Snam S p A : Full year 2020 results (Transcript)

Full Year 2020 Financial Results - Conference call

Thursday, March 18, 2021, 14:00

Investor Relations Snam

T [phone]

MODERATORS:MARCO ALVERÀ, CHIEF EXECUTIVE OFFICER ALESSANDRA PASINI, CHIEF FINANCIAL OFFICEROPERATOR:Good afternoon. This is the Chorus Call conference operator. Welcome and thank you for joining the Snam and Full Year 2020 Financial 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 "*" and "0" on their telephone.

At this time, I would like to turn the conference over to Mr. Marco Alverà, CEO of Snam. Please go ahead, sir.

MARCO ALVERÀ: Thank you. Ladies and gentlemen, good afternoon and welcome to Snam's

full year 2020 results presentation. 2020 has been a very difficult year all over the world. Lombardy was the first region to be hit outside of China and the first lockdowns were only a few miles from here. We were able to ensure the safety of our people, adopting special protocols for essential staff working in those production centers. We guaranteed uninterrupted gas flows and full commercial and technical availability of our grid and storage, and we played a significant role in supporting local communities where and how we could. During this very complex time, we've managed to exceed our original guidance, and to continue to press ahead with our strategic positioning internationally, and in the energy transition businesses.

Project delivery is our key feature, and we expect this to become increasingly sought after for the energy transition. Snam managed to recover operational glaze [ph] to deliver our investment budget for the fourteenth year in a row.

The €1.2 billion we invested is almost a quarter higher than our CAPEX in 2019, and we are planning to increase this further by 14% to €1.4 billion in

2021. TAP is a good example of our capability to deliver major undertakings.

This was one of the most complex projects in our industry and started off ahead of schedule after 4.5 years of work. Our €300 million equity

investment in TAP will result in an annual contribution of around €55 million from this year.

Strategically, we also made significant headway entering into the shareholder base of Adnoc gas pipelines, being the only industrial player in a large consortium of infrastructure funds. We've also made investments in

the hydrogen value chain through De Nora and our small stake in ITM Power. Meanwhile, our energy transition start ups broke even in 2020, despite some delays caused by COVID. Hydrogen, biomethane, energy efficiency and sustainable mobility would be key pillars of our long-term growth opportunity. Helped by strong contribution from international associates, and lower financing costs, net profit rose to €1.164 billion, far exceeding pre-pandemic guidance of €1.1 billion.

In 2020, we delivered another year of strong growth. Regulated revenues are driven by continued investment in the network and higher allowed D&A counterbalanced by the phasing out of older [indiscernible] centers and the decrease linked to the commodity component of our revenues due to the decline in 2020 volumes. In 2020, we saw the inclusion of energy costs in revenues which were previously addressed in kind for around €60 million.

These contribute to revenues and costs with essentially no impact on EBITDA.

Adjusted EBITDA benefited from the contribution of new energy transition businesses, the continued effect of the efficiency program launched in 2016 and some additional COVID related savings mainly lower travel costs and prolonged smart working for 2020. Income from associates was up €33

million compared to last year benefiting from the inclusion of Adnoc and thestartup of TAP plus another…a number of other effects which are…some of them specific to 2020 for a total of €30 million positive one-offs. Alessandra,

will go into more detail on those in a second. On top of all of this, financial charges were €39 million lower in 2020 and this gave us our net profit growth of 6.5%.

In 2020, we also made continuing progress on our ESG strategy. We've introduced an ESG score card to finding 22 targets on which we have provided a 2020 baseline and we will report progress on these regularly.

You'll find details in the backup. Among our key areas of focus is the reduction of our carbon footprint.

We've adhered to the UNEP protocol, and we commit to a 45% cut in methane emissions by 2025. As you might recall, in November, we announced Scope 1 and 2 targets with a 50% reduction in CO2 emissions by 2030 compared to 2018 which is our base year, and we've also committed to carbon neutrality by 2040. We are making significant progress on our strategy of emission reductions with 2020 emissions down 5% year-on-year and are already 15% compared to 2018.

Looking at the S in ESG, we believe that wellbeing will become a key metric.

We have focused on the wellbeing of Snam's employees and our communities in this difficult year with initiatives including medical and psychological support, virtual gym memberships and the reimbursement of child minding expenses. We are launching together with the University of Oxford another important partner, the World Wellbeing Movement, a global partnership which will promote a simple measure of wellbeing as a key ESG indicator. Our leadership in ESG is confirmed by the awards obtained and by our strong positioning within the key ESG ratings. We will hold a webinar dedicated to our ESG initiatives and strategy in April.

Thank you for your attention. I'll now hand over to Alessandra.