Corporate news: VERBUND annual results for 2018

3/13/2019Vienna

Strong income trend despite low water supply

In recent years we at VERBUND have taken action in numerous areas to strengthen our core business and improve the resilience of the Group in today’s volatile energy market. This has enabled us to cut costs substantially and make progress in reducing the Group’s debt level. VERBUND now has a solid capital structure and considerable strategic flexibility that will allow us to take advantage of opportunities for growth as they arise.

The operating conditions in the energy market occurring throughout 2018 have developed favourably for our Group. Among other things, the recovery of wholesale electricity prices that began in Europe in 2017 has continued, with higher prices for CO2 emission rights in particular fuelling the upward price trend. VERBUND benefited greatly from the favourable market environment in 2018 thanks to the cost-efficient, environmentally friendly electricity generation capabilities.

The capital market responded favourably to the measures implemented and the improvements in the energy market climate, which resulted in two ratings increases for VERBUND AG in 2018. Moody’s raised its rating from Baa2/positive outlook to Baa1/positive outlook. Standard and Poor’s increased its rating for VERBUND AG from BBB+/stable outlook to A–/stable outlook. VERBUND is thus once again among Europe’s highest rated energy suppliers.

The income trend in financial year 2018 shows that EBITDA fell by 6.3% year-on-year to €864.2m due to the lower water supply and the Group result increased by 43.7% to €433.2m owing to non-recurring effects. In both the current and the previous reporting periods, however, earnings – especially the Group result – were heavily impacted by non-recurring effects. In 2018, such effects related above all to reversals of impairment losses recognised on the Group’s hydropower operations in Austria and Germany and on wind power operations in Romania. In total, the Group result contained non-recurring income of €91.0m in 2018 and EBITDA included non-recurring income of €0.8m. Adjusted for these non-recurring effects, EBITDA decreased by 4.0% to €863.5m and the Group result was down 3.5% to €342.2m. The low water supply in the 2018 reporting period was among others responsible for the income decline. The hydro coefficient for the run-of-river power plants was 0.94, or 5 percentage points below the prior-year figure and 6 percentage points below the long-term average. Notable in this context was the extremely low water supply in quarters 3 and 4/2018. Lower revenue from flexibility products also had a negative effect. The average sales prices obtained for our own generation from hydropower were also somewhat lower than in the previous year at €29.3/MWh (2017: €30.4/MWh). By contrast, the higher earnings contribution from the Grid segment and the good results achieved through the programmes implemented in recent years to reduce costs and increase efficiency had a positive impact.

Dividend for 2018

A dividend of €0.42 per share for financial year 2018 (identical to the previous year) will be proposed at the Annual General Meeting to be held on 30 April 2019. The payout ratio for 2018 will amount to 33.7% based on the reported Group result, or 42.6% after adjustment for non-recurring effects.

Outlook for 2019

On the basis of average own generation from hydropower and wind power as well as the existing opportunities and risks, VERBUND expects EBITDA of approximately €1,050m to €1,200m and a Group result of approximately €440m to €540m for financial year 2019.

For 2019, VERBUND is planning a payout ratio of 40% to 45% of the Group result of approximately €440m to €540m after adjustment for non-recurring effects.

Key figures Unit 2017 2018 Change in %
Revenue €m 2,913.2 2,847.9 -2.2
EBITDA €m 922.3 864.2 -6.3
Operating result €m 400.1 655.1 63.7
Group result €m 301.4 433.2 43.7
Earnings per share 0.87 1.25 43.7
EBIT margin % 13.7 23.0
EBITDA margin % 31.7 30.3
Cash flow from operating activities €m 640.6 664.1 3.7
Free cash flow before dividend €m 416.1 415.3 -0.2
Net debt/EBITDA X 3.1 3.0 -3.9
Performance of VERBUND shares % 32.8 84.9
(Proposed) dividend per share 0.42 0.42 0.0
Greenhouse gas emissions Scope 1 direct emissions kt CO2e 1,358.1 1,069.7 -21.2
Specific GHG emissions (Scope 1/total electricity generated) g CO2e/kWh 41.3 34.4 -16.8

Further information and non-financial indicators can be found in the 2018 Integrated Annual Report available at www.verbund.com > Investor Relations > Latest financial results.

Contact

Andreas Wollein Andreas Wollein

Head of Group Finance, M&A and Investor Relations

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