VERBUND, Austria’s leading electricity company and one of Europe’s largest producers of hydropower, presents considerably improved results for the first six months of 2013 despite a deterioration of the operating environment in the European energy market. In total, the water supply, asset swap and impairments have a favourable impact on results. EBITDA improved by a total of €134.7m to €794.3m and the Group result increased by €234.1m to €448.2m. The outlook for the full year 2013 is still for EBITDA of at least €1,150m and Group result of at least €600m.
In quarters 1–2/2013, business operations were driven by good water supply. The hydro coefficient was 11.0% above the long-term average and 2 percentage point above the previous year’s figure. However, the overall decline in wholesale electricity prices and the continuing difficult economic situation for gas power plants put a strain on business operations. Overall, the result during the first half of 2013 was influenced by significant non-recurring effects from the successful completion of the asset swap with German utility E.ON and from the impairment losses resulting from impairment tests made necessary by the market situation. EBITDA improved by a total of €134.7m to €794.3m and the Group result increased by €234.1m to €448.2m.
Extremely heavy precipitation in late May until early June resulted in severe flooding of the Danube and its tributaries necessitating the shutdown of power plants on the Danube.
Adjustment of investment volume and cost structure
After the adjustment of investments was completed at the beginning of the year, VERBUND reduced the investment programme by an additional €300m. Investments of €1.2bn (rather than €1.5bn) will be made unitl 2017 – primarily in regulated business areas such as the Austrian high-voltage grid and wind power projects. Hydropower projects currently under construction such as the Reisseck II 430-MW pumped storage power plant will be completed, and investments in efficiency improvements to existing hydropower plants such as Ybbs-Persenbeug will be continued.
The focus is on increasing efficiency even further and significantly reducing the cost base. Cost reductions totalling €130m have thus been initiated until 2015. In addition to ongoing measures, all options for reducing losses and optimising the gas power plant portfolio are being evaluated. In this context, VERBUND filed an application for redress for competition law infringements with the Austrian Cartel Court in May 2013 for the Mellach power plant gas supply agreement.
The poor market environment resulted in trigger factors for impairment tests. Consequently, impairment losses were recognised in quarter 2/2013 for the CCGTs in Austria and France in the amount of €660m as well as for the minority interest of VERBUND in Sorgenia S.p.A. (Group) in the amount of €396m. Further impairments of €96m were recognised for renewable energy projects and other equity interests. The impairments adjust balance sheet values of installations and equity interests to the current conditions and ease the burden on future results.
Selective growth through expansion of regulated areas and market initiative
The development of wind power as a supplement to hydropower is proceeding according to plan. The Romanian Casimcea I wind farm with almost 100 MW was officially opened in June 2013; an additional 125 MW will be completed as of the end of 2013. In the German state of Rhineland-Palatinate, construction on the 5 wind farms acquired last year (86 MW) will be completed by quarter 3/2013. A public participation project began during the planned expansion of the VERBUND wind farm in Lower Austrian Bruck an der Leitha – capacity is planned to double to 100 MW by 2017. Investments in the grid infrastructure increase the security of supply in Austria and allow the expansion of renewable energy. An environmental impact report is being prepared in Salzburg and Upper Austria for the second part of the 380 kV Salzburg line.
Sales to consumers increased by a total of 236 GWh in the first six months. In Austria, VERBUND has around 266,000 consumers in the household/agriculture and commercial segment. The electricity provider continues its market initiative with new products and services such as the VERBUND solar power package PLUS (incl. storage system) and increased advertising measures.
Outlook for the full year
Based on the effects of the asset swap with E.ON and the impairment tests, for financial year 2013, VERBUND expects EBITDA to amount to at least €1,150m and the Group result to amount to at least €600m. The forecast is based on a hydro coefficient of 1.05. Distribution of a dividend of €1 per share is still planned for financial year 2013.