Ad Hoc: VERBUND AG: Updated Financial Outlook for 2013
VERBUND, Austria’s leading utility and one of Europe’s largest producers of hydropower, updated the financial outlook for financial year 2013 on the occasion of today’s analyst day in London.
The asset swap with E.ON was completed on April 24, 2013. As part of this transaction, VERBUND sold its 50% interest in Enerjisa Enerji A.S. in Turkey to E.ON and acquired E.ON shares in 8 run-of-river power plants in Germany in exchange. In addition to eliminating planned investments in Turkey, this results in immediate ongoing cash inflows and significant favourable non-recurring effects in the half-year result in the amount of approximately €1.3bn.
Economic conditions for electricity suppliers in Europe have deteriorated even more in recent weeks. Wholesale prices for electricity remain under sustained pressure. This is primarily a result of the massive oversubsidisation of new renewable energy resulting from government subsidies in combination with a non-functioning CO2 market. Gas power plants are under massive economic pressure from these factors along with long-term, overpriced gas supply agreements that are linked to the price of oil. To counteract these negative developments, VERBUND reduced the capital expenditure programme by an additional €300m through 2017 to €1.2bn, introduced cost reductions cumulatively amounting to €130m for the years 2013 through 2015 and realised divestments amounting to approximately €900m.
Trigger factors for impairment tests emerged as a result of the poor market environment. On the basis of these tests, VERBUND determined a need for significant, yet non-cash impairment losses in accordance with IFRS standards. With regard to gas, impairment losses must be recognised in the amount of €659m for the combined cycle gas turbine power plants in Austria and France, and €371m for the interest in Sorgenia S.p.A. (Group). In addition, further impairments of €96m must be recognised for renewable energy projects and in the equity interest area.
Based on the effects of the asset swap and the effects from impairment tests, VERBUND expects an EBITDA of at least €1,150m (–7% compared with 2012) and a Group result of at least €600m (+54% compared with 2012) for financial year 2013. The plan for 2013 is based on a hydro coefficient of 1.05. Management plans to distribute a dividend of €1 per share for 2013 are unchanged.
Further information and the presentation for the analyst day are available at www.verbund.com