Milan, 29 April 2020 - The Italgas Board of Directors, which met today, chaired by Alberto Dell’Acqua, has approved the consolidated results as at 31 March 2020 (unaudited).
Consolidated economic and financial highlights:
- Total revenues: 327.1 million euros (+5.2%)
- Gross operating margin (EBITDA): 227.3 million euros (+3.7%)
- Net profit: 74.9 million euros (-13.2%)
- Technical investments: 206.0 million euros (+35.2%)
- Cash flow from operating activities: 174.2 million euros
- Net financial debt: 4,450.5 million euros
Operating highlights including affiliates:
- Municipalities in gas distribution concessions: 1,839
- Number of active meters: 7.7 million
- Gas distribution network: around 72,000 Km
Performances in the first quarter of 2020 - despite the significant impacts of Resolution no. 570/2019/R/gas - demonstrate the ability of our company to keep sound economic - financial results thanks to the actions taken in the last three years.
The 206.0 million euros invested over the period (up +35.2% compared to the first quarter of 2019) were devoted to digital transformation, development and modernisation of the networks. Such an effort is confirmed by the related physical data: around 310 km of new pipelines laid versus around 170 km in 2019. Construction of the distribution networks continued in Sardinia, with the laying down of around 165 km of new networks, for a total of more than 630 km on a total of about 1.100 km to build.
Also considering affiliates, the replacement of traditional meters continued, with 0.28 million smart meters installed, bringing the total number of smart meters installed as at the end of the first quarter of 2020 to around 7 million.
The smart meter installation plan, which is expected to be concluded in 2020, is part of the wider project for the digital transformation of the entire network managed. To date, this project has already upgraded the technology of over 400 distribution networks.
The financing requirements related to net investments for the first quarter of 2020 were partially covered by the positive cash flow from operating activities, equal to 174.2 million euros, with a negative Free Cash Flow - before M&A activities - of 33.6 million euros.
The net financial position as at 31 March 2020 was 4,450.5 million euros (4,410.6 million euros at 31 December 2019), net of financial liabilities pursuant to IFRS 16 of 76.3 million euros (74.7 million euros at 31 December 2019).
The EBITDA of the first quarter of 2020 amounted to 227.3 million euros (up 3.7% compared to 31 March 2019) and net profit was 74.9 million euros (down 13.2% compared to the same period of the previous year).
The so-called “Coronavirus Emergency” unfolded in Italy in February in relation to the spread of infection across the whole of Italy and the necessary emergency measures taken by the Health and Government Authorities to contain the spread.
The Company set up a Crisis Committee in the hours immediately following the onset of the first cases. In the light of the measures and indications of the competent authorities, this committee continually monitors the developments of the crisis and takes appropriate measures while ensuring the continuity and efficiency of essential and necessary services, focusing in particular on emergency intervention services.
To protect the health and safety of its people, the Company has adopted a series of initiatives aimed at limiting the mobility of personnel and contractors to the company’s premises, heavily adopting smart working and suspending travel of personnel around the country. In compliance with the emergency measures issued by the Authorities, only work considered to be essential is covered, and all worksite activities have been suspended. Technical staff assigned the task of carrying out work off the company premises, where provided for under current provisions, have been equipped with the necessary personal protection equipment required in order to ensure their safety.
With reference to the impacts, including potential ones, on revenues, costs, investments and cash flows expected as a result of the limitations imposed by the Coronavirus Emergency, the Company has not found any evidence to date to suggest significant negative effects on the 2020 results.
The company is currently unable to estimate the potential material negative effects on the economic, financial and equity outlook of the years to follow, should the situation last significantly longer.
Paolo Gallo, CEO of Italgas, commented:
The global emergency Covid-19 that has hit us in recent weeks has seen all the people of Italgas react with great determination to ensure the country’s continuity of service. Thanks to the digital transformation already achieved, we have been able to use all those innovative technologies such as “gas leakage detection”, “shareview”, “work on site”, to manage our network remotely, enhancing controls on the territory. And thanks to the cloud and the availability of digital tools to all the staff, remote work has met no problems. All the digital technologies developed by us will allow us to resume our daily activities in absolute safety in Phase 2, giving priority to remote management.
I am particularly proud of the response we have given as individuals and as a Company to the emergency collecting and devolving significant economic resources in support of hospitals and Civil Protection: in a particularly difficult time for the country everyone has to do their part.
The investments, in the first quarter of the 2020, have exceeded 200 million euros, with an increase of 35.2% compared to last year. A commitment that today translates into a further impulse and stimulus in view of “Phase 2" for the revival of Italy.
Until the lockdown, our plans have allowed us to lay over 300 kilometers of new networks, of which 165 “digital native” in Sardinia. We have now built more than 600 kilometres of new networks on this island and we are ready to feed with natural gas the first networks at the service of some municipalities, with a significant economic benefit to the economy and the local population.
Despite a tariff regulation in force from 1 January, particularly disadvantageous, Italgas has shown to be able to achieve solid results thanks to all the initiatives launched in recent years: the operating profit, of 122.9 million euros, is consistent with the figure achieved in the same period of last year, net profit amounted to around 75 million, with a drop compared to the corresponding period of the previous year.
We are even more determined to leverage the digital transformation of our networks, business processes, so that our people with the most innovative tools can face the challenges that lie ahead in the coming months.
 This press release uses alternative performance indicators, including EBITDA (gross operating margin, calculated by subtracting operating costs from earnings), EBIT (operating income before taxes, calculated by subtracting operating costs, depreciation and amortisation and write-downs from earnings) and Net financial debt (calculated as the sum of short- and long-term financial debt, net of cash and cash equivalents and financial liabilities for leases pursuant to IFRS 16). The NON-GAAP financial statement must be considered complementary and does not replace the information prepared in accordance with the IAS-IFRS.
 Net Profit means net profit attributable to the Italgas Group net of the portion pertaining to third parties.
The net financial debt as of 31 March 2020 does not consider financial liabilities for leases pursuant to IFRS 16 for 76.3 (74.7 million euros as at 31 December 2019).
 Excluding affiliates, as at 31 March 2020, Italgas has installed 0.27 million new meters, of which 0.22 million to replace traditional ones, bringing the current total of smart meters to 6.96 million, corresponding to 82% of the entire stock.