Italgas S.p.A. (IG) Earnings Call Transcript & Summary

So good morning, everyone. Ladies and gentlemen, I'm delighted to welcome you at today's event. This ceremony marks a very significant moment, a new chapter in the energy sector, both in Greece and in Italy. I'm welcoming all of you, all our guests that are present with us today physically. And of course, all of you watching along via online streaming. We are thrilled to have each one of you today with us because this rebranding event signifies a historical moment, a moment of Unity between Greece and Italy, 2 nations with a long history of collaboration that now join forces to address the energy challenges of the future. So as I speak, soon, I guess, we're going to watch the live connection, here it is. Let me step back, with safety always -- so we're going to watch the live connection with the ground floor where the ribbon cutting ceremony takes place, just in front of the building. So let's all, honored guests in this room and everyone following online, watch now the ceremony, which is the official inauguration of the New Athens offices of the group. So after the ribbon cutting very soon, I'm seeing them already, they will join us to discuss the innovations that will characterize the future of our country's energy field. So this event marks the beginning of a journey that promises significantly to shape the future energy landscape and also a new shared vision for the future of energy that embraces innovation, sustainability and cooperation between the 2 countries. As of the name of the event, Stronger Together, you can see it around, I think it is truly meaningful. It sends the message that through cooperation and sharing of best practices together, we can overcome global energy challenges. So congratulations to everyone for the new beginning for which soon we will know more. And first, I would like to give the floor to Mrs. Barbara Morgante, the CEO of DEPA Infrastructure.

Good morning, everyone, and thanks to all of you to be here to this important event for our group, indeed, both in Italy and in Greece. I'm honored to have important guests. I would like to thank the Minister Skylakakis and Minister Skrekas to be here with us for this important moment. I would like to thank to all the other guests and also to all the colleagues which are connected via streaming in order to follow this important celebration. We have a lot of -- also the Italian colleagues are connected. I don't know how many connected people are, but according to the first numbers, they are hundreds. Having said that, I would like also to say that we are -- we decided to have this important event in our offices, head offices here in Athens. Our new offices that we decided to have in the standard of the Italgas Group, also for the Greek territory. We will do the same in the other offices around Greece in the next months and years because there are many. These new offices are with the concept to -- first of all, in Athens, to aggregate all the people that were working for the different DSOs and also for DEPA [indiscernible] in the same offices, to work together, to know each other because sometimes they didn't know each other and also to collaborate more strictly. This is the philosophy of Italgas. The philosophy is to tend to excellence, thanks to the competencies -- to the sharing of competencies of the experiences to be put altogether in order to increase every single day, our capability to do something for the best of the company, the country and the citizens, our customers. Personally, I've been in Greece many times in the past, as a tourist. I have some Greek friends from the university period in Italy because there are many Greeks studying in Italy. But now it's a different experience, more intense. This is my second home land, and it was really, really this 1.5 years from the story started in September 2022, which has been really an intense experience, but also a very fruitful one for me, and I expect also for all the other colleagues. So thank you very much. As Aristotle said, excellence is not an act, it's an habit. This is the way we want to proceed and to develop our business in this country. Thank you very much.

Thank you, Mrs. Morgante. And let me now introduce you and call on stage, Mr. Paolo Gallo, the CEO and General Manager of Italgas Group. The floor is yours.

Good morning, and welcome, everyone. It's really a true pleasure and honor to be here. We started this journey 18 months ago. And I think we have, in this 18 months, made significant step forward. Let me express the gratitude to the authorities who have accepted our invitation. I would like to thank the Minister Skylakakis and Minister Skrekas at the time, we spend a lot of time together for the closing of the transaction, his excellence ambassador, Paolo Cuculi and all the other authorities here present. Speaking about relationship, I mean, Barbara mentioned about that, that is the -- also the manifesto of today, Stronger Together means we are going to build some future together that is going to be stronger because we are together. Together, we can continue to make a difference to create value for our countries. And together, we are building a cutting edge and incredible infrastructure based on the experience that Italgas has gained over the years. We have the goal to arrive to an economy of 0 emissions that needs infrastructure like the one that we are building, smart, digital and flexible. Infrastructure that will be available in the near future to accommodate different renewable gases. Biomethane is already a reality. It can be accommodated tomorrow, hydrogen can be accommodated even tomorrow. It's still probably too expensive to be produced, but is our future. And I think that, with our commitment, we can help also Greece to achieve the targets that the RePowerEU has set for all the European countries as well as we are doing in Italy. I think that 2 years ago, when -- more than 2 years ago, when the Greek government selected Italgas, I think they made, from our perspective, the best choice. Because they selected a partner that has a number of expertise and knowledge, be able to support the energy transition also in Greece as well as we are doing in Italy. And in fact, in these 18 months, we are adopting, in Greece, all the technologies that we have developed in the last 7 years in Italy, for which Italgas is worldwide recognized excellence, I mean saying worldwide, we are receiving every day, maybe not every day, but every week, visiting parties from Australia, Japan to visit and to test what we were able to develop in Italy. And in fact, some elements, we have already -- we can already demonstrate and prove what we have done in Greece in the last 18 months. We have been able to build 800 kilometers of new pipeline. And if you compare the single year of 2023, in respect of 2021, when we say that they are the 2 years to be compared, the amount of investment that we put in Greece increased by 78%. So it's a significant number. And in fact, the 800 kilometers that we developed, we connected 25 city and -- like I was saying this morning to the journalists that were present at the breakfast, we expect 2024 to be even higher because, as always, the ramp-up in activities is not easy. Like I'm saying in the construction, you need to build the (factory) and it takes time. But 2023 has already demonstrated that our factory is working, but needs to be even faster. With the new name that we will reveal in a moment, is also a way to say and to demonstrate that there is a significant change in the way that we operate. It has been, since then, a very exciting journey, but I think the best will come. The best will be in the next year to come. And we are open to increase the collaboration with the local community, with the government, with the Ministry here because we want to help Greek -- Greece as well as we are doing in Italy to provide the best infrastructure that is going to be a model for Europe. Let me finish. I don't want to take a lot of time because everybody are eager to look at the new name that we have studied for a quite a long time. I need to thank all the team that has worked for the organization of this event and for the work that we have done before in identifying the name. So you may be surprised. I hope you will be surprised positively by the name. So now let's start with the video. [Presentation]

I don't want to teach Greek first of all, so please -- Enaon takes inspiration from the Greek words Aenaos. I hope that I pronounced it correct, which translates to perennial and renewable, and when associated with the energy sector, aims to represent a long-lasting offer capable of meeting the current needs and the future needs. In other terms, our idea is to solve the trilemma of energy security, energy diversification, but even more important, cost of energy that should be affordable to everyone because the energy is our future. Benedetta?

Let's try this Greek lesson. Moreover, the word Ena means one. And somehow recall the union between the 3 previous DSOs, Eda Thess, Eda Attikis and Deda into 1 company. But another important word in our new brand is On. On wants to give the idea of something active, always operational and this Enaon, so embodies the commitment to grant a constant energy flow, providing gas continuously. And moreover, granting also, to the country, a smart, flexible and cutting-edge infrastructure. Additionally, the word On in Greece also means being -- which has been the center of many philosophical discourses over the centuries and years. So being in Samos embraces the symbolic meaning of our willing to keep person as the main framework and the main asset of our development, sustainable strategy. Thanks a lot.

Thank you very much. Thank you. And now from the side of the Greek government, I will ask Mr. Theodoros Skylakakis, Minister of Environment and Energy to come on stage for his speech.

Well, thank you for inviting me in this very important day for you and for your efforts to help moving our energy system towards the future. This is very interesting name. Indeed, what we are trying to achieve is sustainable energy, energy that can go as long as possible. There is nothing Enaon in energy, unfortunately. The sun will go out some time and then we'll have a problem, but we have a few billion years till that happens. For the next decade, though, it's very important to understand that our energy transition is based not only on electrons, but also on molecules. And we'll have to understand that electrons are very useful and very flexible and very important, but we lose energy when we create electrons and when we move electrons. So molecules are going to be an important part of our future. And this infrastructure and all this effort is about moving molecules that will be green. They will turn green gradually. That's obvious, but they will start turning green, and we will try to accelerate this process by helping create more green molecules out of biomass. Thus, we are considering the possibility of subsidizing the biomass that goes into our energy system. This is very important because if we -- hydrogen will come, and it will be based on very cheap energy and surplus of renewable energy. This is going to be the basis of hydrogen. But this will not be enough by itself. It's also important to have a cyclical economy in terms of biomass and biofuels. There, our biggest problem today is our inability to collect this biomass and to have a system of collection of biomass that will be efficient and will make these energy projects and all this energy infrastructure viable economically. Thus, for some time, we'll see how many years, we have the intention of subsidizing this biomass that will enter our energy system. More we would say in the future about that. But I wanted to give you also some news to make this presentation a bit more interesting. And I believe that our collaboration with Italy, a brother country essentially for centuries, is very important for us. And I'm very happy to be here. And don't forget that we Greeks call ourselves not only Greeks, but also Romans. We are Romioi. So you have to understand that this connection goes much deeper into time and it will go much further into time in the future. Thank you very much.

Thank you, Mr. Skylakakis. And now let me pass the floor to Mr. Skrekas, the Minister of Development, ex Minister of Energy.

Your excellency, dear ambassador of Italy, in Greece, [indiscernible] Paolo, welcome first of all. I wish you a nice and pleasant staying, but also very constructive. And I'm sure that we're going to operate in order to enhance the collaboration between Greece and Italy. Dear Benedetta, dear Paolo dear Barbara, dear guests. First of all, I would like to say that I'm very happy being here today. Thank you for the invitation -- for the kind invitation. We invested a lot of time in order to complete this very important but very complex transaction in the summer of 2022. I remember that we have spent many of our vacation days in discussing how to complete and how to solve, how to deal with the details of this transaction. And I'm very happy that a very strong company, Italgas is now here present in Greece, and is going to help us for the very ambitious to implement, our very ambitious green strategy. Many times, I have been asked in the past, why are you expanding the gas grid in Greece? Why are you paying money? Why are you building new pipelines to connect more homes, to connect more businesses with the gas grid. And I said, what also Theodoros said earlier, that currently, we are moving gas -- natural gas through that pipeline. But in the near future, and of course future later, we're going to move renewable gases, biomethane and hydrogen. So all these investments -- all these billions of euros are going to be invested from now on as well, are going to be -- are not going to be stranded assets, are going to be assets that will help the Greek economy to evolve and to transform -- to be transformed into a green economy, a sustainable economy. Also, I would like to say that Greek and Italian economies are complementary. Nobody can walk alone in the global marketplace these days. The international competition from the far east is putting a lot of challenges for the European economy and of course, for the Italian and for the Greek economy. So Italy, Greece and Europe must be united in this effort -- in the effort to sustain the European economy competitive in order to maintain the same level of living for the European citizens. And this is not something to be taken as granted. We have to fight in order to maintain the current status of living in Europe and in our countries. And for this, we have to be united. Here in Greece, in the Ministry of Development, we have -- we are designing and we are planning a very ambitious strategy for the reindustrialization of the Greek economy. The Greek economy, of course, has a lot of revenues from the tourism, from other sectors, but cannot maintain competitiveness in the global marketplace if not developing the manufacturing in the industrial base. And therefore, Italgas, renewable gases, are going to help our industry to get greener and to be more sustainable and more competitive. Therefore, I'm sure that we are going to cooperate further more in the future. Thank you for the cooperation we had all the previous years. But I would like to thank you more for the cooperation we are going to have in the following years in order to be able to make our economy very strong for the benefit of our citizens. Thank you again.

Keerios Skrekas. If you please stay on stage and be joined for -- this is the photo opportunity for those who didn't get it by Ms. Morgante, Mr. Gallo, Ms. Ferrara; his excellency, the ambassador, Paolo Cuculi and Mr. Skylakakis, please come for a photo. A bit more forward, please. Thank you very much. So our ceremony now proceeds with the signing of a Memorandum of Understanding, involving Enaon and HABIO, the Hellenic Biogas Association. I, therefore, call on stage our host, Barbara Morgante, the CEO of Enaon, and Mr. Gallo with Alexandros Yfantis, President of HABIO and Ambassador Cuculi, please. Until we are ready, just let me say that this agreement will last 2 years, we're talking about a strategic collaboration between the 2 parts aiming to accelerate the development of biomethane in line with the objectives of the EU and the Greek government. As a renewable gas, biomethane represents an energy source that reduces dependence on foreign supplies and improves energy security. So let's give them a big applause while they will join me on stage. You can sign whenever you want. You want to state something.

Hello. Mr. Skylakakis, Mr. Skrekas. It's very -- it's a big honor to be here today. We are fighting many years now to solve the value of biomethane. And I have to say that both of you, 2 ministers, that have been contributed the most to start talking about biomethane and how this can be implemented in Greece. You hear our problems. And there are -- the last years, we can see actions, and I'm very happy personally for that. And of course, as the President of HABIO, have to thank you about that. I have to say small things about HABIO. Today, we have 115 megawatts of electrical power coming from biogas. Today, the only framework in Greece for biogas is electricity. We are hoping very soon, as promised, that we will have the biomethane framework, and we are working very closely about that. And unfortunately, we are only 50% on our capacity. We lack raw materials. I'm very excited to hear from Mr. Skylakakis that he will help -- that the government will help on that. It's very important in order to see biomethane becoming a reality. We have more than 70% of the -- there are 75 biogas plants today in Greece. 70% of them are members of HABIO and HABIO is also representing biogas sector in Europe -- in European Biogas Association, and we are in a strong connection -- in strong negotiations with all the parties to make biomethane happen. I have to thank, especially, of course, also Enaon, have to say the new name now. It's a very nice name. I have to thank, especially because the last 3 years, actually even before Italgas coming, but when Italgas also came on scene, biomethane take a new importance. Yes. Of course, we started with Mr. [indiscernible], I have to thank him personally because he is the man from your part that he was very, very involved on that, and he built also the relation. If we're going to see biomethane that we strongly believe that is the future for the renewable gases and eventually as they show in the new studies, more than 70% of this, it will come from biomethane. There are new studies showing that Europe could cover until 2050, up to 70% of all the needs of natural gas from biomethane. So it's very important to start. Biomethane is the heart of cyclic economy is not easy. So we need partners. And the 3 main partners to do that is the government, is the producers and of course the network. Without these 3 members working together, to solve the problems, biomethane cannot be a reality. And biomethane, it's true that it is not in the position that it should be in Greece, and we need years to develop. I like very much what you said, we are building a factory, we're building factories. We cannot do it in 1 day. We need years and we need to work all together. So thank you very much. And I think this MOU represents the will of both, the sector of biogas in Greece and the network administration Enaon, to work together on this and try to find solutions that will really work in the market. Thank you very much.

Thank you. We are really committed. We can also put the experience that we still have in Italy. Our colleagues from Italy are excited to transfer and to share the experience. So we expect that this process will be really split up in respect to other experiences. I mean, I would like to introduce my colleagues which are here on the left and on the right, with the new dresses of our Enaon group. So thank you very much for being here. Okay.

Thank you very much. And congratulations for the sign of this memorandum of understanding and wish you the best of luck. So let's now finally -- let's call his excellency, the Ambassador of Italy, Paolo Cuculi for the final greetings.

Distinguished ministers, [Foreign Language]. Thank you so much for your very kind words of welcome. [Foreign Language] Dear friends, ladies and gentlemen, it is a great privilege for me to be here today. Apart from the stress of the last few weeks since my arrival to discover the new logo and the new brand. So it was quite worth waiting. And there are a few things that an ambassador abroad likes better than to be present on such a momentous occasion when a major Italian economic, financial, industrial reality invests, keeps investing in a country that is more than a sisterly country, almost second mother to us. And on top of that, a moment that it is not, as it was said, the end of a journey, but it is the beginning, the furthering of a very meaningful processes in a sector energy that it is a crucial enabler, much more crucial than anybody would instinctively envisage, because it is -- yes, it is an enabler of economic development. Yes, it is essential for the sustainable development of our countries for the protection of our planet faced with climate change, but it is also an indispensable enabler of human rights protection because without access to affordable energy for everybody, ordinary citizens are not all equal. So there is a crucial important dimension that it is embodied by the workers who are here on stage. And by the consumers that hopefully are going to benefit from this partnership. And the partnership is indeed, as it was said, the key word to face a number of unprecedented challenges that were revoked. And the need to master a number of transitions that it is increasing every day. We have the energy transition. We have the digital transition. Everything stays at the core of what energy means in our societies. And partnership is the recognition that nobody can overcome all these challenges alone. And I'm very proud that this partnership is confirmed, strengthened, enhanced by the investment of Italgas and now Enaon in Greece. A step, a moment that further makes closer and stronger the ties -- traditional, cultural, economic, commercial ties between Italy and Greece. Again, I'm very proud that Italy and Greece, among themselves, are among the main trading partners. And in this sense, as I said, it was said that the word Enaon conveys the message of something that goes on, that progress, that is positively transitioning and I find very meaningful, very important, the agreement that was signed today with the Hellenic Association of Biogas producers because our common effort, endeavor for affordable, efficient, effective energy never stops to the sources that today seem the most important, the most relevant, but must have a look forward to new sources and biogas, as was explained, is one of the very important sources of the future to try to tackle. I think Minister Skylakakis was referring to entropia, if my Greek is not too rusty, about the progressive loss of energy in our everyday life that it is important to tackle. And in all these common efforts, I wish to convey humbly the message that the Embassy of Italy is here to help, to facilitate, to assist to the extent possible. It is quite difficult for any diplomat and for an Italian, most of all, not to be too invasive. So I will try to restrain my team, but be certain that we will be here as long and as soon as you think our help can be helpful. Thank you so much to everybody.

Thank you, ambassador. Ladies and gentlemen, I would like to extend our gratitude to all our esteemed guests, the one that are present today physically and all the others that joined us virtually. Thank you also for being part of this occasion. A reception is to follow. All the best. Good luck. Have a good morning. [Presentation]