply and promotes development in the areas in which it operates, while also contributing to promote the energy transition. Through its international subsidiaries, it operates in Albania (AGSCo), Austria (TAG, GCA), China (Snam Gas & Energy Services Beijing), France (Teréga), Greece (DESFA) and the United Kingdom (Interconnector UK). Snam is also one of the main shareholders of TAP (Trans Adriatic Pipeline), the final section of the Southern Energy Corridor.
The company has the most extensive transmission network among European peers (over 41,000 km including international activities) and greatest natural gas storage capacity (ca. 20 billion cubic meters, including international activities). It is also one of the main regasification operators in Europe, an activity it carries out through its Panigaglia terminal and its stakes in the Livorno (OLT) and Rovigo (Adriatic LNG) plants in Italy and in the Revithoussa (DESFA) plant in Greece, with a total pro rata regasification capacity of around 8.5 billion cubic metres per year.
As part of its new €6.5 billion plan to 2023, Snam will invest €1.4 bn in the SnamTec (Tomorrow’s Energy Company) project, which aims to reduce the environmental impact of its activities by promoting innovation and contribute to decarbonisation. Through this project, Snam aims to reduce methane emissions by 40% by 2025 and direct and indirect CO2 equivalent emissions by the same amount by 2030 and to invest in new energy transition businesses. These include sustainable mobility (compressed – CNG and bio-CNG – and liquefied – LNG and bio-LNG – natural gas distributors, Small Scale LNG), infrastructure for biomethane from organic waste and agricultural and agro-industrial waste, and energy efficiency services tailored to apartment buildings, the public administration and industry. Promoting the use of renewable gases, Snam was also the first European company to test the introduction of hydrogen blended with natural gas in its network.
Snam’s business model is based on sustainable growth, transparency, the promotion of talent and diversity and the social development of regions through the initiatives of Fondazione Snam.
Through the Snamtec project, launched in 2018 and increased in the 2019-2023 Plan, Snam has given a great boost to investments for energy transition, focused on technology initiatives, innovation and R&D supporting large national and international networks and green economy businesses, like sustainable mobility, renewable gas, hydrogen and energy efficiency.
Snam promotes the use of natural gas, as a flexible, safe and low environmental impact. Snam has launched several projects, aiming at promoting biomethane, Liquified Natural Gas (LNG) in trasports, hydrogen.
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.
Snam is expected to enhance the value of existing participations and create opportunities to fully exploit its expertise in transport infrastructures: in particular, the areas of interest are the integration of European market with debottlenecking of borders and reverse flow, and new routes to Europe to strengthen the southern corridor and the Mediterraneo hub. The approach of Snam will be selective, with a strict financial discipline, and will target on assets with capex opportunities and a risk profile comparable with current portfolio.
In all its activities, in Italy and abroad, Snam pursues a sustainable and socially responsible model of growth, in order to create value for the company and for the communities in which it operates through these main strategic drivers: the continuing improvement in the results of core business; the growing exposure to energy transition; the solid performance of international activities; and the ongoing optimization of financial structure.
Snam has forecast an increase in investments for the period 2019-2023, bringing them up to € 6.5 bn, approximately 14% more than the € 5.7 bn of the 2018-2022 Plan. The growth is attributable both to the new energy transition businesses and to the increase in investments in replacement. In detail, € 5.3 bn of the investment concern the transportation network, € 0.8 bn refer to storage and regasification and € 0.4 bn to the new businesses linked to the energy transition. The development initiatives refer to the completion of the infrastructure to connect TAP to the national network, the completion of connections in the North-West to serve the local market and cross-border flows, the network in Sardinia and the start of the conversion of six compressor stations and storage plants in gas-electric hybrids.
As the operational and financial efficiency are concerned, in the 2019-2023 Plan the company's target expects to maintain flat in real terms the controllable fixed costs. From a financial prospective, having successfully established a new Group financial structure in 2012, Snam began work to optimize this in 2013, with the aim to achieve a competitive cost of debt over time as well as to make the debt structure more consistent with business requirements, both in terms of financing maturity and of exposure to changes in interest rates.
Finally, Snam confirms its committed to guarantee shareholders an attractive and sustainable remuneration and the payment of an interim dividend. The dividend growth is expected to be 5% per year up to 2022. Snam expects that for the year 2019 a total dividend of € 0.2376 per share may be distributed in 2020.
03 March 2020 - 20:51 CET