Energy Crisis Tests Resilience of Italian Businesses

The article was originally written by  and published on Reuters.

Italian media had only just begun talking about the threat of winter gas rationing when Marco Checchi sprung into action to ensure bottle top maker Pelliconi would continue to supply customers including Coca-Cola, Heineken and Guinness.

Pelliconi, which produces 35 billion bottle tops a year, mostly in Italy but also in Egypt and China, stepped up production of energy-intensive semi-finished goods, invested in solar panels and commissioned a prototype of a new digital printer for metal sheets that did not require gas ovens.

“When you run a business, if you keep hearing on the news that gas supplies are at risk, you’ve got to do something. It’s not like you can start screaming and stamping your foot when they actually do halt flows for two hours a day,” Checchi told Reuters.

Like other Italian businesses wrestling with the energy crisis sparked by the Ukraine war, Pelliconi has seen costs for electricity and gas more than triple in relation to turnover this year, compounding problems posed by higher steel prices.

In some cases it has been able to pass on almost two thirds of the cost increases to its customers and plans to further hike prices next year.

Higher prices contributed to the 16.2% rise in manufacturing turnover Italy reported in July on a calendar adjusted basis, but volumes also increased by 1.7%. That broadly compares with a 0.8% yearly drop in Germany.

DARKENING PICTURE

Traditionally the laggard among the biggest euro zone economies, Italy has experienced a more vigorous post-pandemic rebound in terms of industrial output than France and Germany, Intesa Sanpaolo economist Paolo Mameli said.

After growth exceeded expectations in the first half, the situation has worsened rapidly and the government now expects the Italian economy to have shrunk in the third quarter, with the contraction seen lasting until mid-2023.

Investors have trouble gauging the depth of the slump awaiting the European economy and debt-laden Italy.

“The euro area outlook remains unusually uncertain,” Goldman Sachs economists said.

The coping strategies adopted by firms like Bologna-based Pelliconi are an element in the equation that will determine the final outcome, according to UniCredit CEO Andrea Orcel.

“Companies are adjusting, it’s wrong to assume they aren’t. We see that all the time when we look at our clients: businesses are reorganising their value chains, their logistics, everything,” he recently told a labour conference.

“So far households and companies have proven more resilient than anticipated … markets worry a lot over Italy’s performance within the euro zone overlooking the fact that Italy keeps growing more than France or Germany,” he added, noting that corporate deposits were up 35% from pre-pandemic levels.

UniCredit, which is financing companies’ investments to boost installed capacity for renewable energy, said some of its customers in non-energy intensive sectors were able to generate independently 30-40% of their power needs, in some cases as much as 50%.

Most companies are rushing to install solar panels, but some are more ambitious. Fastener maker SBE-Varvit has secured 400 gas containers that will be shipped to its plant in north eastern Italy by January to offset any shortages.

Even in a battered industry like ceramics, which like the glass and paper sectors has been hit hard by soaring energy bills, high-end tile maker Italcer expects to cover a quarter of its energy consumption once it completes the two combined heat and power plants it is building.

“Already in September 2021 there were warnings of what was to come,” CEO Graziano Verdi told Reuters, adding Italcer faced an extra 60 million euros in costs for gas and electricity this year – accounting for 70% of manufacturing costs from 20% previously.

“We invested 10 million euros to build two cogeneration plants and save 4 million euros this year,” he said, adding Italcer saved another million by reducing the tiles’ thickness to 8.5 from 10 millimetres.

“We raised prices by 30-35% with a good market response. A weaker euro certainly helped, as did the government’s support measures.”

Outgoing Prime Minister Mario Draghi’s government has set aside 66 billion euros so far this year for tax breaks and subsidies to help energy-intensive firms and poor households.

Italian business lobby Confindustria has warned of an “economic earthquake”, saying the new government will struggle to offset the hit from energy prices on firms like Draghi managed to do without hurting Italy’s fragile public finances.

Veteran banker Corrado Passera said the crises had operated a natural selection among businesses and his digital lender illimity ILTY.MI continued to face growing requests to fund acquisitions, or innovation and internalisation projects.

“When you speak to business owners in private … outside Confindustria … they have great confidence about their ability to react,” Giuseppe Castagna, who leads Italy’s third-biggest bank Banco BPM BAMI.MI, said recently.

How to Start Investing with Foundation Capital

For information on how to make a capital investment in this difficult time, please get in touch with us to generate a sustainable passive income stream. Foundation Capital is one of the most reliable organizations to invest in as our process has been refined, perfected, and proven over the past 12 years of renting our clients’ assets to the construction and energy industries.

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Create Financial Stability amid The Energy Crisis

There are always chances to grow during a tough time, as long as you can see and grab the opportunities – this is always true, even for investment. Instead of complaining about how rising gas and oil costs make you suffer, let’s figure out the key to get you out of this situation and head to life with financial stability.

Efforts to find more streams of income during the crisis

Tough time for everyone

According to the World Bank, The Ukraine war made inflation a global phenomenon – impacting 100% of advanced countries and 87% of emerging markets and developing economies. The energy price shock is the main factor driving inflation in many European countries to the highest levels in three to four decades. As in England, it is expected that inflation in October 2022 will reach 13%, while in the Eurozone, this figure has fluctuated around 10%.

Consequently, the cost of living has been dramatically increasing. The price of food, goods, energy, and fuel has been increasing the most due to customers’ high demand and supply chain problems. Households are scrambling to pay their bills for all kinds of goods. Food prices will soar by 22.9% this year, highlighted by a 40% rise in wheat prices.

This is when many people are in a hurry to find more ways, primarily by passive income on security investment with the hope of surviving the high inflation.

What is the way out?

Unfortunately, throughout this time, most investing schemes offer no sustainable returns. The ups and downs of stock markets come as a reminder that it pays to have a more diversified investment portfolio that is not too concentrated in stock because of the unsettling events of enterprises. Crypto activity determined as “high risk” or “illicit” has surged in Eastern Europe since the start of the war, according to blockchain analytics firm Chainalysis. Chainalysis reveals that 18.2% of all crypto transactions in Eastern Europe are associated with risky or illicit activity. Interaction with high-risk cryptocurrency exchanges, which often don’t require users to submit know-your-customer (KYC) information, accounts for a fraction of dangerous behavior in Eastern Europe. The yellow metal used to be a good choice until Gold prices dropped in 6 months and seem to have yet to reach its bottom. The uncertainties also happen to other assets when currency investment is unstable, and real estate investments are still unaffordable to many people.

So, what can we do now? As the media often says lately, the current situation often leads to the talk of moving money to safe investments, and this applies to even well-informed investors. Fortunately, of crises, longer-term investment opportunities will be born. During a year of the financial crisis, war, global recession, and trade imbalances, the safest investment is what the world needs the most: Investing in energy.

Besides a 50 percent increase between January 2020 and December 2021, the World Bank reports that the energy price index grew by 26.3% between January and April 2022. The substantial rises in the price of coal, oil, and natural gas are reflected in this spike. Russia is the primary resource to the whole of Europe when providing 40 percent of supplies to Europe before the war. That means the continent is rushing to find another supplier of fossil fuels to make up for that loss, which leads to the fact that There’s no stopping Europe’s gas bills.

At the end of August, future gas prices at the Title Transfer Facility (TTF), the continent’s leading trading hub, reached €321 per megawatt-hour, a stratospheric figure compared to the €27 set a year ago. “The next five to 10 winters will be difficult,” – Belgian Prime Minister Alexander De Croo has warned. It proved to be true when the country’s energy regulator Ofgem announced in September that the hike means the average household will pay €4,182 (£3,549) each year to heat and power their homes unless the government steps in. Those figures prove that investing in energy and equipment is one of the most potential choices.

The question is, for individual investors, what energy-related assets have been the most suitable investment?  And if you are still confused, let’s take this new asset into your portfolio adjusting: Invest in gas/oil tank containers.

Why Gas/Oil tank containers?

The potential of Fuel storage investment itself

The storage containers market has the potential to grow itself as unreplaceable shipping devices. Shipping containers transport ninety percent of the world’s cargo. The number of containers keeps increasing. According to Statista, in 2021, the total throughput container was 849 million TEU (TEU stands for Twenty-foot Equivalent Unit, the length of a standard shipping container)

The global fuel storage containers market was valued at US$ 25 billion in 2021 and is expected to grow by 4% year on year to US$ 26.13 billion in 2022. During the projected period of 2022–2032, demand is anticipated to grow at a value CAGR of 4.5%, reaching US$ 40.57 billion. Overall, the market for gasoline storage containers will continue to grow, with a remarkable CAGR shown from 2015 to 2021.

Additionally, the market for fuel storage containers is anticipated to develop from 2022 to 2032 due to high product availability and customization in accordance with industrial and commercial requirements. With excellent potential and about a third of the market, North America will continue to lead during the projected period.

How LNG gas is transported.

The demand for energy transportation and reserve is getting higher

The impact of Covid 19 to shipping prices, together with the extremely high gas price, are additional factors to its expansion. National governments are racing to find alternative supplies now that Russia has cut off one-third of the continent’s gas supplies. This is the opportunity for others to become temporary energy suppliers for Europe. How much forward contracts in the wholesale markets for gas supply months or years ahead have started to rise is one of the most concerning developments in recent weeks. Oil and gas tank containers that can save costs (for instance, by storing more goods per slot and being adaptable for transportation) come in handy.

Besides, the demand to reserve more fossil fuels may be considered. Since we cannot know if the world may suffer from any other crisis, countries must search for backup solutions to avoid the run out of energy before having a reliable and sustainable supplier to the market. That means they may need more facilities, such as gas containers, to reserve fossil fuels in the worst cases. For example, the UK., which does not have extensive gas storage facilities like other European countries, have been filling them over the spring and summer for the winter. They are planning to reopen Rough, the UK’s largest storage facility mothballed in 2017, which will come too late for this year.

The rise has yet to reach its peak

It is predicted that the price of energy storage, under the impact of the gas price surge, is expected to keep increasing, especially when Europe is facing a deepening energy crisis as it prepares for a cold winter, leading gas prices to new record highs. The other supplies are running low, stoking fears.

Norway is currently pumping as much as it can, but its capacity is maxed out. New supplies, such as liquefied natural gas, must take time to come online because countries such as Germany first must build specialized terminals to receive the ships. The limited resources make millions of people live at insanely high prices, the most obscene being the going rate of natural gas.

Besides the effort to propose a cap to tackle extraordinarily high gas prices, The European Commission is at its best to find and transport more energy from new suppliers and store energy as much as its can.

Get passive income from energy in a unique, safe, and profitable investment model with Foundation Capital

The investing scheme is quite simple. First, purchase your tank container of choice, then you can rent it to storing or transporting companies that will pay you monthly for the rental.

Sound interesting, but here comes a big question: how can you manage to purchase and rent out those giant devices? Where can you find viable opportunities to purchase tank containers, and whom do you rend it to with high-rate interest?

The good news is that you do not need to worry about that since Foundation Capital is here to get you to take part in this incredibly lucrative opportunity. Since its inception in 2007, Foundation Capital has specialized in providing investors with access to the construction and energy sectors by purchasing and owning the equipment and technology required for megastructure development, healthcare, and energy.

The step to invest in Gas/oil container with Foundation Capital:

Step 1: You access the broad portfolio of oil and gas tank containers and decide on the one that suits your budget or investing plans. Our management support will help you to find the most suitable strategy for your investment goals and budget. You have the choice between a fixed 14% return or a floating rate return which historically has delivered higher income (with returns of up to 26% per annum)

Step 2: Foundation capital will help you to lease these tank containers to businesses whose operation depends on them. We will help to follow and manage the leasing process for you.

Step 3: All you need to do is sit back and wait for monthly income. We will keep you updated with all information from the leasing and support you with any concerns.

Step 4: You can recoup your investment by selling these assets for the original purchase price at the end of five-year contracts. We guarantee that your investment is effective, adaptable, and 100 percent secure.

Through that plan, Foundation Capital is confident to guarantee that the assets are secured and insured and that you are also guaranteed straightforward exit plans free of additional costs or ambiguous terms. Because of this, we have amassed clients’ trust worldwide for more than 14 years.

For additional information on how to make a capital investment in these oil and gas tank containers, please get in touch with us.

How to Start Investing with Foundation Capital

If you want to generate a sustainable passive income stream, Foundation Capital is one of the most reliable organizations to invest in.  Our process has been refined, perfected, and proven over the past 12 years of renting our clients’ assets to the construction industry.

For more detailed information on how to make a capital investment in construction with Foundation Capital, as well as the terms, conditions, and risks, refer to the following FAQs and guides:

(Support) What Is Foundation Capital and How We Invest?

(Support) Construction Investments Vs. Others

(Support) Foundation Capital FAQ Library

(Support) Schedule Your Free Consultation

(Social Media) Foundation Capital Facebook

(Social Media) Foundation Capital LinkedIn

(Social Media) Foundation Capital Twitter

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