Higher contract prices despite weak spot market prices
Following the long steady growth of the European wholesale prices for electricity, this trend was markedly interrupted at the end of 2006, particularly with regard to spot market prices, a situation which continued in quarter 1/2007. Thanks to its consistent hedging strategy – approximately 60 % of the electricity that is generated was already sold in 2006 on a year-ahead basis for 2007 – VERBUND was able to further raise its average sales prices in spite of the wholesale price correction.
Significantly improved water supply as compared to the previous year
With a generation coefficient of 1.01, the average water supply from rivers needed for hydropower generation was one percent higher in quarter 1/2007 than the long-time average of the past 30 years and significantly above the value recorded in 2006 (0.83). Together with the increased utilization of annual storage power plants, this led to a growth in electricity generation from hydropower of 23.8 % to 5,561 GWh. Generation from thermal power plants, on the other hand, declined by 36.5 % on account of the low spot market prices. The total generation of the group was 6.7 % up on the value recorded the previous year at 6,690 GWh.
International business activities further expanded
In quarter 1/2007, VERBUND was able to further expand its international business activities and enter into an exclusive joint venture with Sabanci, Turkey's leading financial and industrial holding. The jointly-owned generation company "EnerjiSA", in which VERBUND will be holding a share of almost 50 %, aims to have an installed output of 5,000 MW by 2015. The company also intends to purchase electricity distribution grids within the course of the privatization process. In addition, the company will also get involved in the end customer segment so as to cover the entire value chain. Together, the partners aim to achieve a share of at least 10 % in the Turkish electricity market.
In spite of the difficult market environment, the outlook for the full year 2007 remains positive. It is our goal to increase the operating result by 10 % compared with 2006. In addition, VERBUND intends to further increase the dividend for fiscal 2007.