Following the publication of very good results for 2005, VERBUND continued its successful course at the beginning of fiscal 2006. The earnings trend in quarter 1/2006 displayed high double-digit growth rates and remained well above the European sector average. This positive development was also reflected in the share price. Recording a plus of 21.9 %, the share outperformed all of the relevant benchmark indices.
Moreover, the VERBUND group succeeded in further developing its strategic positioning at a national and international level. Essential milestones here include the strategic partnership with Poweo in France, the acquisition of an interest in Energie Klagenfurt GmbH, the further expansion of end-customer distribution activities in Austria and the decision relating to the construction of the peak power plant Limberg II in Kaprun.
Earning trend clearly positive in spite of poor water supply
The low temperatures in the winter of 2005/6 lead to a significant reduction in the water supply for electricity production. With a hydro coefficient of 0.83, the water supply in Q1/2006 lay 17 percentage points below the long-term average and 13 percentage points under the value recorded in the previous year. The negative effect from the drop in highly profitable hydropower generation was, however, more than compensated by the price development parallel to the positive sales development in the core European markets and the increase in thermal generation. In quarter 1/2006, the year-ahead prices for base load energy lay approx. 23 % over the value in the previous year and the spot market prices also increased significantly. This increase is attributable to the high costs for primary energy sources and CO2 certificates as well as the decline in European reserve capacities. Thanks to an intelligent hedging strategy in Austria and the defined core markets, above all in Germany and France, it was possible to realize the full benefits of the increased wholesale prices.
The controlling group ratios also displayed a significant and sustained improvement. The EBIT margin rose from 22.7 % to 24.4 %, net gearing fell further from 131.5 % to 85.7 % and the operating cashflow improved by 130.6 % to € 241.9 million.
On the basis of this development, VERBUND is one of the most dynamic utility stocks at an international level with above-average growth rates.