Corporate news: VERBUND results for quarters 1–2/2022

28.07.2022Vienna

Positive income trend fuelled by increase in wholesale prices for electricity

Geopolitical tensions, the ongoing war in Ukraine, record inflation and expectations of interest rate hikes continued to dominate the landscape in quarter 2/2022. The difficult economic climate caused significant distortion in Europe’s energy markets as well as sharp increases and volatility in energy prices. Changes in gas supply volumes and a change in the off-take structure were especially noticeable in the development of gas prices. 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 current trend in the international energy markets is a stark reminder of the urgent need to expand renewable electricity generation and also enlarge grids and storage facilities. The spotlight is on fossil fuel phase-out, and VERBUND is making a valuable contribution to this endeavour. In pursuing its 2030 strategy, VERBUND will invest heavily, not only in its traditional core business of hydropower and power grids, but also in the expansion of renewable generation and the development of Europe’s hydrogen economy. We will invest around €363m in hydropower operations in 2022, primarily in the Limberg III, Reißeck II plus and Töging projects. Capital spending on our electricity network will come in at around €354m in 2022, the largest projects being the 380-kV Salzburg line and the Reschenpass project. VERBUND is thus making an important contribution to ensuring security of supply in Austria.

The ongoing war in Ukraine and its repercussions for the utilities sector put a damper on the performance of VERBUND shares in quarters 1–2/2022. Trading at a closing price of €93.4 as at 30 June 2022, VERBUND shares recorded a loss of 5.6% in quarters 1–2/2022 against year-end 2021, which meant that the stock far outperformed the Austrian benchmark index ATX (–25.4%) and the sector index STOXX Europe 600 Utilities (–13.2%).

VERBUND saw a significant improvement in the results posted for quarters 1–2/2022. EBITDA climbed by 110.5% to €1,378.9m. The Group result soared by 151.8% to €817.1m compared with the same period of the previous year. The hydro coefficient for the run-of-river power plants dropped to 0.90, or 6 percentage points below the prior-year figure and 10 percentage points below the long-term average. Generation from the annual storage power plants rose by 18.7% in quarters 1–2/2022 compared with the prior-year reporting period. Generation from hydropower thus fell by a total of 455 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 €65.9/MWh to €112.5/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, and the significantly higher contribution from flexibility products also had a positive effect. The Group result for quarters 1–2/2022 was influenced by non-recurring effects of €82.6m (Q1–2/2021: €9.3m). Adjusted for these non-recurring effects, the Group result rose by 133.0% to €734.5m.

Outlook for 2022

Based on average own generation from hydropower, wind power and photovoltaic production in quarters 3–4/2022 and the opportunities and risks identified, VERBUND expects EBITDA of between approximately €3,000m and €3,500m and a reported Group result of between approximately €1,680m and €2,030m in financial year 2022. VERBUND is also planning a payout ratio for 2022 of between 45% and 55% of the Group result of between around €1,600m and €1,950m, after adjustment for non-recurring effects. The earnings forecast and the information on the expected payout ratio are contingent on VERBUND not being impacted by possible energy policy measures to skim off some of the profits at energy companies.

Furthermore, the Executive Board of VERBUND AG has resolved to propose to the 2023 Annual General Meeting that on the basis of the strong business performance a special dividend of €400m be paid in addition to the regular dividend. Distribution of the dividends must be approved by the Supervisory Board at the meeting at which the annual financial statements are to be approved and also requires the approval of the shareholders of VERBUND AG at the 2023 Annual General Meeting.
KPIs Unit Q1-2/2021 Q1-2/2022 Change in %
Revenue €m 17 243,0 47 318,0 1 744,0
EBITDA €m 6 549,0 13 789,0 1 105,0
Operating result €m 4 591,0 11 842,0 1 579,0
Group result €m 3 245,0 8 171,0 1 518,0
Earnings per share 0,93 2,35 1 518,0
EBIT margin % 266,0 25,0
EBITDA margin % 38,0 291,0
Cash flow from operating activities €m 4 264,0 9 203,0 1 158,0
Free cash flow before dividends €m -1 415,0 3 669,0
Free cash flow after dividends €m -4 731,0 -111,0
Performance of VERBUND shares % 112,0 -56,0
Gearing % 387,0 67,0
Additional information as well as the Interim Financial Report for quarters 1–2/2022 is available at www.verbund.com > Investor Relations > Latest financial results.

Contact

Andreas Wollein Andreas Wollein

Head of Group Finance and Investor Relations

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