Earnings call transcript: Snam Q2 2025 sees strong growth, stock dips

Snam SpA reported its second-quarter 2025 earnings, showcasing robust financial performance with adjusted EBITDA rising 5.3% year-over-year to €1,492 million and adjusted net income increasing by 8.5% to €750 million. According to InvestingPro analysis, the company currently trades near its Fair Value, with impressive gross profit margins of 826.66%. Despite these positive results, Snam’s stock experienced a slight decline of 0.55% following the announcement. The company also provided a promising outlook, expecting to potentially exceed its full-year EBITDA guidance of €2,850 million.

Key Takeaways

• Adjusted EBITDA increased by 5.3% year-over-year to €1,492 million.
• Snam’s stock fell by 0.55% post-earnings announcement.
• Snam’s hydrogen and carbon capture projects received significant EU funding.
• Full-year EBITDA guidance set at €2,850 million, with potential to exceed.
• S&P upgraded Snam’s credit rating to A-.

Company Performance

Snam demonstrated solid performance in Q2 2025, driven by strategic initiatives in energy infrastructure and innovation. The company transported 600 terawatt-hours of energy, with a 6% increase in gas demand during the first half of the year. InvestingPro subscribers can access detailed financial health scores and 8+ additional exclusive ProTips that provide deeper insights into Snam’s operational efficiency and market position. Snam’s investments in carbon capture and hydrogen projects position it as a leader in Italy’s energy sector.

Financial Highlights

• Adjusted EBITDA: €1,492 million (+5.3% YoY)
• Adjusted Net Income: €750 million (+8.5% YoY)
• Investments: €1,122 million
• Net Debt: €17,600 million
• Average Cost of Debt: 2.5%

Earnings vs. Forecast

While specific EPS and revenue figures were not disclosed, the company’s strong financial metrics suggest a positive performance relative to market expectations. The increase in adjusted EBITDA and net income indicates robust operational efficiency.

Market Reaction

Despite the positive earnings report, Snam’s stock price decreased by 0.55%, closing at €5.078. This movement contrasts with the broader market trend and may reflect investor caution or profit-taking following recent highs. InvestingPro analysis shows the stock has maintained dividend payments for 24 consecutive years, with 8 years of consecutive dividend growth, demonstrating strong shareholder returns despite market volatility.

Outlook & Guidance

Snam remains optimistic about its future, with a full-year EBITDA guidance of €2,850 million and net income guidance of €1,350 million. The company is focusing on energy integration and aims for carbon neutrality by 2040.

Executive Commentary

CEO Agostino Skornajenki emphasized Snam’s role in the energy transition, stating, "We are entering an energy addition or energy integration phase." He highlighted the importance of gas as a stabilizing energy source and expressed Snam’s ambition to reshape the energy sector.

Risks and Challenges

• Potential regulatory changes impacting energy projects.
• Fluctuations in gas demand and pricing.
• Execution risks associated with large-scale infrastructure projects.
• Financing costs and debt management amidst rising interest rates.
• Competition from other energy providers and technology shifts.

Q&A

During the earnings call, analysts inquired about Snam’s debt structure and funding strategy, regulatory incentives, and the potential EU-US energy import agreement. Executives provided insights into the company’s strategic direction and commitment to energy transition initiatives.

Full transcript - Snam SpA (SRG) Q2 2025:

Chorus Call Conference Operator: Good afternoon. This is the Chorus Call conference operator. Welcome and thank you for joining the SNAM First Half twenty twenty five 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.

At this time, I would like to turn the conference over to Francesca Pizzoli, Head of Investor Relations at NAM. Please go ahead, madam.

Francesca Pizzoli, Head of Investor Relations, SNAM: Good afternoon, ladies and gentlemen, and welcome to the presentation of NAM H1 twenty twenty five consolidated results, which were approved by the Board earlier today. Our presentation will be divided into three parts. First, NAM CEO, Agostino Skornajenki, will share his opening remarks, offering an overview of recent market developments, regulatory updates and the main industrial and financial milestones achieved during the period. Luca Pazas, NAM CFO, will then provide a detailed review of our financial performance. After that, Agostino will return for some closing remarks followed by our Q and A session.

With that, I’m pleased to hand over to Agostino.

Agostino Skornajenki, CEO, SNAM: Thank you very much, Francisca. Good afternoon, everyone, and thank you for joining us today. This is my first call since my appointment as NAM CEO in May. I’m honored to lead such a solid organization, which is a pillar of the energy system and plays a central role in ensuring energy security for our country and for Europe. I found a company with strong fundamentals and great people.

Let me begin by highlighting a few key facts that underscore the central role of Italy’s gas infrastructure. Each year, we transport around 600 terawatt hour of energy, twice the amount carried by the electricity grid and at less that 50% of the unit cost. Approximately 40% of this gas is used in gas fired power generation, producing around 120 terawatt hour of electricity. This accounts for about 45% of Italy’s total electricity output and up to 70% on days where renewable generation is low. In addition, we delivered more than 110 terawatt hour for industrial and hard to abate sectors, including steel, ceramics and chemical subsectors.

Moving now to slide number four. The energy crisis and geopolitical situation have reshaped perception of energy security across Europe. This has triggered the need of strengthening gas infrastructure. In few years, the country shifted from a system largely dependent on pipeline imports from Russia to a more diversified mix, including growing imports from North Africa, Azerbaijan via the top pipeline and the liquefied natural gas. LNG in particular more than doubled versus 2021, accounting for 30% in H1 twenty twenty five supported by new regasification terminals in Tionbino and Ravenna.

Has created the need of the new marine infrastructure requiring a new set of engineering and operational competencies. Moreover, gas plays a critical role as stabilizing energy source in a system increasingly dominated by intermittent renewables. Events such as Spain’s blackout highlight the importance of determining the appropriate share of traditional generation needed to ensure system security without creating excess capacity. Rather than focusing solely on an energy transition, we strongly believe we are entering into an energy addition or energy integration phase based on a balanced mix of energy sources to maintain both competitiveness and sustainability. Let me now turn to some key trends at page five in the Italian gas market during the 2025.

Between January and June, gas demand in Italy reached 33,000,000,000 cubic meters, a 6% increase compared to the same period last year, marking the first rebound in four years. Residential and commercial sectors were up by 3%, largely due to slightly colder weather condition, while industrial demand remained broadly stable. The key driver of the increase was the thermoelectric sector, which grew by 12%. This underscores the critical role of gas fired power generation in balanced heat energy system, especially as we integrate an increasing share of renewable energy. The flexibility provided by gas plants proved to be vital to maintaining grid stability in a context of greater intermittency and disease and European phenomenon with gas fired electricity production up 17% in Europe.

Exports have also risen sharply, growing roughly fourfold compared to the previous year, driven in particular by flows from Tarvisio. Looking at supply flows, we have seen a notable shift. Pipeline imports decreased by 1,800,000,000 cubic meters, more than offset by liquefied natural gas imports, which rose by 2,400,000,000 cubic meters with a significant 32% increase. This growth was supported by the full return to operation of the OLT terminal in Livorno and the start up of a new terminal in Ravenna. As a result, liquefied natural gas accounted for over 30% of Italy’s gas imports.

This contributes significantly to enhancing both the country energy security and the diversification of supply sources, which is crucial in today’s complex geopolitical environment. We have been able to successfully navigate sudden shift in market dynamics and gas flows ensuring security of supply, thanks to the flexibility of SNAM’s existing infrastructure further enhanced by the addition of new regasification terminals. In H1 twenty twenty five, we progressed on the strategy delivered. I’m now at page six. Let me remind the key highlights on gas infrastructure.

Works on Phase one of the Adriatic line are moving forward steadily, with 42% of the pipeline installation completed and progress on the compression station reaching 20% with overall completion at 35%. The BW Singapore Regasification Unit, moored offshore Ravine, began operations in May. Short term auction have already allocated capacity for June and July with four vessels having arrived so far. The first half of the year, Italy received more than 100 LNG tankers, nearly half of which coming from The U. S.

For a total volume of about 10,000,000,000 cubic meters. At the June, the storage exceeded 70%, approximately 10% higher than the European average. At the July, we are about 80%. Moving to our energy transition platform. The first phase of the CCS project in Gravina has delivered solid technical results.

Permitting for the pipeline is at an advanced stage and the process for storage has recently begun. We expect the technical regulation on CO2 transport to be published soon. We look forward to greater regulatory clarity to move ahead with the next phase. On BioMethane, we have 72 megawatts already in operation, authorized or under construction. And our mission is to speed the ramp up and maximize the value of the asset.

Renovits backlog is broadly stable at €1,400,000,000 With regard to the H2 backbone, we have been awarded €24,000,000 contribution by the Connected Europe facility energy program to cover approximately half of the feasibility studies. Let’s look now at sustainability. 32% of CapEx aligns with the EU taxonomy and 61% with SDGs in H1 twenty twenty five, while sustainable finance reached 86% of the total. We expect 2025 Scope one and two CO2 emission down approximately 20% versus 2022, which is our baseline. As part of our commitment to transparency and biodiversity, we have published our 50 NFD Task Force on Network Related Financial Disclosure Reconciliation Table.

We have also launched our first employee share ownership plan supported by a dedicated communication campaign aimed at reaching our entire world. Let’s now move to the H1 results at page seven. We have delivered a sound performance despite persisting volatility. Adjusted EBITDA of $1,492,000,000 is up by 5.3% year on year driven by growing regulated revenues. Adjusted net income of $750,000,000 plus 8.5% year on year, thanks to higher EBITDA and greater contribution from associates only partially offset by higher depreciation and financial charges.

Investment at $1,122,000,000 dollars were broadly in line with H1 twenty twenty four following the completion of works related to the Ravenna LNG terminal. Net debt reached $17,600,000,000 mainly reflecting the investment carried out and the dividend payment. The average cost of debt was stable at 2.5%. Standard and Poor’s raised its NIM rating to A- following the upgrade of the sovereign and confirming our strong credit profile. Let’s now move to key regulatory updates.

The regulator has changed the RAB indexation from 25 to the harmonized index of consumer price with the European Union countries related to Italy, the so called EPCA Italy. At the same time, the deflator for 2024 was updated to 7.9% from 5.3% to recover past adjustments. Therefore, 2025 tariff RAB was lifted to 26,200,000,000.0 from EUR25.8 billion. On May 22, Arera published a consultation document that contains some adjustments to the implementation criteria for the ROS based regulation and the general guidelines for the progressive implementation of the full ROS by 2028 with a transition period twenty six-twenty seven. It adopts a step by step proportionate approach designed to ensure a small transition for all market participants.

The Council of Ministers approved on June 30, a draft law for the definition of a legislative framework for carbon capture and storage, hydrogen and methane emission reduction. The draft now needs to pass through parliament and it will lay the groundwork for establishing CCS market in Italy and attributes to our ERA the role of regulator for the hydrogen market. Several progress were made on the financing front. In an extremely volatile geopolitical context, we have successfully issued our U. S.

Dollar our first U. S. Dollar multi tranche sustainability linked bond totaling 2,000,000,000 and $1,000,000,000 first EU wind bond. Very good job, Luca. With this transaction, we have completed the refinancing for the full year.

Moving now to our associates portfolio. In March, the stake in AdBlock Gas Pipeline was sold to Lunate for $234,000,000 In May, we have successfully placed via accelerated book building the sale of a portion of Itau Gas option rights and partially fold the capital increase diluting our stake by approximately 2%. In addition, we have recently concluded our exit from ITM Power for an amount of $11,500,000 equivalent. With regard to OGE acquisition, the closing is subject to some condition precedents that were partially met. In particular, no other shareholder exercised the right that the German antitrust authority provided the green light.

The process for the foreign direct investment clearance is ongoing and our base case is to close the deal by the end of Q3 this year. Now, I hand over to Luca for the comments on financial. Please Luca. Thank you, Agustino, and good afternoon, everybody. Moving to Slide number nine.

Out of the total around $1,100,000,000 of investment broadly in line with the previous year, 32% EU taxonomy aligned and includes. With regards to gas infrastructure, H2 radio replacement, dual fuel compressor station, biomethane plant connections. As for the energy transition businesses, H2 and CCS, a large part of BioMetane depending on plant technical standards and energy efficiency excluding cogeneration. SDG alignment is instead 61%, of which the majority goes towards SDG seven, nine and thirteen, respectively, affordable and clean energy, industry innovation and infrastructure and climate action. More than 50% of CapEx are development investment, reflecting the company industrial growth phase.

Let’s now move to H1 twenty twenty five EBITDA analysis on Slide 10. EBITDA for the period was €1,492,000,000 plus 5.3% compared to last year or plus €75,000,000 The growth is mainly attributable to regulatory items for a total of around €70,000,000 related to the recognition of the 2024 Deflator update for €52,000,000 the adoption of the Italian Ipka for the RAB revaluation starting in 2025 for around €50,000,000 partially counterbalanced by the WACC decrease for around €50,000,000 Regulatory revenues increased for around €54,000,000 Stojik Adriatica that entered into perimeter from the 03/03/2025 and possibly contributed by €18,000,000 Ravine FSRU that started operation in May and contributed by 4,000,000 In detail, the regulated revenues growth was driven by transport and storage revenues increased by around €77,000,000 linked to the investment plan execution, fast money effect for around €11,000,000 higher allowed OpEx mainly due to inflation. These effects were partially counterbalanced by the absence of LNG extra revenues recognized in second quarter twenty twenty four for around €40,000,000 the output base reduction of around €70,000,000 versus last year, mainly attributable to the storage reverse flow services and expected phase out of input based incentives. The increase in gas infrastructure operating cost, about €30,000,000 is mainly attributable to lower cost in large part due to inflation and new hires.

With regard to the Energy Transition business, the €8,000,000 EBITDA contribution is mainly driven by BioMetane supported by higher volumes. As for the full year, our guidance is €2,850,000,000 EBITDA, which does not reflect the positive impact of the 2024 Deflator update, which accounts for around €52,000,000 nor the switch to Italian Ipca index for RAB revaluation starting in 2025, which is worth approximately €40,000,000 for the full year. As described at Page 11, during first half twenty twenty five, our associates contributed to the group net income by $2.00 €4,000,000 or plus €47,000,000 increase compared to the same period of the previous year. Out of the total contribution, 131,000,000 came from our foreign associates and the remaining €73,000,000 from the Italian associates. Let’s now dive into the performance of each one.

Slightly higher year on year contribution is driven by inflation adjusted tariffs and lower net financial expenses. With 15% of Italian imports covered in the first half twenty twenty five, TAP is the second largest import route by a pipeline with commercial operation starts of the 1.2 BCM expansion in January 2026. Construction works are almost completed and commissioning activities have already started. The Corridor’s operating performance remained broadly in line year on year with approximately 11 BCM of gas transported to Italy in the first half of the year, confirming it as the country’s leading import route by a pipe. TERGA contribution was slightly lower compared to the first half twenty twenty four, mainly due to higher energy costs driven by strong storage withdrawals as well as higher interest expenses following a bond refinancing in 2024.

Moving to Austria, TAG benefited from the new regulatory framework, which removes volume risk, allowing TAG to fully record allowed revenues versus last year, bringing net income contribution to positive. Also, GCA’s performance benefited from the new regulatory framework, however, offset by a worsening in the booking situation, which will be recovered from T plus two. In H1 twenty twenty five, we recorded a significant increase of exports from Italy to Austria, underlying the strategic relevance of this route. Therefore, lower contribution is due to lower auction premium on LNG imports and export to Bulgaria, now in line with historical trends. However, Greek demand rose by 15% compared to first half twenty twenty four, driven by a colder winter and a higher demand for power generation.

Alexandroupolis FSRU is expected to be back in operation by the beginning of the next thermal year twenty twenty five-twenty twenty six. Interconnector’s contribution remains in line year on year since we are reaching the yearly regulatory cap, thanks to capacity almost 50% booked until 2026. EMG contribution is substantially in line versus first half twenty twenty four. We do not expect to record material deviation on the yearly contribution from the upstream interruption occurred in June. Regarding represented only one month of net income contribution, while you can see the consolidated reported level the capital gain.

Italian associate growth is mainly driven by Itau Gas overperformance in first half and by higher contribution from Adriatic LNG following the increase of SNAM participation in the company from last December. For the full year, we expect approximately €360,000,000 €365,000,000 of contribution from associates, assuming OGE contribution starts in fourth quarter. You will find in the index the updated info pack with detailed contribution and data of all our associates. Let’s now move to the first half twenty twenty five net income analysis on Slide number 12. Adjusted net income for the period was EUR $750,000,000, plus 8.5% compared to first half twenty twenty four due to higher D and A by €51,000,000 following rising investments and entering to perimeter of Stojica Adriatica from March and Ravenna FSRU from May Higher net financial expenses by €22,000,000 mainly driven by a slight increase in financial expenses related to debt, reflecting higher financial indebtedness with an average cost of net debt flat at approximately 2.5%, lower non debt related financial income, in particular, lower interest related to the default service.

Higher contribution from associates, as already commented, which was the result of higher international associate contribution for €20,000,000 and higher Italian associates for €27,000,000 Lower taxes reflected higher contribution from associate to EBT as well as tax credit adjustment related to 2024 income taxes. It is important to note that the €1,350,000,000 net income full year guidance does not include the positive impact of the 2024 Defector update, which is worth around €52,000,000 nor the switch to Italian Ipca Index for RAB revaluation starting in 2025 estimated approximately €40,000,000 for the full year. Turning now to cash flow on Slide number 13. Cash flow from operations for the period amounted to around $1,118,000,000 euros and was the result of October of funds from operation and €79,000,000 working capital cash generation. The change in working capital was mainly driven by regulatory working capital with around €300,000,000 of tariff related items, mainly driven by additional tariff components, around €330,000,000 absorption due to balancing and settlement activities and default service and about €100,000,000 cash generation, mainly driven by super bonus fiscal credit decrease.

Net investment for the period amount to €1,575,000,000 including €564,000,000 of cash out related to Stoix Adriatica and around €133,000,000 of ADNOC disposal cash in. Other outflows were related to the payment of dividends for €955,000,000 resulting in a change in net debt of about €1,342,000,000 EBITDA cash conversion reached a very healthy 78%. Moving to slide number 14. Net debt amount to around €17,600,000,000 at the end of the first half twenty twenty five. Net cost of debt, which is calculated as financial charges, net of liquidity incomes on average net debt for the period, remained stable at 2.5%, while fixed floating mix is at 89.11%.

Sustainable finance ratio is at 86%, well on track to reach our long term target of 90% by 2029. The new sustainable finance framework has been published, including the new targets on carbon neutrality for Scope one and two by 2040 and net zero for all Scope by 02/1950. Following the publication, Znam successfully placed its first U. S. Dollar multi tranche sustainability linked bond totaling $2,000,000,000 It represents the first sustainability lien transaction globally with a net zero emission target across Scope one, two and three.

Moreover, in June, we have published the European Green Bond Fact Sheet in a full alignment with the European Green Bond Standards. Following it, we issued our first Green Bond aligned with the European Green Bond Standards for a total amount of €1,000,000,000 the largest European Green Bond by European corporate so far. Following these two transactions, funding for the year is completed, leaving the remaining part of the year for further opportunistic prefunding activities. Credit ratings were confirmed by Moody’s and Fitch following OJ acquisition announcements, while Standard and Poor’s raised non positioning to A- following the upgrade of the sovereign, providing the strength of our credit metrics and business profile. I will now hand over to Agostino for the closing remarks.

Thank you very much, Luca. In conclusion, we have reported solid financial results across all key indicators, while making tangible progress in the execution of our strategic plan. This confirms the strength and the resilience of our business model. The broader energy and geopolitical landscape remains volatile and complex. In this context, the central load of gas within the energy system has become increasingly evident.

Our infrastructure has proven essential both in supporting supply diversification and in providing the flexibility needed to balance a market that is increasingly reliant on intermittent renewable sources. Looking ahead, we benefit from strong visibility and we are very comfortably on track to deliver or even exceed our full year 2025 guidance. As a NAM new CEO, I am fully committed to delivering sustainable growth, maximizing long term value creation for all our stakeholders and preserving the company’s robust financial position and flexibility. We move forward with confidence, supported by solid fundamentals, a clear strategy and a purpose driven organization ready. And on this, let me thanks all the Snam people for the tremendous effort and professionalism they put in their daily activity.

In conclusion, things are happening in a very volatile energy environment. Snam wants to play a central role in reshaping the energy sector toward the future. We are now available to take all your questions in a live Q and A session. Thank you very much.

Chorus Call Conference Operator: This is the Chorus Call conference operator. We will now begin the question and answer session. The first question is from Javier Suarez of Mediobanca. Please go ahead.

Javier Suarez, Analyst, Mediobanca: Hi, everyone, and thank you for the presentation. Three questions. The first one is on a is a high profile, I guess, question after the publication in the Italian press of the first draft of the energy decree that should be approved by the Council of Ministry anytime soon. The question is which are the implication of that energy decree for a company like SNAN and the implication for your strategical priorities? Is a question for the CEO.

Then second question is on your guidance. So the numbers, the net income that the company had released represents circa 5% of 55% of the net income target and the guidance is not considered an important regulatory update. So the question is what is preventing you from increasing the guidance? Is it just for the sake of being conservative or there is something that we should be aware of that is preventing you from increasing that guidance at this stage? And then the third question is a specific question on the carbon capture and storage activity.

If you can provide more color on the long term strategy from the company in that activity and the implication that this may have for a company like SNAM? Thank you.

Agostino Skornajenki, CEO, SNAM: Thank you very much, Javier. It’s a pleasure to take your question. Regarding in general, let me say the strategy of SLAM and the approach related what is happening on the legislative framework. Well, I think that we do have an environment in which we have to face as a nation high energy costs and also some increasing concern for the security of supply. This is our life in the latest four or five years with the crisis following the invasion of Ukraine.

And also this is something that is continuing with the recent events and blackout events that happened not so far from here. So there are some concerns about the stability of the electricity systems and the long term perspective about such sector. I do appreciate a lot the effort of the government in trying to find long term solution to these complicated issues that involves the proper structure of the market after thirty year of functioning of a certain market system that probably was defined several years ago with different priorities and the criteria that now need to be updated. So we are very positive on this, but we don’t want to play, let me say, a passive role. We want to play a proactive role in supporting institution if I find the right solution.

We presented last January a business plan. And I say we, meaning that the business plan is not my business plan, it’s the business plan of the company. I personally will be focused in ensuring continuity and delivery. And at a certain point, we will update such business plan. I want to ensure that SAM will remain a key pillar of the European energy system and the guarantor of the security of supply, especially when the geopolitical and market dynamics are changing rapidly and unpredictably.

What we know is that today, the gas molecules represent more or less 30% of the energy mix and this represents the main source of electricity in the country. We also consider financial discipline as an essential element of our strategy. We will continue seeking the right balance between investing for growth while maintaining a solid capital structure in order to be able to deliver a long term value for all our shareholders. We are also conducting an in-depth review of our portfolio of associates and all the ancillary businesses to assess how they best fit with our strategy, maximize their value creation for Usnaum and its stakeholders. Regarding your second question on the update potential update of the guidance.

Well, you’re right, we are talking about very positive results. And based on the results at the June, we are more than comfortable to deliver the full guidance even to exceed such guidance. You are able to consider that the $1,350,000,000 of adjusted net income guidance does not reflect the positive impact from the deflator update, which accounts per se for around €2,000,000,000 So for sure, there is good possibility that we will exceed such guidance. But you have to consider that I’ve just taken the role of NAM CEO and I’m now currently conducting a thorough review of all potential upsides and risk, if not related anything relevant. But while the initial signs are more than encouraging, I believe it’s still premature to formally revise the guidance before completing such analysis.

Although, we expect that additional $90,000,000 of fleet or update at least will be finally delivered. We will come back on this in November when we’ll comment our nine month results. Relating CCS, well, from a technical standpoint, let me say that we are continuing to advance in the Ravenna CCS project with a very good partnership with E and I. We consider that CCS will be a relevant part of our industrial future. And this is something that need to be connected with what we just explained during the presentation.

We know that we will need a certain amount of gas to continue to provide technical support to the electricity system and to industrial sector. This is what I mean with energy integration. We have to integrate our gas and we have to accept that a certain part of CO2 need to be emitted. So, the question is not how to put gas to zero, because this is impossible from a technical standpoint, But how can we manage this in a sustainable way? And CCS is a technology tool that we want to explore at the best of our possibility and this is what we will do in the coming future.

The ARENA exercise is an excellent example what Italian technology can do in partnership with the relevant player. And aside this, we consider very positive the decision of the government to start discussing about the future regulation on CCS. We will follow it and we will provide all our support to this evolution.

Javier Suarez, Analyst, Mediobanca: Thank you.

Chorus Call Conference Operator: The next question is from James Brand from Deutsche Bank. Please go ahead sir.

James Brand, Analyst, Deutsche Bank: Hi, thank you for taking my question. Agostino, congratulations on joining SNAM, and I wish you all the best of luck in the new role. I just had one question actually, and that was on new incentives. As I understand it, the regulator is working on potentially kind of two or three new incentives for you or maybe two new incentives and you can propose one. So I was just wondering whether you could give us some more detail in terms of how you think those incentives might look, the new ones that the regulator is looking at, like how are they anticipated to work and when will they be brought in?

Thank you very much.

Agostino Skornajenki, CEO, SNAM: Well, I think that you are talking about the consultation document issued by Herrera at the May that contains adjustment to the implementation criteria for the loss based regulation. And of course, it includes also some element in order to anticipate some hypothesis about the impact of some output based incentives. Well, that’s for sure an interesting tool. We will explore it. We’ll do our best to take benefit from this evolution of the regulation.

But let me tell you that we will follow proportionate approach. We want to not to use this tool with, let me say, a speculative approach. We try to do our best to implement evolution that will provide real changes for the benefit of the final customers, but without creating any relevant modification to our risk profile.

James Brand, Analyst, Deutsche Bank: Great. Thank you so much.

Chorus Call Conference Operator: The next question is from Bartek Kubicki of Bernstein. Please go ahead.

Bartek Kubicki, Analyst, Bernstein: Thank you very much and good afternoon. And Agostino, all the best as well. Two questions, one big picture and one company specific. The big picture is related to the EU U. S.

Deal announced over the weekend, where EU is going to buy a much bigger amount of energy from The U. S. So I just wonder how do you look at this from gas infrastructure perspective? Because I guess it also means importing much more gas to the EU market. So just your view, whether it’s actually feasible and whether there’s enough transport LNG capacity in Europe and in Italy to take more U.

Gas? That will be the first one. And second, the company specific, if you look at you regarding the funding structure. I recall in the past, SNAM used to have much higher proportion of floating debt. I think it was even hitting around 25% years ago.

Now you have 11%, so you have kind of fixated higher amount of your Is it like this to be going forward? I mean, you want to have much more fixed debt in the funding structure or this is only temporarily and future needs you will be financing with short term floating debt as well? Thank you.

Agostino Skornajenki, CEO, SNAM: Thank you. Thank you very much, Bartek. And also James, thank you very much for your congratulation. I will do my best as NAM CEO. So regarding the evolution on import side on LNG and the recent news happened between on the agreement between you and The United States.

Well, let’s start from some historical figures. In 2024, energy imports were evaluated at more or less €350,000,000,000 €370,000,000,000 of which around €70,000,000,000 75,000,000,000 more or less 20% came from United States. Under the new trade agreement between The U. S. And the European Union, it seems that Europe committed to import €50,000,000,000 worth of energy, including a lot of things oil, gas, nuclear, raw materials over two years.

It means €250,000,000,000 per year that is more or less three times increase in the annual energy import from The U. S. So, let’s look now nothing to comment on this, it’s not up to me. But let’s look at Italy specifically looking at our gas demand. Well, full year 2024, the total gas consumption was 62,000,000,000 cubic meters, of which 15,000,000,000 came off from LNG.

So, we are talking about 25. On this 15,000,000,000 cubic meters, five came from U. S. If we move to 25, we do expect the total gas demand will move from 62 to 64 with 20 BCM, 20,000,000,000 cubic meters or 30% expected from liquefied natural gas. If we look at the figures at the June, we are more or less on The U.

S. Gas where we were at the 2024. And we do expect that if this trend continue, we will expect to more or less double the volumes from U. S. In 2025.

If you look at the reclassification capacity of the Ravenna Terminal that has been added to the other station in unit. The total reclassification capacity for the country reached 28,000,000,000 cubic meters. That is more or less 50% of capacity that could be used to accommodate potential LNG imports from The U. S. Regarding your question on debt structure, I will give the floor to Luca.

Please Luca. Hi, Bartek. Regarding the funding structure, the 89%, 11% fixed to floating is temporary. We have, let me say, a target to be on 75%, 25% every year. It’s temporary and it’s related to the fact that we issued longer term fixed rate, as you might recall, in The U.

S. So current duration is four point seven years. Overall, we expect to finish the year shortening the duration between four point two and four point three average, as well as cost of funding today is 2.5%. We expect to finish the year at 2.6% overall net debt cost of funding. Thank you very much.

Chorus Call Conference Operator: The next question is from Alberto D’Antonio of BNP Paribas XA. Please go ahead.

Francesca Pizzoli, Head of Investor Relations, SNAM: Hi.

Alberto D’Antonio, Analyst, BNP Paribas: Your new role. And a couple of questions from my side. And the first one, maybe a follow-up on guidance regarding the net income of EUR 1,350,000,000.00. And you mentioned the second account, the deflator, which is EUR 52,000,000, so EUR 52,000,000 and then the APCA adjustment. Could you remind me the numbers, EUR 40,000,000, so EUR 40,000,000 or EUR 14,000,000, it will be the first one?

Then the second one is regarding the Iturcas stake that you like you have not fully subscribed to all the shares. And actually, the share has performed really well. Could you consider to sell this stake or part of this stake to finance your operations? Do you have a full discretionary decision forward regarding this? Or would you have to reach an agreement with CDP, your major shareholder?

Or do you have any other contractual or legal requirement that prevents for doing so? And finally, maybe if you could update us on the mark to market value of the WACC for 2026, if you expect the threshold of a trigger mechanism to be reached or it’s still below the 30 basis points? Thank you so much.

Agostino Skornajenki, CEO, SNAM: Okay. Alberto, regarding the guidance, so the two positive effect, which are not currently in the guidance is €52,000,000 regarding the adjustment of the Inflation Index for 2024, which is €52,000,000 five-two euros and 40,000,000 the move to Ipka for 2025. So €92,000,000 in total pre tax. And that’s basically what is not currently included in the formal guidance. Regarding the Itagas stake, you might recall that we have one shareholder pact with CDP, which is our shareholder and also Itagas shareholder that provides us not to go below 6.4% in IttaGas.

And on top of that, we have issued an exchangeable back in 2023 that is basically covering what is left between six point five percent and eleven point four percent, which is our current stake. Therefore, we do not expect to do anything on natural gas, given the contractual framework that is actually in place on both the exchangeable as well as the shareholder part. Regarding the third question, market on WACA, we currently are still above the triggering mechanism on the WACA. It’s currently 15 basis points away on the transport, which is the, I would say, most relevant one and about five to six basis points away when it comes to the reclassification. There are only two months left, so our expectation is clearly for the trigger not to be triggered.

Chorus Call Conference Operator: The next question is a follow-up of Alberto De Antonio from BNP Paribas. Please go ahead.

Alberto D’Antonio, Analyst, BNP Paribas: Hi, thank you so much again for taking my questions. Maybe one additional question regarding your debt. In 2026, you will have to finance around SEK 3,600,000,000.0 of debt maturing during 2026. What is the expected impact on your cost of debt? And do you see the average cost of debt by year end 2020?

And also, maybe if you could explain us the rationale behind issuing some debt in U. S. Dollars and whether you think that this is an interesting way of finance your operation given that actually all of your operation are in euros? Thank you so much.

Agostino Skornajenki, CEO, SNAM: Thank you, Alberto. I’m answering first the second part of your question. So the reason why we have tapped the U. S. Dollar market is because it’s the most, I would say, developed capital markets when it comes to fixed income across the globe.

The company with its investment plan has between 2.5 and 3,500,000,000.0 billion of funding every year to be done. And clearly, the euro market is, I would say, very available to us, but we want to have alternatives, so diversification of funding. Now, we don’t take any currency risk. When we issue in dollars, we swapped all our issuance directly into euro. So, there is no currency risk attached and the rationale is just to diversify market access.

When it comes to 2026, we haven’t gave the guidance on our expected cost of debt. I said that 2025 full year expected cost of debt is 2.6%. Clearly, if interest rates remains where they are, we might have some increase, but we’re very far away from the 3%, which is at the end of our plan in terms of estimates. Yes. If I may add something Luca, if you don’t mind.

I will insist on what I told you previously. We consider our financial solidity stability and confirmation of our rating important element of the strategy of the company, will do our best to keep it, to keep the debt under very strict control to pay as less as possible for future bonds and also consider, I said before, that I would like also to explore all the possibility inside our portfolio in order to assess if all the participation that we do have are strategic or not and also leveraging on these to make our capital structure more and more efficient also in the future.

Chorus Call Conference Operator: Francesca Pettoli, there are no more questions registered at this time.

Francesca Pizzoli, Head of Investor Relations, SNAM: So thank you very much for listening the call. As usual, the Investor Relations department is available for any follow-up question. Thank you very much.

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