IR & ESG
SUPPLIERS
August 2019
The new Plan that will lead Italgas to 2025 foresees a key role for the Company both in the scope of its market and in the evolving European scenario. Italgas aims to be a pioneer in the current transformation, with all the efforts and benefits coming with this choice.
The Company intends to exploit the tools and opportunities offered by new technologies and digitization, to act in an agile, efficient and focused way. Italgas has a clear capital-allocation plan, with visible returns. It can count on strong cash flow generation and solid financial discipline to sustain growth over time.
The ultimate objective of the entire Plan is sustainable value creation. To shareholders, this means attractive remuneration through dividend and the chance of seeing that value creation incorporated into the stock price.
These are the key features of the 2019-2025 Strategic Plan presented on 12 June 2019. We talk about it with the CEO, who explains us how the Company translates this vision into concrete strategies.
A true leader reads the transformation and acts on the front line
Our planning exercise for the 2019-2025 period fits into in a macro scenario of the gas industry marked by two key transformation drivers – policies to protect the environment and innovation.
The new Strategic Plan is based on the belief that in this context – seizing the opportunities offered by technological innovation – Italgas will be able to play a leading role in the decarbonization process, contributing to the full development of businesses like energy efficiency, sustainable mobility and green gas.
Italgas is starting this journey from a valuable position, being a leader in gas distribution in Europe and, more specifically, being the leading operator in a country in which gas has a strategic weight. In Italy, the Company also has the chance to contribute to the system efficiency, playing an important role in the concentration process under way, through participation to tenders for gas concessions.
Lastly, our Plan assumes that the regulatory context will keep stimulating investments from operators and efficiency in managing operations, considering that in the last 20 years the Authority has shown consistency and transparency in the setting of game rules.
A broader investment plan, which is also aimed to optimal resource allocation
Compared to the previous Plan, we have forecast a higher commitment in terms of 7-years cumulative investments, of about 500 million euro. We will invest 4.5 billion euro, compared to the 4-billion investments previously planned. Furthermore, Italgas will invest 1.9 billion euro in tenders. These investments represent our growth engine, which will lead us to achieve a RAB over 10 billion in 2025.
Organic investments focus on continuous network development, upgrading and maintenance, for approximately 2 billion euro, and the development of Sardinia’s methanization, for roughly 0.5 billion euro. Moreover, with an amount close to one billion, organic investments focus on the replacement of traditional meters with the digital devices, and on the network and processes digitization – an effort through which we intend to transform Italgas assets, processes and personnel.
The use of big data is of great help also in capital allocation. For example, today on the network we do not simply intervene to replace old or fully amortized pipes, but we give priority to investments that can guarantee a real improvement in security and service quality.
Alongside this effort
Since we migrated all the apps on the Cloud and the Digital Factory became operational, we realized the significant advantages of managing the network in an efficient way, leveraging on the new decisional systems, the opportunities of predictive maintenance and a more fluid communication of data and information.
A plan focused on value creation, with the premises to offer atractive returns to shareholders
The extension of our business perimeter, pursued both through M&A and through the consolidation of our subsidiary Toscana Energia, will also contribute to sustain the growth forecasted in the new Plan. Operating efficiency, strengthened by the opportunities provided by innovation and digitization, together with a solid financial profile, will allow us to translate the growth into value creation for shareholders. We can therefore state that the entire Plan is set to offer attractive returns to shareholders.
We confirm the dividend distribution policy presented in the last Plan. A policy that has already yielded results, as shown by the 12.5% increase in the 2018 DPS, compared to 2017. The Plan’s architecture has been designed to allow Italgas to have the resources, in terms of free cash flow, to finance a profitable and sustainable growth. Our shareholders will therefore benefit from attractive returns not only in terms of dividend yield, but even as a result of the increase in the Company value that the market will reflect in the stock performance.