Corporate news: results for quarter 1/2022

5/12/2022Vienna

Positive income trend fuelled by strongly increased sales prices for electricity

Prices for primary energy in the international procurement markets had already rocketed in 2021. This trend was exacerbated by the outbreak of the war in Ukraine in late February 2022. Supply shortages and low stocks in Europe coupled with high demand were especially noticeable in the development of gas prices. The uncertainty around gas deliveries created by the geopolitical conflict in Eastern Europe further pushed up gas prices and generated considerable volatility among commodities across the board in the energy markets. As a consequence of the surge in global market prices for primary energy and the high cost of emission allowances, Europe also witnessed a rise in wholesale prices for electricity.

The geopolitical challenges are putting growing pressure on policy-makers in Europe to exit from fossil fuels and reduce dependence on energy imports. This calls for increased development of renewables as well as accelerated expansion of grids and storage facilities. VERBUND can make an important contribution to this. Over the coming years, for example, VERBUND will invest heavily in power plant and grid expansion and continue to guarantee security of supply in Austria.

The performance of VERBUND shares in quarter 1/2022 was impacted in particular by the war in Ukraine and the knock-on effects on primary energy prices. After reaching their high for the quarter on 28 February, the shares experienced a sharp correction, followed by a volatile sideways movement lasting until the end of the period now ended. Trading at a closing price of €95.5 as at 31 March 2022, VERBUND shares recorded minor losses of 3.4% in quarter 1/2022 against year-end 2021.

VERBUND saw a significant improvement in the results posted for quarter 1/2022. EBITDA climbed by 169.3% to €814.9m. The Group result soared by 255.6% to €514.4m compared with the same period of the previous year. The hydro coefficient for the run-of-river power plants dropped to 0.94, or 5 percentage points below the prior-year figure and 6 percentage points below the long-term average. Generation from VERBUND’s annual storage power plants rose by 15.1% in quarter 1/2022 compared with the prior-year reporting period. Generation from hydropower thus fell only slightly by 47 GWh. The sharp increase in wholesale electricity prices on the futures and spot markets gave a significant boost to earnings. The average sales prices obtained for VERBUND’s own generation from hydropower rose by €66.3/MWh to €113.8/MWh. The consolidation of Gas Connect Austria GmbH, the regulated gas transmission and distribution system operator in Austria acquired with effect from 31 May 2021, likewise had a positive effect. The contribution from flexibility products also rose significantly as a result of greater volatility in the electricity market. In the Thermal generation segment, increased use of the Mellach combined cycle gas turbine power plant made a positive contribution to earnings. The Group result in quarter 1/2022 was also bolstered by a positive non-recurring effect in taxes on income in the amount of €56.6m. This effect results from the revaluation of deferred tax as a consequence of the decision to lower Austria’s corporate income tax rate in connection with the Eco-social Tax Reform Act. The Group result after adjustment for this non-recurring effect was €463.7m, an increase of 220.6% on the year-earlier figure.

Outlook for 2022 adjusted

Based on average own generation from hydropower, wind power and PV production in quarters 2–4/2022 and the opportunities and risks identified, VERBUND expects EBITDA of between approximately €2,800m and €3,500m and a reported Group result of between approximately €1,550m and €2,000m in financial year 2022. VERBUND is planning a payout ratio for 2022 of between 45% and 55% of the Group result of between around €1,500m and €1,950m, after adjustment for non-recurring effects.

The earnings forecast and the information on the expected payout ratio are contingent on not being impacted by possible energy policy measures to skim off some of the profits at energy companies – something which is currently being debated at European and national level.
KPIs Unit Q1/2021 Q1/2022 Change in %
Revenue €m 818.1 2,531.9 209.5
EBITDA €m 302.7 814.9 169.3
Operating result €m 207.9 705.7 239.4
Group result €m 144.7 514.4 255.6
Earnings per share 0.42 1.48 255.6
EBIT margin % 25.4 27.9
EBITDA margin % 37.0 32.2
Cash flow from operating activities €m 203.7 209.2 2.7
Free cash flow before dividends €m 35.3 -105.1
Free cash flow after dividends €m 35.3 -105.1
Performance of the VERBUND-share % -11.2 -3.4
Gearing % 26.7 60.7
Additional information as well as the Interim Financial Report for quarter 1/2022 is available on the website www.verbund.com > Investor Relations > Latest financial results.

Contact

Andreas Wollein Andreas Wollein

Head of Group Finance and Investor Relations

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