Italian TSO Snam Sees Bright Future

Italian gas transmission system operator (TSO) Snam said February 19 its profits were rising and it presented a positive outlook for the coming years as the energy transition gets underway.

Its adjusted net profit of €1.01bn ($1.14bn) for 2018 was up €70mn or 7.4% on 2017 despite lower gas throughput in Italy. It said the operational performance was higher and the cost of debt was lower. It also expects to do better this year and has revised its forecast to 5% better, compared with 4% better earlier.

Adjusted earnings before interest and tax were €1.405bn, up 3.1% on 2017, which was also due to the effects of the efficiency measures implemented, as well as balancing services. Free cash flow was €1.16bn.

In 2018, 72.82bn m³ were injected into Snam's Italian network, down 2.4% compared with 2017. Power plants took less as imports from France returned to normal, it said. 

Snam bought an 82% stake in TEP Energy Solutions (TEP), a 70% stake in IES Biogas which specialises in the building biomethane plants and 100% of Enersi Sicilia and the business unit dedicated to technological solutions for natural gas refuelling stations for MTM transport. It also bought a 66% stake in Greek TSO Desfa, jointly with Enagas and Fluxys, for a total value of €535mn. Snam has 60% in the investment vehicle and the other two TSOs have 20% each.

CEO Marco Alvera said the year was a good one for Snam, as it exceeded all its objectives and enhanced its position as a leading player in the energy transition. New initiatives in renewable gas, energy efficiency and sustainable mobility, as well as its ongoing technological and social innovation, have all become important distinguishing features for Snam going forward, he said. "Thanks to our strong operating performance, effort on efficiency, the reduction in the cost of debt and the share buyback, we have increased earnings per share by 26% and the dividend by 8% in the last two years, positioning ourselves in the highest segment in the sector," he said.

By the end of the five-year investment plan (2018-2022) it expects the profit from investments for the energy transition, new services and international activities to exceed a quarter of Snam’s total profitability.

The outlook is also good: Italian gas demand is stable, and European demand supported in particular by the reduction in the use of coal, together with the decline in domestic production, will need new import routes. Snam expects to work through its €5.7bn investment plan in the five-year period 2018-2022, with a continued focus on replacement and maintenance in order to guarantee the maximum resilience, flexibility and efficiency of existing infrastructure.

It is looking forward to the arrival of gas from the Caspian next year, through the Southern Gas Corridor which terminates in southern Italy. Snam's projects include strengthening the south network, the north-west connections, the local market service, cross-border flows, the network in Sardinia and the upgrading of the Fiume Treste storage facility.

Snam will also allocate €850mn to the Snamtec project (Tomorrow’s Energy Company), which will focus, specifically, on four areas:

• greater operating efficiency;
• a reduction in methane emissions (-25% by 2025);
• energy transition;
• innovation and reinforcement of core competencies.