Corporate Credit Rating 2025 for ENERGY TRADING SERVICE SRL: B1- (First Issuance)

modefinance has published on its website the Corporate Credit Rating (Solicited) of ENERGY TRADING SERVICE S.R.L., assigning a rating of B1- (First issuance). The analysis highlights that the company has an adequate financial position, appearing capable of withstanding adverse economic conditions in the medium and long term.

ENERGY TRADING SERVICE S.R.L. (hereinafter also referred to as the "Company") is part of the Renovatio Group and specializes in the wholesale trading of electricity. Established in 2022, its primary goal was to ensure a reliable energy supply for Group companies that sell directly to end customers. Over time, the Company has gradually expanded its operations to include external resellers, albeit on a limited scale. In 2024, trading volumes increased significantly, with intercompany transactions accounting for nearly 95% of total revenue. The Company now aims to enhance its operating margins and diversify its customer base, with the intention of gradually increasing transactions with small resellers outside the Group.

At the end of the 2024 financial year, ENERGY TRADING SERVICE S.R.L. reported an overall satisfactory economic and financial situation. The degree of capitalization is low, primarily due to the recent start-up of the business and the limited reserves of retained earnings. Additionally, financial leverage has not yet been utilized. Despite holding substantial fixed assets in the form of security deposits paid to distributors, the Company has successfully maintained a sound short-term financial balance. In 2024, the increase in sales volumes from 24.46 GWh to 94.95 GWh led to significant growth in turnover, which rose from €6.34 million to €23.17 million - an increase of 265.7% compared to 2023, the Company's first year of operations. The gross operating margin increased from €61,000 to €403,000, resulting in an increase in sales margins from 1% to 2%. However, this figure remains relatively low, partly due to the high volume of intercompany transactions. The financial year closed with a net profit of €300,000. In terms of profitability, the Company achieved a satisfactory return on invested capital of 3.8%. The return on equity is particularly high at 84.4%, reflecting the advantages of a limited capital base. The Company’s rapid growth has on one hand strengthened its ability to self-finance, while on the other, led to an increase in working capital requirements that prevented operations from generating a positive cash flow. The impact of investment activities on the overall cash flows balance was minimal.

ENERGY TRADING SERVICE S.R.L., managed and coordinated by Renovatio Holding S.r.l., has a basic governance and control structure. Administration is entrusted to two directors, and an external professional has been appointed to audit the financial statements.

In comparison to its sector peer group, the Company is larger than the median in terms of size. However, its solvency performance is relatively weak. While the Company ranks highly in terms of profitability, this is partly attributable to its limited capital base. By contrast, companies within the peer group generally demonstrate satisfactory average levels of both solvency and profitability.

The fundamentals of the energy sector in Italy have improved, thanks to the stabilization of gas and electricity prices, along with reduced volatility compared to the record levels seen in 2022. However, the increasingly strategic role of LNG (liquefied natural gas) in the energy mix — accounting for 38% of the gas imported by the EU in 2024, up from 20% in 2021 — as a replacement for Russian pipeline gas, entails higher procurement costs and exposes Italy to the risk of potential price increases. These may be driven by global market dynamics such as rising gas demand in Asia or changes in U.S. shale gas extraction policies.

At the macroeconomic level, GDP growth remained modest in 2024 due to tight financial conditions - with interest rates still high in the Eurozone – and inflation hovering around 2%, weighing on household spending and investment. Global growth is also potentially hindered by heightened geopolitical tensions and the tightening of U.S. trade policy.

The present Corporate Credit rating is issued by modefinance under EU Regulation 1060/2009 and following amendments.

The present rating is solicited and is based on both private and public information. The rated entity and/or related third parties have provided all private information used. Modefinance had access to some accounts and other relevant internal documents of the rated entity and/or related third parties. Solicited and unsolicited ratings issued by modefinance are of comparable quality, as the solicitation status has no effect on methodologies used. More comprehensive information on modefinance Corporate Credit Ratings are available at http://cra.modefinance.com/en

The present Corporate Credit Rating is issued on MORE Methodology 2.0 and Rating Methodology 1.0. A comprehensive description of both methodologies, as well as information on Modefinance Rating Scale and Mappings, is available at http://cra.modefinance.com/en/methodologies.

For information on historical default rates of modefinance Corporate Credit Ratings please refer to ESMA Central Repository and ESMA European Rating Platform.

modefinance refers to default as a company under bankruptcy, or under liquidation status, or under administration or for which missed payments on a financial obligation are officially recorded.

The quality of the information available on the rated entity and used to determine the present rating was judged by modefinance as satisfactory. Please note that modefinance does not perform any audit activity and is not in a position to guarantee the accuracy of any information used and/or reported in the present document. As such, modefinance can accept no liability whatsoever for actions taken based on any information that may subsequently prove to be incorrect.

The present credit rating was notified to the rated entity in order to identify potential factual errors, as prescribed by the CRA Regulation.

No amendments were applied after the notification process.

The rated company purchased ancillary services from modefinance (preliminary rating). Modefinance guarantees that this purchase of ancillary activities does not constitute any conflict of interest.

The rating action issued by modefinance was performed independently. The analysts, members of the rating team involved in the process, modefinance Srl and its members and shareholders do not have any conflicts of interest in relation to the Rated Entity and/or Related Third Parties. If in the future a potential conflict of interest is identified in relation to the persons reported above, modefinance Ratings will provide the appropriate information and if necessary the rating will be withdrawn.

The present Credit Rating is an opinion of the general creditworthiness that modefinance issues on the rated entity, and should be relied upon to a limited degree. The issued rating is subject to an ongoing monitoring until withdrawal.

Head Analyst - Stefano Chrisich, Rating Analyst
stefano.chirsich@modefinance.com

Responsible for Rating Approval - Naomi Busdon, Rating Process Function
naomi.busdon@modefinance.com