VERBUND results for the 2012 financial year: Group result increased, higher dividend
- EBITDA: +15.4% to €1.2bn - Group result: +9.4% to €389m - Recommended dividend: +9%, €0.60 per share
VERBUND, Austria’s leading electricity company and one of Europe’s largest producers of hydropower, presents clearly positive business performance for the 2012 year despite difficult conditions in the energy sector and the overall economy. EBITDA (+15.4%) and Group result (+9.4%) increased significantly. VERBUND continues to focus primarily on hydropower and wind power in particular in Austria and Germany, as well as in the modernisation of the electricity transmission grid.
“In the past year, we streamlined VERBUND’s strategy and took key steps for the Group’s future. In what was probably our most important decision, we will be exchanging our Turkish equity interest for shares in Bavarian hydropower plants, which are now wholly owned. This move will improve our risk profile and strengthen our renewable generation portfolio by focusing on hydropower,” according to Wolfgang Anzengruber, Chairman of the Executive Board at VERBUND.
Good earnings trend
Despite the difficult situation on the energy markets and in the general economy, VERBUND looks back on a good financial year in 2012. EBITDA rose by 15.4% to €1.2bn as a result of an above-average water supply. The operating result decreased by 12.6% on the previous year to €900m. The decline was primarily due to impairment tests performed on VERBUND power plants in the previous year, which had a net effect of €+202.2m on the operating result for 2011. However, taking the operating result before effects from impairment tests results in an increase of 15.5% to €956m in 2012.
The Group result increased by 9.4% to €389m due to a significant improvement in the financial result. VERBUND also succeeded in maintaining profitability in financial year 2012: the gearing ratio declined to 64.9% and the EBITDA margin reached an outstanding 38.9%.
Clear strategic focus
Today, VERBUND is one of Europe’s leading hydropower groups. The company plans to continue on its chosen path, investing further in renewable hydropower and wind power. With this focus and our
in-depth market expertise in Austria and Germany, VERBUND is very well positioned to meet the new challenges arising from the fact that the electricity market is currently undergoing the most far-reaching changes since deregulation in 1999. Due to the transition of the European electricity generation system towards increased renewable energy, the failure of the CO2 market and weak electricity demand as a result of economic factors, electricity prices remain at a persistently low level.
Concentration on hydropower and wind power
Underlining the importance of hydropower for VERBUND is the acquisition of shares in 8 Bavarian run-of-river power plants (asset swap with E.ON) with additional generation of more than 2 billion kWh per year, which is expected to be completed in the first half of 2013. The largest hydropower project at present – the Reisseck II/Carinthia pumped storage power plant (430 MW) – is in the assembly phase, with commissioning planned for 2014. In 2012, VERBUND opened the Gössendorf power plant (18.5 MW) in Styria; commissioning of the Kalsdorf power plant (19 MW) is progressing as scheduled. In addition, the company is continuously modernising existing plants, thus increasing the efficiency of its power plants. VERBUND is also continuously expanding electricity generation from wind power: 172 MW are already in operation in Austria, Bulgaria and Romania, and approximately 238 MW are under construction or ready for construction in Austria, Germany and Romania.
Core markets of Austria and Germany
In its investments, VERBUND will focus on Austria and Germany in the future – 94% of the VERBUND electricity is already sold here. We also see interesting growth opportunities in Southeast Europe over the medium to long-term. Not least, the focus on Austria and Germany underscores the asset swap with E.ON announced in December 2012. This entails VERBUND relinquishing its equity interest in Enerjisa Enerji A.S., its Turkish joint venture, and in return acquiring sole ownership of shares in Bavarian hydropower plants. The asset swap is set to be completed in the first half of 2013. The transaction will enable VERBUND to capitalise on the enterprise value it has successfully built up in Turkey. It will improve VERBUND's risk profile and strengthen the company’s financing power.
VERBUND streamlined its investment portfolio in 2012. The company parted with non-strategic minority interests including Gletscherbahnen Kaprun AG (GBK), Kärntner Restmüllverwertungs GmbH (KRV), Energie Klagenfurt GmbH (EKG) and STEWEAG-STEG (SSG).
Thermal power – a necessary addition
All over Europe, gas power plants are currently under massive pressure. However, with the increased expansion of renewables, the flexibility of gas power plants is needed more and more to compensate for weather-related fluctuations in wind and sun and to guarantee the security of supply. VERBUND has set the goal of optimising the existing portfolio of gas power plants but will not invest further in carbon technology. In the year under review, the company recorded initial successes in restructuring its gas supply contracts: the long-term contract for the French Pont-sur-Sambre CCGT (420 MW) was cancelled by court order. With respect to the Italian equity interest Sorgenia as well as the Mellach CCGT, negotiations on further optimisations are under way.
A dividend of €0.60/share for financial year 2012 will be proposed to the Annual General Meeting on 17 April 2013. This corresponds to a year-on-year increase of approximately 9%. The payout ratio will thus amount to 53.5%.
On the basis of average own generation from hydropower, EBITDA from operations is expected to amount to approximately €1 billion for the financial year 2013. Assuming the successful completion of the asset swap announced in December 2012, VERBUND plans an extraordinary increase of the dividend to €1/share. The shareholders thus participate in the value realised through the sale of Turkish activities.