Snam Spa

Good afternoon, this is the Coruscall Conference operator. Welcome and thank you for joining this NAMM first quarter 2025 consolidated results conference call. As a reminder, all participants are in listen-only mode. After the presentation, there will be an opportunity to ask questions. Should anyone need assistance during the conference call, they may signal an operator by pressing star and zero on their telephone. At this time, I would like to turn the conference over to Ms. Francesca Pezzoli, Head of Investor Relations of SNAM. Please go ahead, Madam.

Good afternoon, ladies and gentlemen. Welcome to the presentation of SNAM Q1 2025 Consolidated Results, approved by the Board today. The presentation will be hosted by SNAM CEO, Stefano Venier, and by SNAM CFO, Luca Passa. Stefano will provide an overview of the excellent financial and industrial results achieved along with regulatory and market updates. Luca will provide a detailed financial performance overview. Then back to Stefano for closing remarks and finally the Q&A session. I will now hand over to Stefano.

Thank you, Francesca. I'm on page two with the key highlights on the first quarter. In Q1 2025, we have delivered another set of sound results despite the market turmoil and the volatility. The adjusted EBDA of $761 million is up 8.3% year-on-year, driven by growth in regulated revenues. Adjusted net income at $406 million is 21.2% year-on-year, up thanks to the higher EBDA and greater contribution from associates, only partly offset by higher depreciations and income taxes. Investments at $300,061,000 are down 22% versus first quarter 2024, following the completion of works related to the Ravenna LNG terminal and higher transport third parties contribution. Net debt was at $16.8 billion, mainly reflecting investments carried out and the payment of 2024 interim dividend for almost $400 million. the average cost of debt was stable at 2.5%. Several updates on M&A, asset rotation and financing front. First, on March we have closed the acquisition of Edison Stock Energy that contributed to first quarter results for one month. Second, we sold the stake in Adnok gas pipelines to Lunate for $234 million, crystallizing a 14.5 IRR and booking $120 million of capital gain net of taxes. Third, on April 7th, Znam and Infinity Investments, an investment vehicle only owned by Abu Dhabi Investment Authority, entered into a sale-purchase agreement for the acquisition by Znam of the 24.99% stake in the share capital Fear Gas Holding Group, which indirectly owns the entire share capital of Open Grid Europe, OGE, for an equity value of 920 million. At the same time, Znam agreed to sell to Fluxys a stake of approximately 0.5% of the share's capital of Fiat Gas Holding so that Znam and Fluxys, upon completion of such transactions, will hold a substantially equal shareholding in VGH. As a result, SNAM will become the first ever Italian energy player to make a sizable entry into the German energy infrastructure space, so then strengthening end-to-end presence the South-North Corridor and its position as Europe's largest gas infrastructure operator, in line with a strategy to develop a pan-European multi-molecular network located along the key European energy corridors. Today, the Board of Directors approved the issuing hybrid bond by 31 December 2026 for up to $1 billion to finance the deal, maintaining so the financial flexibility, diversifying funding and investors, and optimizing the financial structure. After the deal, both Moody's and Fitch reaffirmed their credit rating, while S&P raised it to A-, following the upgrade of the sovereign confirming Stamstrom credit profile. Now I'll move to page three to dig into the regulatory framework at gas market. On the regulatory front, the weighted average cost of capital formula was updated for the next three years period, providing future future visibility across all regulated businesses. With the Resolution 130, the regulator has finally changed the RAB indexation to the Harmonized Index of Consumer Prices for the European Union countries relating to Italy, so-called IPCA Italy. At the same time, the deflator for 2024 was updated to 7.9% from the previous 5.3%. in order to recover the past adjustments. This effect has a one-off of 52 million effect related to 2024 recovery, which was fully booked in first quarter, and a positive effect of 10 million per quarter from the first quarter 2025 onward. Considering the application of the ARERA 130 resolution, The 2025 tariff rub is lifted from €25.8 billion to €26.2 billion. Moreover, the regulator defined the rules for the sixth regulatory period for storage, confirming the overall setup and introducing a bonus-malus incentive on cap expanding versus the budget and the criteria for drafting the single 10-year development plan for the entire gas sector. In the period January-March, European gas demand was 105 bcm with an 8% growth, or 7.5 bcm more, compared to the previous year, driven particularly by Germany, UK, and Italy. Italy gas demand then, in particular, was up 10% in the first quarter of 2025, mainly driven by higher thermoelectric demand as a fact of lower electricity import and hydro production. Today, there are approximately 130 active points injecting biomethane in the network with 15% year-on-year increase in production. Now, I'll turn on page four for some key achievements. Also, in the first quarter of 2025, we progressed on the key levels of our strategy to build a pan-European multi-molecular operator, specifically in gas infrastructure, The regasification unit BW Singapore moored 8.5 kilometers offshore of Vena has successfully completed the commissioning operation within the scheduled time. The regasification activity will begin next day with the capacity being made available through competitive auction procedures in accordance with the current regulatory framework. Second, as of today, Italy received around 60 LNG tankers, half of which coming from the United States, for a total volume of almost 6 billion cubic meters, equal to approximately 30% of the gas volumes imported into the country. Third, at the end of April, the storage level reached 47%, approximately 10% higher than the European average. Furthermore, 90% of the available storage capacity for the year 2025-2026 thermal year, sorry, was allocated. This will facilitate the achievement of the 90% infilling target before winter. Moving to energy transition, renewable backlog is stable at 1.4 billion, whilst on biomethane, 14 plants won tariff auctions in January, About 30 megawatt, 100% of plants submitted. This implies that out of the 78 megawatt 2028 target, 72, so almost more than 90%, are already in operation, under construction, or finally authorized. Looking at the sustainability initiatives, 28% of the capex aligns with the EU taxonomy, and 52% with the SDGs in the first quarter of the year. A new sustainable finance framework, including a sustainability link bond section assessed by Moody's, was launched. It includes a new 2035 target that implies minus 65% of the scope one and two emissions, carbon neutrality by 2040, and 2015 net zero goal. ESG investors make up about 43% of our institutional investor base, above average of the sector, and Italy. Finally, SNAM is committed to adopt the TNFD framework early to demonstrate the commitment to biodiversity. Let's now focus a bit more on the gas market in Italy. On page 5, in the first quarter of 2025, gas demand reached 21.84 billion cubic meters, up by 10% compared to the same period in 2024, the highest level in the last three years. This growth was mainly driven by higher consumption, firstly in the thermoelectric sector, plus 1.4 billion cubic meters, or 22%. supported by a decrease in electricity imports and lower hydroelectric production due to lower rainfalls. And second, the residential and tertiary sector, up by half a billion, after colder average temperatures and the easing of prior energy-saving measures, whilst consumption in the industrial sector remained substantially stable. If you look at the climate-adjusted gas demand, that amounted to 22%. showing an increase of 1.51 billion cubic meters, or 7.2%, compared to the same period of last year. In April, natural gas demand reached approximately 4.2 BCM, again up 2% year-on-year. As in previous months, demand from the power generation sector continued to grow, plus 19%. mainly driven by reduced hydroelectric production, following last year exceptionally high rainfall. Residential consumption was decreased 9% due to milder weather than previous year, while industrial demand again remained stable. LNG volumes up by 10% in the first quarter, representing, as we said, about 30% of the total gas inflows in the country. liquefied natural gas provided a key contribution to the diversification of energy supplies to Italy. In 2024, just to remind you, LNG met a quarter of Italy's gas demand, with 150 ships from around 10 different countries reaching the four re-gasification units in Italy, which now, with the entry into operation of the Ravenna terminal, will become fine, providing then a fundamental contribution of the Russian gas phase-out, at least for Italy. Export to Austria was $0.5 billion out of $0.6 billion of the total export, which is almost three times compared to the export we recorded in the first quarter of last year. I will now hand over to Luca for a detailed financial performance overview.