Earnings call transcript: Snam reports solid Q2 2025 results, stock declines slightly

Snam SpA reported robust financial performance for Q2 2025, with key metrics showing year-over-year growth. The company’s adjusted EBITDA increased by 5.3% to 1.492 billion euros, while adjusted net income rose by 8.5% to 750 million euros. Despite these positive results, Snam’s stock saw a slight decline of 0.63%, closing at 5.382 euros, amidst broader market fluctuations.

Key Takeaways

• Adjusted EBITDA increased by 5.3% year-over-year.
• Net income rose by 8.5%, reflecting strong operational performance.
• Investments remained steady, aligning with previous year figures.
• Snam’s stock fell by 0.63% despite positive financial results.

Company Performance

Snam SpA demonstrated strong operational performance in Q2 2025, with significant growth in its adjusted EBITDA and net income. The company maintained stable debt levels and a consistent average cost of debt at 2.5%. Snam continued to advance its strategic projects, including the Ravenna Carbon Capture and Storage (CCS) project and the H2 backbone initiative, supported by EU funding.

Financial Highlights

• Adjusted EBITDA: 1.492 billion euros (+5.3% YoY)
• Adjusted Net Income: 750 million euros (+8.5% YoY)
• Investments: 1.122 billion euros, stable compared to H1 2024
• Net Debt: 17.6 billion euros
• Cash Flow from Operations: 1.118 billion euros

Outlook & Guidance

For the full year 2025, Snam has set an EBITDA guidance of 2.85 billion euros and a net income guidance of 1.35 billion euros, with expectations to potentially exceed these targets. The company is also targeting carbon neutrality for Scope 1 and 2 emissions by 2040 and aims for net zero across all scopes by 2050.

Executive Commentary

CEO Agostino Scornajenchi emphasized the company’s strategic direction, stating, "We are entering an energy addition or energy integration phase," highlighting the critical role of gas as a stabilizing energy source. He also expressed Snam’s commitment to supporting institutions in the energy transition.

Risks and Challenges

• Regulatory changes could impact Snam’s operational flexibility and financial performance.
• Fluctuations in global gas demand and prices may affect revenue streams.
• The transition to sustainable energy sources requires significant investment and innovation.

Snam remains a key infrastructure player in the European energy system, with diversified import routes and strategic initiatives supporting its competitive position. Despite the slight stock decline, the company’s solid financial results and strategic outlook position it well for future growth.

Full transcript - Snam SpA (SRG) Q2 2025:

Speaker 4: Good afternoon, this is the Conference Operator. Welcome and thank you for joining the Snam first half 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 might signal an operator by pressing star and zero on the telephone. At this time I would like to turn the conference over to Francesca Pezzoli, Head of Investor Relations at Snam. Please go ahead, madam.

Francesca Pezzoli, Head of Investor Relations, Snam: Good afternoon ladies and gentlemen and welcome to the presentation of Snam H1 2025 consolidated results which were approved by the Board earlier today. Our presentation will be divided into three parts. First, Agostino Scornajenchi will share his opening remarks offering an overview of recent market developments, regulatory updates and the main industrial and financial milestone achieved during the period. Luca Passa, Snam 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 am pleased to hand over to Agostino.

Agostino Scornajenchi, CEO, Snam: Thank you very much, Francesca. Good afternoon everyone and thank you for joining us today. This is my first call since my appointment as NAMCO 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 TWh of energy, twice the amount carried by the electricity grid and at least at 50% of the unit cost. Approximately 40% of this gas is used in gas fired power generation, producing around 120 terawatt hours 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 deliver more than 110 terawatt hours for industrial and hardware based 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 a 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 TAP pipeline and liquefied natural gas. LNG in particular more than doubled versus 2021, accounting for 30% in H1 2025, supported by new regasification terminals in Piombino and Ravenna, has created the need of a new marine infrastructure requiring a new set of engineering and operational competences.

Moreover, gas plays a critical role as a 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 5 in the Italian gas market. During 1H 2025 between January and June, gas demand in Italy reached 33 billion cubic meters, a 6% increase compared to the same period last year, marking the first rebound in four years. Residential and commercial sector 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 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 this is an European phenomenon. With gas fired electricity production up 17% in Europe, export 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 1.8 billion cubic meters, more than offset by liquefied natural gas imports which rose by 2.4 billion 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 startup 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 2025 we progressed on the strategy delivered. I am 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 Ravenna began operations in May. Short term auctions 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 US for a total volume of about 10 billion cubic meters. At the end of June the storage exceeded 70%, approximately 10% higher than the European average. At the end of July we are about 80% moving to our energy transition platform. The first phase of the CCS project in Ravenna 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. Renovit backlog is broadly stable at EUR 1.4 billion. With regard to the H2 backbone, we have been awarded EUR 24 million contribution by the Connected Europe Facility Energy Program to cover approximately half of the facility studies. Let’s look now at sustainability. 32% of capex aligns with the EU taxonomy and 61% with SDGs in H1 2025, while sustainable finance reached 86% of the total.

We expect 2025 scope 1 and 2 CO2 emission down approximately 20% versus 2022 which is our baseline. As part of our commitment to transparency and biodiversity, we have published our fifth TNFD Task Force on Nature-related Financial Disclosures 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 7. We have delivered a sound performance despite persisting volatility. Adjusted EBITDA of EUR 1,492,000,000 is up by 5.3% year on year driven by growing regulated revenues. Adjusted net income of EUR 750 million rose 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 EUR 1,122,000,000 were broadly in line with H1 2024.

Following the completion of works related to the Ravenna LNG terminal, net debt reached EUR 17.6 billion, mainly reflecting the investment carried out and the dividend payment. The average cost of debt was stable at 2.5%. Standard & Poor’s raised Snam 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 2.5% to the Harmonized Index of Consumer Prices for the European Union countries related to Italy, the so-called IPCA 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 EUR 26.2 billion from EUR 25.8 billion.

On May 22, ARERA published a consultation document that contained 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 2026-2027. It adopts a step-by-step proportionate approach designed to ensure a smooth 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 a CCS market in Italy and attributes to ARERA the role of regulator for the hydrogen and CCS market. Several progress were made on the financing front in an extremely volatile geopolitical context.

We have successfully issued our first US dollar multi-tranche sustainability-linked bond totaling $2 billion and our first EU green bond of EUR 1 billion. 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 ADNOC Gas Pipelines was sold to Lunate for EUR 234 million. In May, we have successfully placed via accelerated book building the sale of a portion of Italgas option rights and partially followed the capital increase, diluting our stake by approximately 2%. In addition, we have recently concluded our exit from ITM Power for an amount of GBP 11.5 million 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 and 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 financials. Please, Luca.

Luca Passa, CFO, Snam: Thank you Agostino and good afternoon everybody. Moving to slide number 9. Out of the total around EUR 1.1 billion 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 compression station, biometan plant connections. As for the energy transition businesses, H2 and CCS, a large part of biometan depending on plant technical standards and energy efficiency excluding cogeneration. SDG alignment is instead 61% of which the majority goes towards SDG 7, 9 and 13 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 2025 EBITDA analysis on slide number 10. EBITDA for the period was EUR 1,492,000,000, plus 5.3% compared to last year or plus EUR 75,000,000.

The growth is mainly attributable to regulatory items for a total of around EUR 70 million. Related to the recognition of the 2024 deflator update for EUR 52 million, the adoption of the Italian IPCA for the RAB evaluation starting in 2025 for around EUR 50 million packages, partially counterbalanced by the WACC decrease for around EUR 50 million. Regulated revenues increased for around EUR 54 million. Stoccaggio Adriatica that entered into perimeter from 3 March 2025 and positively contributed by EUR 18 million, Ravenna FSRU that started operation in May and contributed by EUR 4 million. In detail, the regulated revenue growth was driven by transport and storage revenues increased by around EUR 77 million linked to the investment plan execution, fast money effect for around EUR 11 million, higher allowed OpEx mainly due to inflation.

These effects were partially counterbalanced by the absence of LNG extra revenues recognized in second quarter 2024 for around EUR 40 million. The output based reduction of around EUR 3.70 million versus last year mainly attributed.

Agostino Scornajenchi, CEO, Snam: To the storage reverse flow services.

Luca Passa, CFO, Snam: The expected phase out of input-based incentives. The increase in gas infrastructure operating cost, about EUR 30 million, is mainly attributable to lower costs in large part due to inflation and new hires. With regard to the energy transition business, the EUR 8 million EBITDA contribution is mainly driven by Biomefn, supported by higher volumes as for the full year. Our guidance is EUR 2,850,000,000 EBITDA, which does not reflect the positive impact of the 2024 deflator update, which accounts for around EUR 52 million, nor the switch to Italian IPCA index for RAB evaluation starting in 2025, which is worth approximately EUR 40 million for the full year as described at page 11. During first half 2025, our associates contributed to the group net income by EUR 204 million, or EUR 47 million increase compared to the same period of the previous year.

Out of the total contribution, EUR 131 million came from our foreign associates and the remaining EUR 73 million from the Italian associates. Let’s now dive into the performance of each one. TAP’s 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 2025, TAP is the second largest import route by pipeline, with commercial operation start 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 pipe.

Perega contribution was slightly lower compared to the first half 2024, 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 T2. In H1 2025, we recorded a significant increase of exports from Italy to Austria, underlying the strategic relevance of this route theft. 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 2024 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 2025. 2026 interconnectors 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 2024 with we do not expect to record material deviation on the yearly contribution from the upstream. Interruption occurred in June regarding represented only one month on TAG and contribution. While you can see in the consolidated report 11 the capital gain, Italian associates growth is mainly driven by Italgas 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-$365 million 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 2025 net income analysis on slide number 12. Adjusted net income for the period was EUR 750 million, plus 8.5% compared to first half 2024 due to higher D&A by EUR 51 million following rising investments and enter into perimeter of Stogit, Adriatica from March, and Ravenna FSRU from May. Higher net financial expenses by EUR 22 million 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 EUR 20 million and higher Italian associates for EUR 27 million. Lower taxes reflected higher contribution from associates to EBIT as well as tax credit adjustment related to 2024 income taxes. It is important to note that the EUR 1,350,000,000 net income full year guidance does not include the positive impact of the 2024 deflator update which is worth around EUR 52 million nor the switch to the Italian IPCA index for rapid evaluation starting in 2025 estimated at approximately EUR 40 million for the full year. Turning now to cash flow on slide number 13. Cash flow from operations for the period amounted to around EUR 1,118,000,000 and was the result of EUR 1,039,000,000 of fund from operation and EUR 79,000,000 working capital cash generation.

The change in working capital was mainly driven by regulatory working capital with around EUR 300 million DUT tariff related items mainly driven by additional tariff components, around EUR 330 million absorption due to balancing and settlement activities and default service and about EUR 100 million cash generation mainly driven by Super Bonus fiscal credit decrease. Net investment for the period amount to EUR 1 billion from EUR 575 million including EUR 564 million of cash out related to Stogis Adriatica and around EUR 133 million of ADNOC disposal cash in. Other outflows were related to the payment of dividends for EUR 955 million resulting in a change in net debt of about EUR 1,342,000,000. EBITDA cash conversion reached a very healthy 78% moving to slide number 14. Net debt amount to around EUR 17.6 billion at the end of the first half 2025.

Net cost of debt which is calculated as financial charges net of liquidity incomes. On average, net debt for the period remains stable at 2.5% while fixed floating mix is at 89-11%. Sustainable finance ratio is at 86% 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 1 and 2 by 2040 and net zero for all scope by 2050. Following the publication, Snam successfully placed its first US dollar multi branch sustainability linked bond totaling $2 billion. It represents the first sustainability linked transaction globally with a net zero emission target across scope 1, 2 and 3. Moreover, in June we have published the European Green Bond Fact Sheet in 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 EUR 1 billion, 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 pre-funding activities. Credit ratings were confirmed by Moody’s and Fitch following OLT acquisition announcements, while Standard and Poor’s raised Snam 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.

Agostino Scornajenchi, CEO, Snam: 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 role 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 Snam 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 thank 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 as 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.

Speaker 4: This is the Chorus conference operator. We will now begin the question and answer session. Anyone who wishes to ask a question may please star and one on the touchtone telephone. To remove yourself from the question queue, please press star and two. Please pick up the receiver when asking questions. The first question is from Javier Suarez of Mediobanca. Please go ahead.

Javier Suarez, Analyst, Mediobanca: Hi everyone and thank you for the presentations. Three questions. The first one 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 implications of that energy decree for a company like Snam and the implication for your strategical priorities? That is a question for the CEO. The second question is on your guidance. The numbers, the net income that the company had released, represents 55% of the net income target. The guidance is not considered an important regulatory update. The question is, what is preventing you from increasing the guidance? Is it just for the sake of being conservative or is there something we should be aware of that is preventing you from increasing that guidance at this stage?

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 Scornajenchi, CEO, Snam: Thank you very much, Javier. A pleasure to take your question regarding, in general, let me say, the strategy of Snam and the approach related, what is happening on the legislative framework. I think that we do have an environment in which we have to face as a nation high energy cost 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. This is something that is continuing with the recent events and blackout events that happened not so far from here. There are some concerns about the stability of the electricity systems and the long term perspective about such a sector.

I do appreciate a lot the effort of the government in trying to find long term solutions to these complicated issues that involves the proper structure of the market after 30 years 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. We are very positive on this, but we do not want to play, let me say, a passive role. We want to play a proactive role in supporting institutions and 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 is 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 Snam will remain a key pillar of the European energy system and the current of the security of supply, especially when the geopolitic 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 and maximize their value creation for Snam and its stakeholders.

Regarding your second question on the potential update of the guidance, you’re right, we are talking about very positive results and based on the results at the end of June we are more than comfortable to deliver the full guidance, even to exceed such guidance. You have also to consider that the EUR 1.35 billion of adjusted net income guidance does not reflect the positive impact from the deflator update, which accounts per se for around EUR 52 million. For sure there is good possibility that we will exceed such guidance. You have to consider that I’ve just taken the role at Snam and I’m now currently conducting a thorough review of all potential upsides and risks, if not highlighted anything relevant. 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 EUR 90 million, the deflator update at least will be finally delivered. We will come back on this in November when we comment our nine month results. Relating to CCS, from a technical standpoint, let me say that we are continuing to advance in the Ravenna CCS project with a very good partnership with Eni. We consider that CCS will be a relevant part of our industrial future and this is something that needs 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 the 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 needs to be emitted.

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? CCS is a technology tool that we want to explore at the best of our possibility. This is what we will do in the coming future. The Ravenna exercise is an excellent example of what Italian technology can do in partnership with the relevant players. Aside from 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.

Luca Passa, CFO, Snam: Thank you.

Speaker 4: 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 and 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. 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 Scornajenchi, CEO, Snam: I think that you are talking about the consultation document issued by Herrera at the end of May that contains adjustment to the implementation criteria for the ROS-based regulation. It includes also some element in order to anticipate some hypotheses about the impact of some output-based incentives. That is for sure an interesting tool. We will explore it. We will do our best to take benefit from this evolution of the regulation. Let me tell you that we will follow a proportionate approach. We want 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 very much.

Speaker 4: The next question is from Bartlomiej Kubicki of Bernstein. Please go ahead.

Bartlomiej Kubicki, Analyst, Bernstein: Thank you very much and good. Good afternoon. Agostino, all the best as well. Two questions, one big picture and one company specific. The big picture is related to the EU US deal announced over the weekend, where EU is going to buy.

Agostino Scornajenchi, CEO, Snam: A.

Bartlomiej Kubicki, Analyst, Bernstein: Much bigger amount of energy from the U.S. I just wonder, how do you look at this from gas infrastructure perspective? I guess it also means importing much more gas to the EU market. What’s your view whether it’s actually feasible and whether there’s enough transport energy capacity in Europe and in Italy to take more U.S. gas? That would be the first one. 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 but I think it was even hitting around 25% years ago. Now you have 11%. You have kind of fixated a higher amount of your debt. Is it like this to be going forward?

I mean, you want to have much more fixed debt in the funding structure or is this only temporary and future energy you will be financing with short term floating debt as well? Thank you.

Agostino Scornajenchi, 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 Snam CEO. Regarding the evolution on import side on LNG and the recent news.

Luca Passa, CFO, Snam: On.

Agostino Scornajenchi, CEO, Snam: The agreement between the EU and the United States. Let’s start from some historical figures. In 2024, energy imports were valued at EUR 350-370 billion, of which around EUR 70-75 billion, more or less 20%, came from the United States. Under the new trade agreement between the U.S. and the European Union, it seems that Europe committed to import EUR 750 billion worth of energy, including a lot of things, oil, gas, nuclear, raw materials. Over three years, it means EUR 250 billion per year. That is more or less a three times increase in the annual energy import from the U.S. Let’s look now, and nothing to comment on this, it’s not up to me. Let’s look at Italy specifically, looking at our gas demand. For full year 2024, the total gas consumption was 62 billion cubic meters, of which 15 came from LNG. We are talking about 25%.

Of this 15 billion cubic meters, 5 came from the U.S. If we move to 2025, we do expect the total gas demand will move from 62 to 64, with 20 bcm, 20 billion cubic meters, or 30% expected from liquefied natural gas. If we look at the figures at the end of June, we are more or less on the U.S. gas where we were at the end of 2024. We do expect that if this trend continues, we will expect to more or less double the volumes from the U.S. in 2025. If you look at the regasification capacity of the Ravenna terminal that has been added to the other station in unit, the total regasification capacity for the country reached 28 billion cubic meters. That is more or less 50% of the capacity that could be used to accommodate potential LNG imports from the U.S.

Regarding your question on debt structure, I’ll give the floor to Luca, please. Luca. Hi Martek.

Luca Passa, CFO, Snam: 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 is 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 4.7 years. Overall, we expect to finish the year shortening the duration between 4.2-4.3 years 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.

Agostino Scornajenchi, CEO, Snam: Thank you very much.

Speaker 4: The next question is from Alberto De Antonio of BNP Paribas Exane. Please go ahead.

Alberto De Antonio, Analyst, BNP Paribas Exane: Hi, your new role. A couple of questions from my side and the first one may be a follow up on guidance regarding the net income of EUR 1.35 billion. You mentioned the testing account, the deflator which is 52, so EUR 52 million and then the IPCA adjustment. Could you remind me the number is 40, so 4-0, or 14-14? It will be the first one. The second one is regarding the Italgas stake that you like. You have not fully subscribed 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? Would you have to reach an agreement with CDP, your major shareholder? Do you have any other contractual legal requirement that prevents for doing so?

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.

Luca Passa, CFO, Snam: Much. Okay, Alberto, regarding the guidance. The two positive effects which are not currently in the guidance are EUR 52 million. Regarding the adjustment of the deflator of the inflation index for 2024, which is EUR 52 million, EUR 52 million and EUR 44.0 million. The move to IPCA for 2025, so EUR 92 million in total pre tax. That is basically what is not currently included in the formal guidance. Regarding the Italgas stake, you might recall that we have one shareholder pact with CDP, which is our shareholder and also Italgas shareholder, that provides for us not to go below 6.4% in Italgas. On top of that, we have issued an exchangeable back in 2023 that is basically covering what is left between 6.5% and 11.4%, which is our current stake.

Therefore, we do not expect to do anything on Italgas, given the contractual framework that is actually in place on both the exchangeable as well as the shareholder pact. Regarding the third question, mark to market on WACC, we currently are still above the triggering mechanism. The WACC is currently 15 basis points away on the transport, which is, I would say, the most relevant one, and about five to six basis points away when it comes to regasification. There are only two months left. Our expectation is clearly for the trigger not to be triggered.

Speaker 4: For any further questions, please press star and one on your telephone. The next question is a follow-up of Alberto De Antonio from BNP Paribas Exane. Please go ahead.

Alberto De Antonio, Analyst, BNP Paribas Exane: 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 EUR 3.6 billion of debt maturing during 2026. What is the expected impact on your cost of debt and where do you see the average cost of debt by year end 2026? Also, maybe if you could explain to us the rationale behind issuing some debt in US dollars? Do you think that this is an interesting way of financing your payers given that actually all of your operations are in euros? Thank you so much.

Luca Passa, CFO, Snam: Thank you, Alberto. I’m answering first the second part of your question. The reason why we have tapped the US 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 EUR 2.5 billion and EUR 3.5 billion of funding every year to be done. Clearly, the Euromarket is, I would say, very available to us, but we want to have alternatives. Diversification of funding. Now, we do not take any currency risk when we issue dollars; we swapped all our issuance directly into euro. There is no currency risk attached. The rationale is just to diversify market access. When it comes to 2026, we have not given 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 remain where they are, we might have some increase, but we are very far away from the 3% which is at the end of our plan in terms of estimate.

Agostino Scornajenchi, CEO, Snam: Yes, if I may add something, Luca, if you do not mind, I will insist on what I told you previously. We consider our financial solidity, stability, and confirmation of our rating important elements of the strategy of the company. We will do our best to keep it, to keep the debt under very strict control, to pay as little as possible for future bonds, and also consider, as 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. Also leveraging on these to make our capital structure more and more efficient in the future.

Speaker 4: For any further question please press star and one on your telephone. Francesca Pezzoli. There are no more questions registered.

Francesca Pezzoli, Head of Investor Relations, Snam: This time 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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