The dramatic transformation of the European electricity markets is still ongoing. There are three main reasons for this: substantially lower hydropower generation due to lower water supply, the even lower wholesale prices for electricity as well as non-recurring expenses for thermal power plants. Profitability of conventional generation facilities in Europe is rapidly declining. The situation of gas power plants is a particularly precarious one. In May, VERBUND approved the restructuring of thermal generation. This includes the temporary decommissioning of the combined cycle gas turbine power plants in Mellach, Austria, as well as in Pont-sur-Sambre and Toul in France. In addition, the Dürnrohr hard coal power plant and the Neudorf-Werndorf oil-fired district heating plant were closed.
Focus on cost management, energy-related services and innovative products
VERBUND invests mainly in efficiency measures for its existing power plants and in the finalization of ongoing projects. The internal cost-management-programme is rigorously executed and saves €130m accumulated until 2015.
In the first half of 2014, around 95 % of the electricity generated by VERBUND was from renewable energy such as hydropower and wind power. Around 320,000 household customers opted for electricity from 100 % Austrian hydropower from VERBUND. VERBUND is entering new business segments with innovative products like VERBUND-Eco-packages for households and energy-related services for industrial and commercial customers.
Outlook for financial year 2014
Based on average own generation from hydropower in the second half of the year, the VERBUND expectations now are for EBITDA to be approximately €690m and the Group result to be approximately €70m for financial year 2014. The planned payout ratio for 2014 remains at approximately 50 % of the Group result of approximately €150m after adjustment for non-recurring effects.