23 quarters of continuous growth
Third-quarter 2022 results again prove the effectiveness of Italgas strategic choices, which allow the Group to face complex scenarios, as those determined by the pandemic and geopolitical tensions, while staying on track with the growth indicated in the Strategic Plan.
In the first nine months of 2022, the main financial indicators are on the rise, with Revenues driven by the growth of RAB and of the energy efficiency business, despite the negative impact of the Regulator’s reviews, while EBITDA growth is close to 5%, also leveraging on continuous operating cost efficiencies that have more than offset the inflation impacts.
The published results include the first month of consolidation of the Greek operator, DEPA Infrastructure, whose acquisition was closed on the last 1st September.
Italgas Group’s financial profile remains solid, despite a slight increase in Net Financial Debt, while sustainability performance shows significant improvement, proving the concrete impact of Italgas commitment in the process of decarbonizing the economy and making the energy system more efficient.
Given the performance as at 30 September 2022, Italgas can confirm the FY22 guidance indicated in June for the Italian perimeter of the Group.
In the first nine months of 2022, Italgas posted an 8.1% increase in Total Revenues, which amounted to 1,087.0 €mln. The 81.3 €mln improvement largely comes from other Revenues (+76.8 €mln), driven by the energy efficiency business, while the remaining 4.5 €mln increase derives from regulated Revenues.
The Regulated Revenues component benefited from the increase in RAB (+32 €mln) and the contribution provided by the first month of consolidation of DEPA Infrastructure Group (+12.6 €mln), in addictioin to the new operating networks in Sardinia (+9.3 €mln): these factors were partially offset by the negative impact of the new regulatory framework in force from 1 January 2022, of which -40.8 €mln due to the WACC revision and -6.3 €mln due to the change in the X-factor.
At EBITDA level, Italgas achieved a 4.9% increase compared to the same period of the previous year. EBITDA grew at a lower rate than Revenues, reflecting a 44.9 €mln increase in operating costs, mainly due to higher costs related to the ESCo business (+57.9 €mln) and the consolidation of DEPA Infrastructure (+4.5 €mln). Nevertheless, on a like-for-like basis, compared to 30 September 2021 Italgas achieved operating efficiencies that resulted in a 16.3 €mln reduction in costs (-6.3% vs. first nine months of 2021).
EBIT amounts to 454.9 €mln, a 5.6% growth compared to the same period of 2021, against a 3.8% increase in depreciation and amortization, attributable to the new investments made and the change in the scope of consolidation following the entry of DEPA Infrastructure.
Group’s adjusted Net Profit amounted to 288.6 €mln, up 5.5% compared to the first nine months of 2021: an increase broadly in line with the growth at the EBIT level, despite the rise in net financial expenses (-1.5 €mln) that reflect higher average debt and the rise in taxes (-6.1 €mln) that reflect the broader taxable base against a tax rate of 26.9%.
The updated picture of operational metrics shows that, with the contribution of DEPA Infrastructure, the Italgas network for gas distribution now exceeds 82 thousand kilometres.
Investment program continues, with a special focus on digitization
Italgas can maintain a solid financial structure while funding significant technical investments and continuing M&A activity.
In the first nine months of 2022, Italgas completed technical investments amounting to 546.7 €mln: less than the investments made in the first nine months of 2021, which represented a record high of 612.6 €mln, and in line with guidance.
Almost 60% of the total investments were dedicated to the development, maintenance and repurposing of the distribution infrastructure, through works on networks aimed at enabling them to accommodate renewable gases: biomethane at first and, later, hydrogen and synthetic methane. In the period from January to September 2022, Italgas also laid 272 km of new pipes. Thanks to those investments, in 2023 Italgas will be able to count on a 90% digitized network, thus manageable in a flexible and efficient manner, also in terms of maintenance.
The decrease in investments in new networks reflects the fact that in areas under concession in Sardinia the methanization process is now almost complete: the network has reached an extension of 909 km out of a planned total of about 1,110 km.
For the first time, the Italgas Group’s reporting also includes investments dedicated to Greece, following the acquisition of DEPA Infrastructure, which can count on a total of 610 thousand meters, of which 36 thousand are digital.
Investments in digitalisation, amounting to 155.8 €mln, kept increasing compared to the first nine months of 2021, due to the intense effort to instal devices that enable the acquisition of data for the remote control and monitoring of both network and plants. Within this type of investments, there are also metering investments, which instead show a reduction due to the approaching completion of the plan for the replacement of traditional meters. In the first nine months of the year, 278,000 new smart meters were installed, of which 72,000 related to the replacement of traditional meters, excluding the subsidiaries. In total, there are 7.9 million smart meters installed as of 30 September 2022: a figure that represents 92.4% of the total fleet of meters and is substantially equivalent to 100% of active meters.
The significant Capex of the first nine months of 2022 completely absorbed the Cash Flow from Operating activities, equal to 455.3 €mln: a level indicating a 14.7% decrease compared to the one of the same period of 2021, mainly due to the expansion of working capital (148.7 €mln).
Free Cash Flow before M&A is therefore negative for 100 €mln. After the financial investments net of divestments (766.7 €mln) and the distribution of dividends for fiscal year 2021 (249.7 €mln), Net Financial Debt increased by 1,116.4 €mln to 6,096.4 €mln, including IFRS-16 effects.
Italgas Group maintains a solid and efficient debt structure, with 89% of debt at fixed rate and limited refinancing need until 2024. At the end of September 2022, Italgas can also count on a liquidity of over 350 €mln, while boasting a cost of debt below 1%, one of the lowest in the industry.
In terms of sustainability, as of 30 September 2022 Italgas released some KPIs, which demonstrate the actual execution of the commitment undertaken by Italgas as a leading player in the ecological transition and the achievement of better energy efficiency in the gas system.
Those results confirm that the Group is on track to meet its 2028 targets, which the Strategic Plan presented on 15 June has set at even more ambitious levels than those of the previous Plan.
-18.4% Scope I and II Emissions (100.0 103tCO2eq)
-14.8% Net Energy Consumption (372.7 TJ)
+17.8% Km of network inspected (66,167)
-16% Fugitive emissions of total gas distributed: (0.085%)
-31.0% Fugitive emissions per km inspected: (72.5 Smc/km)
-10.8% fleet consumption for -9.4% km travelled