Release Date: July 24, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Double-digit growth in adjusted EBITDA, EBIT, and net profit in the first half of 2024.
- Significant increase in overall adjusted gas distribution revenues by 12% year over year.
- Operating cash flow improved by 66% compared to the first semester of 2023.
- Successful integration and positive contribution from the acquisition of Acqua Campania.
- Continued reduction in operating costs, achieving a 1% decrease on a like-for-like basis.
Negative Points
- Revenues decreased by 6.4% due to the end of the Superbonus program affecting the energy efficiency segment.
- CapEx decreased by 11% compared to last year, driven by lower spending in digitization and centralized RAB.
- Scope 1 and Scope 2 emissions increased due to revised global warming potential ratios and more detected leaks.
- Higher net financial charges due to new bonds issued, impacting overall financial costs.
- Uncertainty regarding the regulatory environment and potential antitrust issues related to the acquisition of 2i Rete Gas.
Q & A Highlights
Q: How should we think about working capital performance for the rest of 2024, particularly relating to Superbonus receivables?
A: We have around EUR130 million in Superbonus receivables for this year. Part of it has already been compensated in the first semester, with the remaining portion to be compensated in November. Broadly speaking, we expect working capital to be neutral to positive by year-end. (Gianfranco Maria Amoroso, CFO)
Q: How is the integration of recently consolidated water assets progressing?
A: We are focusing on helping Acqualatina and Siciliacque meet their investment commitments, particularly in digitizing the network. We have already seen some quick wins, such as collaborative efforts between gas and water distribution teams. (Paolo Gallo, CEO)
Q: Can you comment on the press article hypothesizing a EUR1 billion equity issuance for hybrid refinancing?
A: The acquisition financing for 2i Rete Gas is fully underwritten by JPMorgan. We will refinance through a combination of equity or equity-like instruments and debt, aiming to maintain our current rating profile. (Paolo Gallo, CEO)
Q: Can you provide guidance on net debt by the end of the year without M&A?
A: The net debt without IFRS 16 for year-end is expected to be around EUR6.6 billion, in line with the guidance we communicated last month. (Gianfranco Maria Amoroso, CFO)
Q: Are there any updates on regulatory changes to simplify gas distribution tenders in Italy?
A: We have read about potential changes to reduce the number of tenders, which would likely increase the likelihood of tenders happening. We view this positively but await further developments. (Paolo Gallo, CEO)
Q: What are the reasons for the decline in CapEx in Italy in the first half, and what can we expect in the coming quarters?
A: The decline is mainly due to reduced spending on centralized RAB and digitization. We expect an increase in digital investments in the second half as we aim to complete the digital transformation of our network. (Paolo Gallo, CEO)
Q: What can we expect from the regulator regarding the new WACC and RAB deflator?
A: We expect the regulator to issue a consultation document next year. The deflator for 2023 has already been corrected to 5.3%, and we anticipate similar adjustments for future periods. (Paolo Gallo, CEO)
Q: How does the cost of laying pipelines in Greece compare to Italy?
A: The cost per kilometer is generally lower in Greece, mainly because most investments are outside urban areas. However, costs can vary significantly based on geographical conditions. (Paolo Gallo, CEO)
Q: Are there any potential antitrust issues related to the acquisition of 2i Rete Gas?
A: We expect the antitrust authorities to review the acquisition, but we cannot provide specific details at this time. (Paolo Gallo, CEO)
Q: Are you interested in participating in water tenders, and will the acquisition of 2i Rete Gas affect your ability to do so?
A: We are always interested in water tenders, but we currently have no information on upcoming opportunities. The acquisition of 2i Rete Gas will not limit our ability to pursue opportunities in the water sector. (Paolo Gallo, CEO)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
