Italian gas company Snam sticks to dividend policy amid limited crisis impact

MILAN (Reuters) - Italian gas company Snam stuck to its dividend policy after saying it did not expect any major impact from the coronavirus pandemic on its business outlook.

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

On Thursday it said that while it was unable to reliably calculate the impact of COVID-19 on business going forward, it expected a limited impact on its economic targets and investment programme.

“There will be no change to our overall dividend policy,” Chief Executive Marco Alvera said in a conference call, adding the government had brought no pressure on the group to cut or preserve its payout.

Snam is controlled by state lender Cassa Depositi e Prestiti. There have been calls in parts of Europe for state-controlled companies to rethink their dividend policies to preserve cash.

Presenting first-quarter results, Alvera also confirmed the group’s investment plan to 2023, saying he expected construction sites to be at full capacity by June, from 45% at present.

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

The group, which runs almost 42,000 kilometres (26,000 miles)of grid, also owns gas storage operations, liquefied natural gas terminals and pipeline assets abroad.

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.

Asked about acquisitions, Alvera said low commodity prices would probably make assets available on the market.

“We’ll look at some of those,” he said, adding the group was interested in “prudent stakes” of some 200 million to 300 million euros alongside creditworthy partners.

Last month sources told Reuters Snam was part of a consortium in talks with banks for an $8 billion loan to back an investment in ADNOC natural gas pipeline assets.

Snam also has assets in France, Austria, Greece, Albania and the United Kingdom.

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.

Alvera said natural gas demand in Italy fell 9% in the first four months of the year, adding he expected full-year demand to be at 67 billion cubic metres from 74 bcm last year.

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.

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 Mark Potter and Lisa Shumaker