Corporate news: VERBUND annual results for 2020

3/17/2021Vienna

Encouraging business performance despite COVID-19 crisis

Financial year 2020 was very encouraging in spite of the COVID-19 crisis. The excellent results and the solid performance of VERBUND shares demonstrate that our sustainable business model works well even in times of crisis and that the Group has considerable strategic flexibility and resilience to external influences. As a supplier of electricity generated almost exclusively from renewable sources of energy, we are ideally positioned to navigate a decarbonised, decentralised and digitalised energy future.
In 2020, the COVID-19 crisis led to a rapid deterioration of the overall energy market in which VERBUND operates. Following the onset of the crisis in Europe, wholesale electricity prices fell due to lower electricity demand, an excess supply of CO2 emission rights and a drop in prices for coal, gas and oil. In the wake of this downturn in the first half of 2020, the energy market environment started to improve again from mid-2020. Wholesale prices for electricity recovered, and prices for coal, gas and CO2 emission rights began to stabilise again mid-year. 
The good positioning in connection with the improvement in the energy market environment was also rewarded accordingly in the capital markets. VERBUND shares finished the year trading 56.1% higher and thus significantly outperformed the ATX and the STOXX Europe 600 Utilities. Its market capitalisation of €24.3bn as at 31 December 2020 made VERBUND the highest-valued company on the Vienna Stock Exchange. Rating agencies S&P and Moody’s confirmed VERBUND AG’s good rating with “A/stable outlook” and “A3/stable outlook”, respectively. VERBUND therefore ranks among one of Europe’s premium utilities. 
The results posted by VERBUND for financial year 2020 improved in spite of negative impacts caused by COVID-19. EBITDA increased by 9.2% to €1,292.8m. The Group result rose by 13.8% to €631.4m compared with the previous year. At 1.01, the hydro coefficient for the run-of-river power plants was on a level with the previous year and 1 percentage point above the long-term average. Generation from our annual storage power plants increased by as much as 14.8% in quarters 1–4/2020. Generation from hydropower therefore increased by 864 GWh compared with the previous reporting period. The rise in wholesale electricity prices on the futures markets during the relevant hedging period also had a positive effect on earnings. By contrast, prices on the spot markets declined significantly in 2020, due in particular to the effects of the COVID-19 crisis. As a consequence of these developments, the average sales prices obtained for VERBUND’s own generation from hydropower increased by €5.6/MWh to €44.6/MWh. The EBITDA contribution from the Hydro segment thus rose significantly. The EBITDA contribution from the Sales segment also increased, while the contributions from the New renewables, Grid and All other segments decreased. The development of the financial result was very encouraging, due among other things to a significant reduction in interest expenses attributable to high principal repayments in financial years 2019 and 2020. The Group result for financial years 2019 and 2020 was also influenced by non-recurring effects. Adjusted for these non-recurring effects, the Group result rose by 11.2% to €610.4m. All of the Group’s management KPIs saw a considerable improvement. The Group further reduced its debt level, significantly improved its margins and substantially increased its return on capital employed. 

Dividend for 2020

A dividend of €0.75 per share for financial year 2020 will be proposed at the Annual General Meeting on 20 April 2021. The payout ratio calculated on the basis of the reported Group result amounts to 41.3% for 2020 and the payout ratio calculated on the basis of the Group result after adjusting for non-recurring effects is 42.7%.

Forecast for 2021

Based on expectations of average levels of own generation from hydropower and wind power and the opportunities and risks identified, VERBUND currently expects EBITDA of between around €1,080m and €1,300m and a Group result of between around €450m and €590m in financial year 2021. 
Financial effects from the planned acquisition of the 51% stake in Gas Connect Austria GmbH are not included in this earnings forecast. VERBUND’s planned payout ratio for 2021 is between 45% and 55% of the Group result of between around €450m and €590m, after adjustment for non-recurring effects. 

Contact

Andreas Wollein Andreas Wollein

Head of Group Finance and Investor Relations

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Key figures Unit 2019 2020 Change in %
Revenue €m 3,895.0 3,234.6 -17.0
EBITDA €m 1,183.5 1,292.8 9.2
Operating result €m 865.9 921.9 6.5
Group result €m 554.8 631.4 13.8
Earnings per share 1.60 1.82 13.8
EBIT margin % 22.2 28.5
EBITDA margin % 30.4 40.0
Cash flow from operating activities €m 1,204.3 1,191.0 -1.1
Free cash flow before dividend €m 817.4 590.9 -27.7
Free cash flow after dividend €m 639.3 299.5 -53.1
Net debt/EBITDA X 1.9 1.5
Performance of VERBUND shares % 20.1 56.1
(Proposed) dividend per share 0.69 0.75 8.7
Greenhouse gas emissions Scope 1 direct emissions * kt CO2e 1,072.7 653.3 -39.1
Specific GHG emissions (Scope 1/total electricity generated) ** g CO2e/kWh 32.4 19.5 -39.7
* preliminary data prior to ETS audit
** based on total electricity generated (incl. purchase rights excluding electricity generated for district heating)

Additional information as well as non-financial KPIs can be found in the Integrated Annual Report 2020, available on the website www.verbund.com > About VERBUND > Investor Relations > Latest financial results.