Bloomberg News

Snam Lowers Its Growth Forecast for Natural-Gas Grid Assets

March 13, 2012

Frameworks of empty gas storage tanks stand at an Italgas SpA depot, a subsidiary of Snam Rete Gas SpA, in Rome. Eni SpA, Italy’s biggest energy producer and Snam’s largest shareholder, plans to divest its 50 percent, 5.9 billion-euro stake this year. Photographer: Alessia Pierdomenico/Bloomberg

Frameworks of empty gas storage tanks stand at an Italgas SpA depot, a subsidiary of Snam Rete Gas SpA, in Rome. Eni SpA, Italy’s biggest energy producer and Snam’s largest shareholder, plans to divest its 50 percent, 5.9 billion-euro stake this year. Photographer: Alessia Pierdomenico/Bloomberg

Snam SpA (SRG), Italy’s natural-gas pipeline operator, cut its growth forecast for regulated assets.

The value of Snam’s Regulated Asset Base, or RAB, will probably rise by an average 4 percent a year through 2015, it said today in a statement. That’s down from an average annual gain of 4.3 percent projected in its 2011-2014 plan last year.

The company, which operates Italy’s high-pressure gas network and is paid in part through a regulated return on investments, plans to spend 6.7 billion euros ($8.8 billion) from 2012 to 2015, with 1.4 billion euros for this year. That compares with the 6.4 billion euros forecast in the prior plan.

It expects to spend about 5 billion euros beyond 2015 for “key projects today under feasibility,” according to a slide presentation. “As these projects come on stream, we can leverage a significant amount of investment delivering sustained profitable growth in the long term,” Chief Executive Officer Carlo Malacarne said today on a conference call with analysts.

Snam forecast annual expansion in consolidated earnings before interest and taxes from 2012 through 2015 of at least 4 percent on a “high correlation” between Ebit growth and RAB, Chief Financial Officer Antonio Paccioretti said on the call. He confirmed the company’s forecast of 4 percent growth this year.

The pipe operator confirmed its preliminary 2011 results released Feb. 14, with net income falling 29 percent from a year earlier to 790 million euros. The San Donato Milanese-based company had been “heavily penalized” by a government decision to increase a windfall-profit tax, it said at the time.

It has begun a process aimed at “gaining direct access” to capital markets by the year-end to refinance debt after rules were relaxed. Eni SpA (ENI), Italy’s biggest energy producer and Snam shareholder, plans to sell its 5.9 billion-euro 50 percent stake this year. The government, which ordered the sale in January, must decree the spinoff by May 31, Ansa reported Feb. 24.

Snam rose 0.9 percent to 3.724 euros by 4:43 p.m. in Milan.

To contact the reporter on this story: Nadine Skoczylas in Rome at nelsibai@bloomberg.net

To contact the editor responsible for this story: James Ludden at jludden@bloomberg.net


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