May 7, 2020 / 9:33 AM / 20 days ago

Italy's Snam sees limited impact from coronavirus on targets

MILAN (Reuters) - Italian gas company Snam (SRG.MI) can’t reliably calculate the effects of the coronavirus pandemic on its business outlook but doesn’t see any major impact, it said on Thursday.

“The company expects a limited impact on its economic targets and to the investment programme, proportional to the speed of recovery of operations,” it said in a statement on first quarter results.

Europe’s biggest gas pipeline company has put in place emergency measures to ensure it can keep gas flowing during the virus outbreak.

In its quarterly results statement, it said effects on development plans and on suppliers or customers due to global business slowdown could not yet be assessed.

Snam, which makes most of its revenue from its regulated gas transport business in Italy, has pledged to spend 6.5 billion euros in the four years to 2023, most of it on its transmission grid.

The state-controlled group also has assets in France, Austria, Greece, Albania and the United Kingdom.

“Despite the context, we confirm our investment plan for 2019-2023 in support of the recovery of the territories on which we operate,” CEO Marco Alvera said.

The coronavirus outbreak in Italy has been one of the deadliest worldwide and is set to plunge the already fragile economy into its worst recession in 75 years.

Snam said natural gas demand in Italy fell 6.7% in the first quarter to 23.94 billion cubic metres, adding a fall was also forecast for the second quarter.

“Based on the current regulatory framework, the maximum impact on Snam is estimated at a reduction in revenue of around 9 million euros,” the company said, adding the impact on new business was expected to be limited.

The group, which runs almost 42,000 kilometres of grid, also owns gas storage operations, liquefied natural gas (LNG) terminals and pipeline assets abroad, including a 20% stake in the giant TAP pipeline that will bring Azeri gas to Europe.

It is planning to spend more money on new green business lines as it moves to position itself for the industry-wide transition to cleaner energy sources.

In the first three months of the year, core earnings rose 4.6% on the year to 567 million euros, with net profits up 5.3% at 298 million euros.

Reporting by Stephen Jewkes; Editing by Emelia Sithole-Matarise and Mark Potter

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