Following a very positive business development in quarter 1/2007, the VERBUND Group, Austria's leading electricity company, is again able to present record mid-year results. Despite extremely difficult basic conditions in quarter 2/2007, the results are well above the record results of 2006. "Only by pursuing a forward-looking hedging strategy was it possible to achieve such a good result, despite the difficult framework conditions," explains Dr. Michael Pistauer, Chairman of the Managing Board of VERBUND. The sales revenue rose by 3.1 % to 1,490.8 million Euro, the operating result could be improved by 4.9 % to 447.4 million Euro. "The future-oriented participation policy is reflected most importantly in the increased group results that rose by 19.6 % to 329.9 million Euro," says Pistauer.
The control relevant key figures could also be improved. The EBIT margin rose from 29.5 % to 30.0 %, the EBITDA margin rose from 35.5 % to 36.1 % and the net gearing sank further from 88.4 % to 82,7 %. However, the operating cash flow worsened – primarily on account of higher income tax payments – by 16.9 % to 384.3 million Euro.
Operating cash flow
Higher sales prices despite weak spot markets
In quarters 1-2/2007, the prices for day-ahead deliveries for base load on the German electricity exchange EEX lay at almost 40 % below the comparative value of the previous year. For peak load, the downturn amounted to almost 37 %. Through its hedging strategy, which has been successfully applied for years – approximately 60 % of the generated electricity for 2007 was already sold in 2006 on a year-ahead basis – VERBUND was able to increase the average sales prices despite the strong decline in the spot market prices.
Hydro coefficient significantly below the perennial average
In quarter 2/2007, the hydro coefficient only reached a value of just 0.78 and thereby lay 22 percentage points below the perennial average. The hydro coefficient for quarter 1-2/2007 amounted to 0.87 and lay 13 percentage points below the previous year's value. This led to a decline of 673 GWh in the harnessing of electricity from hydropower. The generation from thermal power plants also showed a significant downturn on account of the low spot prices. It declined by 577 GWh.
Investment in the Turkish energy company EnerjiSA
In quarter 2/2007, VERBUND acquired 49.99 % of EnerjiSA, the electricity generation company, from the Sabanci Group in Turkey. The acquisition represents the first major step in the strategic partnership between VERBUND and Sabanci, which was announced mid March. By 2015 EnerjiSA aims to increase more than tenfold the generation capacities: to 5,000 megawatt.
Positive outlook for 2007
The outlook for the entirety of 2007 remains positive despite the extremely difficult basic conditions of the market environment. Based on average hydro condition in the second half of the year it will be possible to increase the operating result by 10 %, compared to the record year of 2006, and the group result by 15 %. "As a leading hydropower company, VERBUND will be establishing clear priorities in the utilisation of all of the relevant renewable energy sources," Pistauer states, pointing the way to the company's future.