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December 2020

03. EBITDA grows by 8.3% in a very challenging context
Data di pubblicazione:

Despite both the pandemic and the new regulation made an impact, Italgas achieved an increase of 8.3% at EBITDA level and of 6.0% at EBIT level compared to the first nine months of 2019.

The execution of the investment plan continues, for a cumulative amount of 556.6 million euro (+12.4%) over the nine-month period, with a clear focus on grid works: a total of 702 km of new pipes have been laid down, of which 283 in Sardinia.

In the first nine months of 2020 Italgas operated in a particularly challenging context. Besides the effects related to the Covid-19 pandemic, also ARERA Resolution no. 570/2019/R/gas relating to the tariff regulation of gas distribution and metering services for the 2020-2025 period negatively impacted operating results.

Nevertheless, Italgas achieved an 8.3% increase in EBITDA compared to the same period of the last year, by leveraging, on the one hand, an expansion of revenues and, on the other, an effective control of the evolution of costs. The increase of 6.7% in Revenues, which reached 978.0 mn€, substantially benefited from the expansion of the perimeter and the full consolidation of Toscana Energia. The acceleration in the achievement of new efficiencies also allowed for a 6% reduction in operating costs on a like-for-like basis and limited the growth in total operating costs in the new Group scope to the extent of 2.4%.

EBIT, which amounts to 399.7 mn€, grows in comparison with the first nine months of 2019, although at a lower rate than that of EBITDA (+6%, vs. +8.3% for EBITDA). The difference in the growth rate is mainly due to higher depreciation and amortization, arising from higher operating investments and the contribution of Toscana Energia.

Group’s Net Profit amounted to 246.5 mn€, posting a limited decrease of 6.1%, as a result of the effective strategic and operational choices that succeeded in containing the negative impact of the scenario. The performance of Net Profit reflects, in addition to the EBIT progress of 22.8 mn€:

  • The increase of 3 mn€ in Net Financial Expenses due to the increase in average debt, although offset by a lower cost of debt,.
  • The reduction of approximately 16 mn€ in Net Income from Equity Investments, due to the full consolidation of Toscana Energia, effective from October 2019.
  • An increase of 5.9 mn€ in taxes.
  • An increase of 14 mn€ in minority interests, again due to the full consolidation of Toscana Energia.

Investments do not stop and focus on network

Italgas gave a strong boost to the execution of the investment plan, as proves the 12.4% capex increase in the first nine months of 2020. Cash Flow from Operations in the first nine months showed a decrease, due to the choice of letting working capital temporarily increase to sustain the supply chain; nonetheless, Italgas financial profile continues to be solid.

In the first nine months of 2020 Italgas investments were 556.6 mn€, an increase of 12.4% compared to the first nine months of 2019, despite the difficulties caused by the current pandemic.

Investments in distribution, approximately 75% of total investments, were mainly dedicated to maintenance, extension and digitalization of the network, with about 702 km of new pipelines laid down (639 km in the same period of 2019), of which 283 km in Sardinia. Therefore, at the end of September 2020, more than 755 km of network were already in place on the island, out of a total planned of 1,100 km.

Through the metering investments made, Italgas reached 7.3 million smart meters installed at the end of September 2020. Despite the persisting difficulties in accessing private dwellings due to the pandemic, Italgas expects to complete the plan for the full replacement of the meter fleet in early 2021.

Cash Flow from Operations in the first nine months of 2020 amounted to 424.4 mn€, a 19.7% drop compared to the same period of 2019, which reflects an increase of 107 mn€ in working capital, resulting from Italgas’ decision to support its supply chain in this sensitive economic phase. Considering the flow deriving from net investments of 562.6 mn€ and M&A deals for 10.7 mn€, net cash flow for the nine-month period is a negative 148.9 mn€. After the payment of 2019 dividends accounting for 206.0 mn€ and excluding the effect of IFRS 16 on leasing liabilities, down by 4.7 mn€, Net Financial Debt posts an increase of € 360.3 million, reaching € 4,770.9 million as at 30 September 2020.

Italgas’ debt structure remains solid and efficient, with 86.5% of fixed rate debt and no need for debt refinancing before 2022. Italgas can also count on bank deposits of 541.8 mn€ and undrawn committed credit lines of 500 mn€ expiring in October 2021. The cost of debt, around 1%, is one of the lowest in the industry.