Adhoc: VERBUND results for quarters 1-2/2015

7/29/2015Vienna

Efficiency increases, success in the electricity business and non-recurring effects result in positive income development despite a challenging environment

Challenging conditions in the European electricity market changed little during quarters 1–2/2015. Energy companies’ earnings came under increased pressure due to low prices for primary energy sources and CO2 emission rights, which has led to low wholesale prices and margins. At the same time, electricity generation capacities continue to rise in Europe, caused above all by heavy subsidisation of solar and wind power.

In this challenging operating environment, VERBUND continued to steadily work towards its goal of becoming a CO2-free, cost-effective and innovative electricity provider, a path embarked upon in 2014.

Despite the further decline in average contract prices achieved, the operating business performed positively in quarters 1–2/2015, reflecting the successful implementation of VERBUND’s strategy. Business performance was positively impacted by the Group’s measures to increase efficiency, which significantly reduced personnel expenses and other operating expenses, as well as continued implementation of thermal restructuring. One example of this is the VERBUND Dürnrohr coal power plant block, which discontinued operations on 30 April 2015.

Additional income from the increasingly volatile electricity market resulting from higher earnings generated from the marketing of control and balancing energy as well as from congestion management also increased earnings. The positive performance was also underpinned by non-recurring effects on profit, such as the reversal of provisions due to expected legal settlements in the Grid segment. Finally, the above-average water supply also had a positive effect. The hydro coefficient rose to 1.03, up 3.0% over the long-term average and ten percentage points above the previous year’s figure. Generation from hydropower therefore rose by 1,039 GWh. VERBUND’s total own generation reached 17,217 GWh in the first half, an increase of 10.5% compared with the first half of the previous year.

As a result of the aforementioned effects, EBITDA rose by 37.9% to €489.1m. After adjustment for non-recurring effects, the increase in EBITDA was 5.0% to €442.1m. The Group result rose by 246.6% to €196.3m. Adjusted for non-recurring effects, the Group result increased by 72.3% to €161.2m, which was still above the prior-year comparison period. The positive trend in the Group result reflects, among other things, the clear improvement in interest expenses, due in part to the significantly better liquidity situation, as well as positive tax effects. 

Outlook for 2015 confirmed

Based on average own generation from hydropower in the second half of the year, we expect EBITDA of approximately €850m and a Group result of approximately €240m in financial year 2015, as published in the ad hoc notification dated 9 July 2015. The planned payout ratio for 2015 remains at approximately 50% of the Group result of around €240m after adjustment for non-recurring effects.

Key figure Unit Q1-2/2014** Q1-2/2015 Change in %
Revenue* €m 1,416.1 1,405.4 -0.8
EBITDA €m 354.8 489.1 37.9
Operating result €m 196.7 303.7 54.4
Group result €m 56.6 196.3 246.6
Earnings per share 0.16 0.57 246.6
EBIT margin* % 13.9 21.6
EBITDA margin* % 25.1 34.8
Cash flow from operating activities €m 345.0 421.8 22.2
Free cash flow after dividends €m -322.8 304.9
Gearing % 78.2 71.9
* The comparative figures have been adjusted retrospectively in accordance with IAS 8. ** The calculation of the figures takes account of the profit/loss after tax from discontinued operations (equivalent to the profit/loss after tax attributable to the French companies Pont-sur-Sambre Power S.A.S. and Toul Power S.A.S., which were classified as “held for sale” until their deconsolidation in 2014).

Additional information and the interim report for quarters 1-2/2015 is available at www.verbund.com > Investor Relations > Latest financial results.

Contact

Andreas Wollein Andreas Wollein

Head of Group Finance, M&A and Investor Relations

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