Verbund Reports Drop in Group Result and Sale of French Poweo
The Austrian electricity group suffered from extraordinarily weak water supply in the first six months of the year. The stake in French Poweo will be sold to competitor Direct Energie.
Verbund reported results for the first half of 2011 today. The group generated revenue of € 1.87bn (+18.1% year-on-year). The operating result improved by 1.7% to € 388.7m, while the group result declined by 16.2% to € 176.3m. The Group succeeded in increasing its operating result in quarters 1-2/2011, despite the far below-average water supply in quarter 2/2011. At 0.86, the hydro coefficient in the first half of 2011 was 14% below the long-term average (6 percentage points below the previous year's level). This had a negative impact of € 82.5m on the operating result. Generation from annual storage power plants was also below the previous year's level. Thus, Verbund’s own generation from hydropower fell 6.0% year-on-year to 11,752 GWh. In contrast, generation from thermal power rose 34.1% year-on-year to 2,454 GWh. Overall, Verbund’s own generation decreased by slightly less than 1%.
The Group result was impacted in particular by the negative result from equity interests. Foreign exchange losses from the measurement of liabilities denominated in foreign currency on the part of the Turkish joint venture, the lack of positive effects on earnings from tax benefits for investments at the Italian company Sorgenia Holding S.p.A. and the difficult market situation as well as restructuring at the French company Poweo and its subsidiaries resulted in a significant decrease in the contribution to the result of foreign equity interests. European wholesale prices rose following the nuclear crisis in Japan and the German moratorium on nuclear power. Verbund sells the majority of its annual own generation one year in advance as part of its hedging strategy. Thus, the development of wholesale prices is not directly reflected in the 2011 half-year result, but rather in the 2012 results.
Assuming an average supply of water in the second half of 2011, the company expects the operating result as well as the Group result for 2011 to remain at nearly the same level as in the previous year. Dividends will be oriented on a payout ratio of 45% to 50%.
Verbund today also announced the sale of its 46% stake in French alternative electricity supplier Poweo to competitor Direct Energie. The sales price of about € 36m corresponds approximately to the book value. This transaction concludes Verbund’s restructuring of its business activities on the French electricity market. The closing is set to take place before November 2011 after approval of the anti-trust authorities.