Corporate news: VERBUND results for quarters 1–2/2019

01.08.2019Vienna

A surge in earnings strengthens VERBUND and increases the Group’s strategic flexibility

Developments in the energy market continued to be favourable for VERBUND in the first half of 2019. In particular, a sharp increase in the cost of CO2 certificates raised wholesale prices for electricity, compensating for declining prices for the primary energy sources of coal and gas. Our short-term hedging strategy has enabled us to benefit from the significant price increases in the market for wholesale electricity over the past months. The reduced cost base achieved in recent years thanks to numerous programmes to increase efficiency coupled with the further successful downsizing of the Group’s debt underpins VERBUND’s favourable business performance and increases the Group’s strategic flexibility to take advantage of any opportunities for growth that arise. By consistently focusing on generating energy from renewable resources, especially hydropower, and on implementing line construction projects in the regulated, stable high-voltage grid, the Group has created a good, solid basis for the new future of energy.  

 

Higher prices on the futures and spot markets for wholesale electricity than in the prior-year period considerably pushed up average sales prices, making a substantial contribution to the very encouraging earnings trend. Earnings for quarters 1–2/2019 were also characterised by generation of higher volumes of electricity from hydropower and wind power, with a corresponding decrease in generation from thermal power plants. Water supply from rivers, which led to a hydro coefficient of 1.11, was 11 percent above the long-term average and 3 percentage points above the level for quarters 1–2/2018. By contrast, generation from annual storage power plants decreased by 8.6%. Generation from hydropower consequently increased by 231 GWh. A higher earnings contribution from the Grid segment thanks to higher revenue from auctioning off cross-border capacity and additional temporary revenue as well as the good results achieved through the programmes VERBUND has implemented in recent years to reduce costs and increase efficiency also had a positive impact on earnings. Revenue from flexibility products was down year-on-year, however, mainly due to reduced use of thermal power plants for congestion management.

EBITDA climbed by as much as 36.2%, from €503.7m to €685.9m. The reported Group result was up 48.7%, increasing from €227.5m to €338.2m, while the Group result after adjustment for non-recurring effects rose by 53.1%, from €222.3m to €340.3m. Cash flow from operating activities also showed a substantial improvement, rising by 43.9% to €690.7m and thus reducing the Group’s debt to historically low levels. 

 

Outlook for 2019 

Based on our strong business performance in the first half of 2019, we are raising our earnings forecast for the year as a whole. Assuming an average water supply and an average wind supply in the second half of the year, and in light of the opportunities and risks identified, we expect EBITDA to amount to between approximately €1,180m and €1,250m and the Group result to between approximately €530m and €580m in financial year 2019. In terms of the dividend for financial year 2019, VERBUND is planning a payout ratio of between 40% and 45% based on the Group result after adjustment for non-recurring effects.
 

KPIs Unit Q1-2/2018 Q1-2/2019 Change in %
Revenue €m 1,373.2 1,835.2 33.6
EBITDA €m 503.7 685.9 36.2
Operating result €m 346.7 505.8 45.9
Group result €m 227.5 338.2 48.7
Earnings per share € 0.65 0.97 48.7
EBIT margin % 25.2 27.6 –
EBITDA margin % 36.7 37.4 –
Cash flow from operating activities €m 480.0 690.7 43.9
Free cash flow after dividends €m 177.8 355.5 100.0
Performance of VERBUND shares % 37.5 23.5 –
Gearing % 46.3 39.0 –
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Additional information as well as the Interim Financial Report for quarters 1–2/2019 is available at www.verbund.com > Investor Relations > Latest financial results.


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Andreas Wollein Andreas Wollein

Head of Group Finance and Investor Relations

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