Corporate Credit Rating 2024 for EARTH ENERGY SRL: B1 (First Issuance)

Earth Energy S.r.l. (hereinafter also referred to as “EE”), based in Monza, has been active in the energy sector since 2009 where it markets natural gas. In 2024 it aims to enter the electricity sector as well. The Company sells directly to wholesalers who in turn resell to private consumers, particularly focusing on users of gas for heating. EE is active in all major European markets, also providing environmental certification systems. The Company management consists of professionals with proven experience in the energy sector.

The Company EARTH ENERGY S.R.L. presents an overall adequate economic and financial situation. In 2023, the turnover recorded a further increase of +23% YoY, benefiting primarily from the price increase. Operating margins and net income are also growing, and ensure satisfactory profitability indicators. Adequate management of expenses results in a financially balanced situation. The management of the monetary cycle and the relationship between incoming and outgoing payments are also appreciable. On the solvency front, EE registers an improvement in leverage ratio, which although suffers the low degree of capitalization. However, financial debt remains sustainable. 

In 2023, the Company effectively managed its core business, generating positive operating cashflow, also thanks to the decrease in accounts receivable positions . In addition, the Company increased its cash and cash equivalents by the recourse of new financial debt. 

The Company has an administrative body with a collegial form, composed of managers with a long experience in the energy sector. The Board is flanked by an auditor. EE presents a clear group structure, with ownership traceable to the CEO, Mr. Carlo Maria Bagnasco, who exercises it through a holding company.

Compared to the reference peer group, Earth Energy is positioned well above the 50th percentile in terms of size and profitability, while its solvency positioning is below the median. The peer group expresses solvency levels close to sufficient, along with adequate financial balance and an appreciable profitability performance.

The energy sector in Italy is of considerable strategic importance and has undergone strong and important changes due to recent geopolitical tensions. In the last months, however, the situation seems to have normalized, with a partial reduction in commodity prices. 

The macroeconomic outlook for Italy projects a deceleration in growth for 2024, with consumption and investment affectedby the high interest rates. In the medium to long term, however, inflationary pressure is expected to slow down, with benefits for both GDP growth and public debt sustainability. Macroeconomic forecast data could be revised upwards.

^{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 here
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^{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.}

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^{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.}

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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 - Elisa Graffi, Rating Analyst
elisa.graffi@modefinance.com

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