The energy market
environment, which is vitally important for our business, continued to improve
in recent months in spite of the COVID-19 crisis. Wholesale electricity prices,
one of the main value drivers of VERBUND’s business performance, increased on
the back of rising prices for CO2 emission rights, which are being
pushed up by the strong commitment of the EU member states to achieving
comprehensive decarbonisation of the energy system. This favourable development
underpins VERBUND’s business model and will allow us to implement an ambitious
and sustainable investment programme over the next three years. The investments
will focus on further strengthening the Austrian high-voltage grid – a key
prerequisite for decarbonisation of the energy system in Austria and Europe –
as well on further expanding domestic hydropower generation and building up new
renewable electricity production. VERBUND is also moving into new fields of
application that will play an important role in the successful implementation
of the energy transition over the coming years. Some examples are the
development of a green hydrogen system, the advancement of electromobility and
the development of storage systems.
The performance of VERBUND shares in quarter 1/2021 was impacted not only by the protracted COVID-19 crisis but in particular by high inflows and outflows in exchange traded funds (ETFs) in connection with clean energy and a major index reweighting in the S&P Global Clean Energy Index. After reaching their high in early February, the shares experienced a correction which lasted until the beginning of March, followed by a volatile sideways movement until the end of the quarter. VERBUND shares ended quarter 1/2021 trading at €62.0, down 11.2% compared with year-end 2020.
VERBUND’s earnings figures for quarter 1/2021 were down slightly, due mainly to a year-on-year drop in production of electricity from hydropower attributable to a lower water supply. EBITDA decreased by 8.6% to €302.7m, and the Group result fell by 7.6% to €144.7m. The hydro coefficient for the run-of-river power plants in quarter 1/2021 came to 0.99, which is 1 percentage point below the long-term average and 10 percentage points below the year-ago figure. Generation from annual storage power plants also decreased substantially in quarter 1/2021 due to market conditions. Overall, generation from hydropower was down 11.2% on the previous year’s level. However, the marked increase in wholesale electricity prices on the spot markets gave a boost to earnings – unlike futures market prices, which declined in the relevant period. The average sales price for our own generation from hydropower increased by €1.7/MWh to €47.6/MWh.
Outlook for 2021 adjusted
Based on expectations of average own generation from hydropower and wind power in quarters 2–4/2021 and the opportunities and risks identified, VERBUND currently expects EBITDA of between around €1,130m and €1,300m and a Group result of between around €480m 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 €480m and €590m, after adjustment for non-recurring effects.