VERBUND AG: Results for Q1/2021
Slight decline in the earnings performance due to lower water flow
The earnings figures for Quarter 1/2021 were down slightly due to electricity generation from hydropower, which was lower compared to the previous year; this can be traced to a reduced water flow. EBITDA fell by 8.6% to 302.7 million euros, the group result by 7.6% to 144.7 million euros. The earnings forecast was
adjusted for financial year 2021: an EBITDA of between around 1,130 and 1,300 million euros and a group result of between around 480 and 590 million euros is expected.
Underlying conditions in the energy industry, which are important to our business, continued to improve in recent months, despite the COVID-19 crisis. For example, wholesale prices for electricity, an important value driver for the business development of VERBUND, increased due to the rising prices for CO2 certificates. The strong commitment of the EU Member States to comprehensive decarbonisation of the energy system is assisting with this. This positive development supports the business model of VERBUND and will enable 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 decarbonising the energy system in Austria and Europe, on the further expansion of domestic hydropower generation and on the expansion of new, renewable electricity production. News areas of application will also be set up, which will make a significant contribution to the successful implementation of the energy transition in the coming years. This concerns, for example, the development of a green hydrogen system, the advancement of electromobility and the development of storage systems.
Performance of the VERBUND share in Q1/2021 was, apart from the ongoing COVID-19 crisis, mainly influenced by high inflows and outflows in ETFs (Exchange Traded Funds) in connection with “Clean Energy” and a large index conversion in the S&P Global Clean Energy Index. The peak in the share price at the beginning of February marked the beginning of a correction that continued until the beginning of March and then transitioned to a volatile sideways movement until the end of the quarter. With a closing price of €62.00 as at 31 March 2021, the VERBUND share ended Q1/2021 11.2% lower than on the last day of 2020.
The earnings figures for Quarter 1/2021 were down slightly due to electricity generation from hydropower, which was lower compared to the previous year; this can be traced to a reduced water flow. EBITDA fell by 8.6% to 302.7 million euros, the group result by 7.6% to 144.7 million euros. The generation coefficient of the run-of-river power plants in Q1/2021 was 0.99 and thus 1 percentage point below the long-term average and around 10 percentage points below the comparative value for the previous year. Due to market events, generation at the annual storage power plants was also significantly lower in Q1/2021. In total, generation from hydropower was 11.2% below the level of the previous year. In contrast, the sharp rise in spot market prices on the wholesale market for electricity had a positive impact on earnings performance. However, prices on the futures market declined in the relevant period under review. The average sales price achieved in the area of own generation from hydropower increased by 1.7 EUR/MWh to 47.6 EUR/MWh.
Earnings forecast for 2021 adjusted
On the basis of average own generation from hydropower and wind power in Q2-4/2020, as well as the opportunity and risk situation for financial year 2021, an EBITDA of between around 1,130 million euros and 1,300 million euros and a group result of between 480 million euros and 590 million euros is expected. Financial effects from the planned acquisition of the 51% share in Gas Connect Austria GmbH are not considered in this earnings forecast. For financial year 2021, VERBUND is planning a distribution ratio of between 45% and 55%, based on the group result adjusted for non-recurring effects of between around 480 million euros and 590 million euros.
An important implementation step of the VERBUND strategy in Q1/2021 was the decision to implement the projects Limberg III with a capacity of 480 MW in Salzburg and Reißeck2+ with a capacity of 45 MW in Carinthia. VERBUND is investing more than half a billion euros in the construction of both projects. Apart from their special energy-related significance for a sustainable and secure power supply, the implementation also represents a powerful boost to the domestic economy for overcoming the economic crisis caused by COVID-19.
At the end of April 2021, VERBUND announced the joint venture with Visiolar, an agricultural group of companies in Lower Saxony/Germany. In a first step, it is planned to make up to 1,400 hectares in Brandenburg, Germany, available for the generation of electrical energy from photovoltaics, which corresponds to an installed output of around 1,400 MWp.