Corporate Credit Rating 2025 for SWITCH LUCE&GAS SRL: B1- (First Issuance)

modefinance published the update of the Solicited Corporate Credit Rating of SWITCH LUCE & GAS S.R.L. on the website and the rating assigned to the entity is B1- (First Issuance). The analysis revealed that the Company has an adequate economic and financial situation and can face adverse economic conditions in the medium and long term.

SWITCH LUCE & GAS S.R.L., based in Naples (NA), was founded in 2013 to provide call center services. In 2020, the company shifted its focus to sales of energy and gas to residential customers under the registered brand name Switch Luce & Gas. To expand its customer base, the company relies on the teleselling network of Gierre Contact Call Center, which consists of approximately 800 employees across 11 offices in the Campania region.

The company shows a balanced economic and financial position, with improved operating margins driven by significant growth of its customer base, which reached a monthly average of 5,519 delivery points in 2024 - up sharply from 604 in 2023. Sales conditions and lower procurement costs through direct sourcing on the GME led to the company’s marginality remaining high. Solvency indicators remain at healthy levels (0.25 for financial leverage and 1.07 for leverage), though they have slightly worsened. Specifically, the increase in leverage is due to higher tax liabilities resulting from the aforementioned business growth. This expansion also led to a strengthening of shareholders' equity, which rose to €3.8 million - an increase of €3.2 million.

Cash flow from operations was almost entirely absorbed by working capital requirements, mainly due to deposits issued to the Transmission System Operator (Terna), distributors, and suppliers (€2.5 million), as well as by the growth in trade receivables (approx. €3 million) resulting from business expansion. The liquidity deriving from the new bank loans was largely unused at year-end, leading to cash and cash equivalents (€1,5 million) exceeding outstanding financial debt, which totaled €1 million.

Management expects a further improvement in economic performance in 2025, driven by the continuous expansion of the customer base, which consisted of over 35 thousand delivery points as of March 2025 - a 35% increase compared to December 2024. In light of the working capital absorption expected from higher sales volumes, the Rating Agency believes that maintaining a balanced financial structure and a sustainable debt level will depend on management's ability to face the business expansion and the increasing complexity of the reference sector. This will require effective credit risk management and appropriate strengthening of both the organizational and technological infrastructure.

The company’s administrative body is not well structured, as Mr. Grimaldi Achille is both the sole owner and director. There is no supervisory board, although management plans to appoint one by the end of 2025 in response to significant business growth.

The company's position compared to its peers is sufficient in terms of size, excellent in terms of profitability, and good regarding solvency. In the last fiscal year (2023), the peer group has shown an adequate economic and financial position, improving profitability, liquidity, and solvency indicators.

The fundamentals of the energy sector in Italy have improved due to the stabilization of gas and energy prices, which had previously been volatile and reached record levels in 2022. However, the growing importance of LNG in the energy mix – accounting for 42% of EU gas imports in 2023, up from 20% in 2021 - as a substitute for Russian pipeline gas has led to higher supply costs. This also exposes Italy to the risk of potential price increases driven by global market dynamics, such as rising gas demand in Asia and changes in shale gas extraction policies in the U.S.

Italian GDP growth has been modest in 2024, constrained by tight financial conditions associated with high interest rates in the eurozone, as well as by inflation, still above 2%, which has negatively impacted on household spending and investment. Additionally, global economic growth faces slowdown due to high geopolitical tensions in the short term.

The present Corporate Credit Rating is published by modefinance in accordance with EU Regulation No. 1060/2009 and subsequent 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 entity is a buyer of ancillary services provided by modefinance (preliminary rating). modefinance ensures that such situation does not imply a conflict of interest in the issuance of the present credit rating.

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 - Carmela Santomarco, Rating Analyst
carmela.santomarco@modefinance.com

Responsible for Rating Approval - Pinar Dilek, Rating Process Manager
pinar.dilek@modefinance.com