Verbund generates record results in quarter 1/2008

4/22/2008Wien

Verbund, Austria's leading electricity company, continued its positive business development in quarter 1/2008 and further strengthened its position as one of the leading hydropower groups in the European market. Sales revenue increased by 9.8 % to 891.7 million Euro, the operating result rose by 15.1 % to 275.9 million Euro and the group result was up 11.8 % at 210.3 million Euro.

Against the backdrop of a sustained positive business development, Verbund is raising its earnings forecast for fiscal 2008.

The control-specific ratios also displayed a very positive development: The EBIT margin rose from 29.5 % to 30.9 %, the EBITDA margin improved from 35.0 % to 35.9 % and net gearing was lowered from 71.0 % to 68.4 %. The operating cash flow was significantly improved – it increased by 56.3 % from 197.9 million Euro to 309.3 million Euro.

Ratios Unit Q1/2007 Q1/2008 Change
Sales revenueMio. €812.2891.7+9.8
Operating resultMio. €239.7275.9+15.1
Group resultMio. €188.2210.3+11.8
Net gearing%71.068.4-3.7
Operating cash flowMio. €197.9309.3+56.3

Sales prices in the European electricity markets increased
After the sharp decline in the European spot market prices for electricity in 2007 due to the drop in the prices for CO2-emission rights and the extraordinarily warm winter, prices recovered again in quarter 1/2008. This development is essentially attributable to the high costs for primary energy sources and CO2 emission rights as well as the decline in European reserve capacities. The prices for day-ahead supplies on the German electricity exchange EEX in quarter 1/2008 came to an average of 56.2 Euro/MWh for base load and were therefore 89 % up on the corresponding values in the previous year. The prices for peak load rose by 77 %. Furthermore, the European forward prices are still at a high level. For this reason, Verbund managed to increase its average sales prices in the European electricity markets in quarter 1/2008.

Water supply above the long-term average
In the first three months of 2008, the water supply of the Austrian rivers, which is measured with a hydro coefficient, came to 1.03 and therefore lay three percentage points above the long-term average and two percentage points above the value recorded in the previous year. Generation at the run-of-river power plants therefore displayed a slight increase compared to the previous year. Generation at the storage power plants fell, however, by approx. 25 % on account of the low reservoir levels compared to 2007. In total, electricity generation from hydropower dropped by 298 GWh to 5,263 GWh. Generation at the thermal power plants rose by 21 GWh to 1,151 GWh. The total generation of the group, at 6,414 GWh, was 4.1 % lower than in the previous year.

Foreign joint ventures growing successfully
The joint ventures of Verbund in Italy, France and Turkey are also developing very well. The Italian electricity and natural gas company Sorgenia, in which Verbund holds a 38 % interest, managed to increase profits after taxes and minority interests by almost 16 % last year. The construction of the 770 MW gas power plant Modugno is well advanced; commissioning will take place at the end of this year. The construction work for two further 770 MW thermal power plants is due to commence this year. Sorgenia currently has a generation capacity of over 2,000 MW in Italy.

In France, the construction work for the thermal power plant Pont sur Sambre (412 MW) is already well advanced. Commissioning is scheduled for quarter 1/2009. Further thermal power plants of the Verbund joint venture are currently in the planning and approval phase.

In Turkey, EnerjiSA, which is owned equally by the Verbund Group and the Sabanci-Holding, has decided to construct a 920 MW gas power plant, which is to be located in Bandirma on the south coast of the Sea of Marmara in northwest Turkey. Commissioning is scheduled for autumn 2010. EnerjiSA currently has an installed output of 455 MW (370 MW gas power plants and 85 MW hydropower plants) and holds licenses for hydropower plants with a total output of 908 MW, wind power plants with a total output of 150 MW and a brown coal field for a 450 MW power plant. The majority of the power plants should be connected to the grid between 2010 and 2012. With an installed output of 5,000 MW, EnerjiSA aims to win a minimum market share of 10% in the Turkish electricity market by 2015.

Expansion of capacities and customer growth in Austria
The power plant and line construction projects initiated by Verbund in Austria are either progressing according to or are well ahead of schedule. The latest construction phase for "Limberg II", the excavation of the machine caverns, was, for example, completed four months earlier than expected. The pumped storage power plant, which will more than double the output of Verbund's Kaprun power plant group, is due to be commissioned in 2012. The construction of the Styria line, an important section of the future 380 kV high-voltage ring in Austria, is also proceeding according to schedule. Verbund's activities in the Austrian end customer segment are also thriving: In less than three years, the distribution subsidiary VERBUND-Austrian Power Sales GmbH (APS) has attracted almost 140,000 customers.

Earnings forecast for 2008 improved
Against the backdrop of a positive and stable business development, the Chairman of the Managing Board of Verbund, Michael Pistauer, is raising his earnings forecast for fiscal 2008: "Assuming an average water supply, we aim to increase the operating result and the group result by 15%." In addition, Verbund intends to further increase the dividend for fiscal 2008 on the basis of a pay-out ratio of between 45 % and 50 %.