Implementation of the programme approved by the VERBUND Executive Board with a view to further reducing debt has been consequently continued. The measures under the programme to reduce costs and increase efficiency include significantly reducing capital expenditure, freezing costs at 2015 levels through to 2019 and reducing the payout ratio for 2016 to around 30%. This already had a positive impact on VERBUND’s rating. Moody’s and Standard & Poor’s left their rating at Baa2 and BBB respectively, but raised the outlook from negative to stable.
Compared with the previous year, earnings were on a positive trend in quarters 1–3/2016: both EBITDA and the Group result, adjusted and unadjusted, showed a sharp increase. The year-on-year improvement in water supply had a positive impact on earnings. Represented by a hydro coefficient of 1.01, this was up 7 percentage points compared to the level in quarters 1–3/2015 and 1% above the long-term average. Earnings were also boosted by the settlement of various outstanding issues between VERBUND and EconGas related to gas deliveries for the Mellach combined cycle gas turbine power plant, the implementation of measures under the programme to reduce costs and increase efficiency, and higher (adjusted) contributions from the regulated Grid segment. The further decrease in average electricity sales prices, on the other hand, had a negative impact on earnings performance. These fell from €35.0/MWh at year-end to €30.6/MWh.
EBITDA increased by 11.5% to €809.7m in total. The Group result was up by 48.7% on the prior-year quarters to €339.9m. Overall, however, earnings for quarters 1–3/2016 were impacted by positive non-recurring effects. After adjusting for these non-recurring effects, the Group result rose by 12.7% to €276.4m and adjusted EBITDA by 2.8% to €698.4m.
Earnings outlook for 2016 raised
Given the positive trend in earnings in quarters 1–3/2016, we are raising our earnings forecast for the full year. Assuming an average water supply and average wind supply in the fourth quarter of 2016, we are expecting EBITDA of approximately €980m and a Group result of approximately €385m for financial year 2016. The planned payout ratio for 2016 will amount to around 30% of the Group result of approximately €315m after adjustment for non-recurring effects.