VERBUND Balance 2004: Best result in the group’s history

16.02.2005Wien

In 2004, VERBUND enjoyed its most successful year since the company was founded. The forward-looking, innovative strategy of the last few years has transformed the group into an extremely successful enterprise. The figures for 2004 prove this quite impressively.

VERBUND, one of the most important producers of electricity from hydropower, made excelent use of its opportunities and significantly enhanced its market position not only in Austria but, above all, in Europe. Being one of the best positioned wholesaler and hydropower producer in Europe, VERBUND benefited greatly from the increase in wholesale prices in market price indexed contracts which was driven by the clear rise in the costs for primary energy sources (coal, gas and oil) and once again managed to expand its business volume. Revenue as well as volumes sold both exceeded the corresponding, very positive values that were reported in fiscal 2003. VERBUND’s largest growth markets include Germany (+ 26%) and France (+ 57%). In 2004, the group was also actively and profitably involved in one of Europe’s most interesting electricity markets, namely the Italian power market. VERBUND increased its stake in the joint-venture Energia from 26.6 % to 38.5 % by way of a capital increase in the amount of € 160 million. The group also pushed ahead with its expansion into the new EU states: the fifth foreign subsidiary commenced business in Hungary.

VERBUND’s success in Europe is largely attributable to a perfectly timed change in strategy. In the past, VERBUND adopted rather defensive objectives that focussed primarily on cost reduction and debt clearance. The revised strategy is much more offensive and focuses on actively shaping the market as well as on achieving value-enhancing, profitable growth in the group’s core business areas. Rigorous cost-management and the maintenance of a solid capital structure will, however, continue to be central focal points in VERBUND’s strategic orientation.

Very positive business development

Against this backdrop, VERBUND presented the best results in the group’s history. Sales revenues increased by 24.2 % to € 3,078.0 million, the operating result rose by 19.9 % to € 385.5 million, profits after taxes were up by as much as 23.5 % at €268.8 million and the consolidated result climbed by 17.7 % to € 235.4 million. The focus was clearly directed on enhancing value creation in the individual business segments. As a result, the Economic Value Added (EVA) was increased by € 51.8 million to € 64.5 million.

This also led to a significant improvement in the financial position of the group. Due to the strong debt clearance, the net debt was further reduced and net gearing was lowered from 165.0 % to 134.3 %. In addition, the operating cash flow climbed by 6.9 % to € 438.5 million. As a result, the cash-flow-based key ratios, which are relevant from a rating viewpoint, were also improved. Gross interest cover rose from 2.9 to 3.5 and the Gross debt cover improved from 22.0 % to 25.8 %.

On the basis of these successes, the Managing Board shall propose a dividend increase of 50 % to € 3.00/share to the General Meeting. This will be the fourth dividend increase in succession.

Detailed information on the results for fiscal 2004 can be found under http://www.verbund.at/. Here, you can either download the Annual Report or view the user-friendly online version.