Sales revenue increased by € 190.4 million (+ 45.6 %) to € 607.7 million
Operating result improved by € 6.0 million (+ 7.8 %) to € 83.6 million
Group result decreased by € 10.7million (– 27.4 %) to € 28.5 million
Operating cash flow increased by € 9.6 million (+ 12.8 %) to € 84.7 million
Implementation of VERBUND/EStAG strategic partnership
Negotiation of “Austrian power solution”
Although the business conditions were difficult, VERBUND is able to present a good business development for the 1/2002 quarter. The strategy VERBUND had embarked – positioning VERBUND as low-cost producer of eco-friendly hydroelectric power in Europe, tapping new customer segments at home, and expanding international sales and trading vigorously – has proved to be the right response to the challenges of a liberalized power market.
Furthermore, VERBUND was very successful in the reselling business abroad, especially in Germany and Italy. Domestic sales also went up, however, by € 18.9 million (+ 11.4 %) in the business customer segment and in resale to provincial companies, although the market share had already been very high.
The operating result improved by € 6.0 million (+ 7.8 %) to € 83.6 million. Thus the positive performance trend from operative business was confirmed again in the second quarter after the full liberalization of the Austrian electricity sector on October 1, 2001. This fact is attributable to the successes in market coverage described above, and also to still restrictive cost management. Payroll costs, for example, were maintained at a stable level despite a 2.3 % collective agreement pay raise, and the other operating expenses were cut again.
The development in the international foreign exchange markets, which was negative for VERBUND, presented a strain on the financial results. The Swiss franc, which soared due to the unstable political situation in the world, caused valuation-related exchange losses, unrealized and thus with no impact on the cash flow (quarter 1/2001: exchange profit: € 6.9 million; quarter 1/2002: exchange loss: € 10.8 million). The first-time application of IAS 39 added to this development, which is negative above average, compared to last year’s quarterly performance. Thus the financial results show a decline by € 15.3 million (– 74.9 %) and led to a group result reduced by € 10.8 million (– 27.4 %). By contrast, the liquidity of the group continued to improve. A significant rise by € 9.6 million (+ 12.8 %) to € 84.7 million was recorded in operating cash flow.
As to the strategic partnerships for strengthening the core business, the cooperation between VERBUND and the Styrian Energieholding EStAG - and thus the first-time integration into the quarterly accounts of VERBUND Group - were implemented in the 1/2002 quarter. In the framework of the merger the hydroelectric and the thermal power plants owned by STEG and STEWEAG, the companies involved in the transaction, were brought into VERBUND - Austrian Hydro Power and VERBUND - Austrian Thermal Power against granting of shares. The remaining sales and distribution activities were integrated into the joint subsidiary STEWEAG-STEG, the undisputed market leader in Styria.
Another strategic chance in the company’s development are the negotiations for an Austrian power solution, as VERBUND sees it. The central element of the solution is a cooperation with joint companies in power trading and large corporate customer sales via the production, trading and distribution stages, in which added value is created. The concept for the Austrian power solution is to be agreed on by the beginning of July and implemented by 01-01-2003, depending on the approvals as to the relationship between the companies involved and the antitrust regulations. For VERBUND the Austrian power solution would bring synergy effects and thus an increase in corporate value.