VERBUND managed to continue the profitable growth trend of quarter 1/2004: Austria’s leading electricity company clearly improved sales, the operating result and the group result in quarters 1-2/2004. This success is largely due to the successful expansion and diversification of international electricity distribution activities with the focus on profitability and the utilization of the rising wholesale prices. After fulfilling the essential antitrust condition, the Austrian Electricity Solution received the required antitrust approval. The capital increase in the Italian joint venture Energia creates a sound basis for the further growth of the group abroad.
Very good sales and earnings trend
The European market environment developed extremely favorably for VERBUND. The declining reserve capacities in the area of electricity generation, increasing and volatile fuel costs and the costs for the implementation of the climate protection measures ensure that the wholesale prices for electricity are under constant upwards pressure. This trend is set to continue long term as the full costs for the construction of power plants are not yet covered at the current price level. Generating the majority of its electricity from hydropower and being a wholesaler with a strong position on the domestic market and a highly diversified marketing structure in the neighboring European electricity markets, above all, in Italy, Germany and Slovenia, VERBUND profits greatly from this development.
Once again, sales revenue increased by a substantial 22.0 % to € 1,465.3 million. The increase in sales revenue and the lean cost structure which has been achieved through consequent restructuring programs in the past years are essential contributors to the 19.2 % improvement in the operating result to € 191.3 million. Substantial debt clearing from the cash flow and a significant jump in investment income allowed the group result to improve by 15.0 % to € 145.3 million in spite of the considerable number of positive one-off measures in the previous year. This positive earnings trend has also led to an improvement of all the essential control-specific group ratios which already lie above the European industrial average. Net gearing was reduced from 183,0 % to 151.1 % and the operating cash flow increased by 3.7 % to € 259.5 million.
Strong share performance
The price of the VERBUND share also developed very positively in quarter 2/2004: Since the beginning of the year, the share has achieved a plus of 56.1 %. Consequently, the VERBUND share clearly outperformed the DJ STOXX Utilities (+12.4 %) and the ATX (+28.8 %) and is therefore among the shares with the highest value increase of all the listed European electricity companies.
Austrian Electricity Solution on the home straight
The Austrian Electricity Solution, the merger of the electricity trading business and the major customer business of VERBUND and the partner companies of EnergieAllianz, is about to become reality. Following the sale of the VERBUND distribution subsidiary APC to the Slovenian company Istrabenz, the central requirement of the European cartel office with a suspending effect has now been fulfilled. The antitrust approval of the European Commission was granted on 08 July 2004. Operations are planned to commence on 01 October 2004. From then on, VERBUND expects synergies in the amount of € 40 million p.a. with a proportionate share in 2004.
Expansion of activities in Italy
In quarter 2/2004, VERBUND increased its interest in the Italian joint venture “Energia” to 37.5 % through a capital increase in the amount of € 150 million. In this way, VERBUND strengthened its activities in one of Europe’s most attractive electricity markets: the price level is considerably higher than in all the other European states. VERBUND expects that the setting up of new power plants and the implementation of the repowering of existing plants in Italy will lead to significant earnings contributions and dividend flow back from 2007 onwards. Consequently, the Italian interest makes an important contribution to the profitable growth of the group.
Detailed information on the results for quarters 1-2/2004 can be found under http://www.verbund.at/. Here, you can either download the Interim Report or view the user-friendly online version.