DGAP-News: EVN AG: Business development Q. 1-3 2012/13

DGAP-News: EVN AG / Key word(s): Quarter Results EVN AG: Business development Q. 1-3 2012/13 29.08.2013 / 08:00 --------------------------------------------------------------------- Highlights - Results from operating activities at prior-year's levels; negative financial results burdened Group net profit - Provision for reserve capacity for Germany over the next three winter half-years - International arbitration proceedings in Bulgaria - Difficult progress on environmental projects in Moscow - Duisburg-Walsum coal-fired power plant - planned commercial start of operations in Q. 1 2013/14 - 100th wind turbine under construction - expansion of total wind power capacities to up to 213 MW - Standard & Poor's and Moody's rating confirmed (BBB+, A3) with stable outlook Key figures Revenue: -2.3% to EUR 2,204.5m EBITDA: -3.2% to EUR 415.1m Results from operating activities (EBIT): +0.1% to EUR 238.8m Group net profit: -34.8% to EUR 145.2m Outlook 2012/13: Group net profit approximately 40% below prior year Energy sector development The spot market prices and forward market prices for base load and peak load electricity remained on a downward trend throughout the reporting period. This latest decline resulted, above all, from the increased generation of electricity from renewable energy - in particular from photovoltaic sources - and weaker demand from the industrial sector in Germany. The spot market prices fell by 14.1% to EUR 38.8 for base load electricity and by 9.8% to EUR 50.2 per MWh for peak load electricity. The forward market prices for base load and peak load electricity were at EUR 49.6 and EUR 61.5 per MWh, or 12.3% and 11.8% below the previous year. The price for crude oil fell by 2.7% to EUR 82.8 per barrel. Natural gas prices in Austria, which are linked in part to the price of oil, traded at EUR 30.0 per MWh in the first three quarters of 2012/13, or 3.9% higher than the previous year. The price of coal fell by 23.4% to EUR 65.1 per tonne due to the high stock levels in Europe and weaker demand in Asia. The downward trend in the price of CO2 emission certificates continued, with a 32.3% decline below the prior year to EUR 5.6 per tonne. Revenue decrease despite a slight improvement in energy revenues EVN generated revenue of EUR 2,204.5m in the first three quarters of the 2012/13 financial year. This represents a year-on-year decline of EUR 52.3m, or 2.3%, which occurred despite a slight improvement in energy revenues. It resulted primarily from a comparatively lower volume of final invoices in the international environmental project business, the pass on of lower additional costs for renewable electricity through price reductions and lower sales volumes of marketed natural gas. In addition, the comparable prior-year period also included revenue from the sale of first facility GmbH in summer 2012. The increase in energy revenue reflected higher revenues in South Eastern Europe that resulted, above all, from price increases for end customers in Macedonia in the previous year and from higher sales volumes in the Austrian heating business. Results from operating activities (EBIT) at prior-year's level; Group net profit burdened by negative financial results The other operating income rose due to higher level of inventories at the closing date. The cost of materials and services declined due to the scheduled completion of projects in the international project business in the previous year. Operating expenses were increased by higher expenditures for energy and higher other operating expenses. This position was influenced by an addition to provisions for impending losses on the sale of EVN's own production and by additional costs of renewable electricity in Bulgaria. The above factors led to an EBITDA-decline of 3.2% to EUR 415.1m. After the deduction of lower depreciation and amortisation - the previous year was burdened by impairment charges - EBIT totalled EUR 238.8m and nearly matched the prior year. Financial results fell from EUR 53.2m to EUR -21.0m. This decline is chiefly attributable to the following factors: the negative earnings contribution of EUR 20.4m from EconGas that was recognised in the first quarter of 2012/13 and the one-time negative effect of EUR 27.5m due to the sale of the 50% investment in the Albanian Devoll hydropower plant project. In addition, the negative earnings contribution from WEEV Beteiligungs GmbH rose by EUR 6.9m after the balance sheet date on March 31st, 2013 to equal EUR 29.4m. This resulted from a valuation-related impairment charge to the Verbund shares held by WEEV, which was recognised to reflect a significant and lasting decline in the price of these shares below their cost. Group net profit totalled EUR 145.2m and was 34.8% lower than the comparable prior-year period. Positive cash flow development Gross cash flow rose by 12.0% to EUR 498.4m in the first three quarters of 2012/13, in spite of the decline in profit before income tax. This increase was supported by high non-cash expenses from EconGas, WEEV and Devoll that are included under the share of profit from equity accounted investees as well as a change in non-current provisions. Net cash flow from operating activities was 38.8% higher for the reporting period. This development reflected the lower year-on-year growth in working capital as of June 30th, 2013. EVN's balance sheet total equalled EUR 6,923.3m as of June 30th, 2013 which is 0.9% higher than the level on September 30th, 2012. Equity declined by 0.2% to EUR 3,008.0m; the equity ratio equalled 43.4%. Due to the positive cash flow from operating activities and lower investments net debt declined to EUR 1,588.8m (September 30th, 2012: EUR 1,703.7m), resulting in a gearing of 52.8% (September 30th, 2012: 56.5%). Developments in the energy and project business The provision of 785 MW in reserve capacity for the next three winter half-years to supply Southern Germany with energy on demand will open new opportunities for EVN in the changing European energy market. The operation of the gas-fired power plants would otherwise not be profitable due to the continuing negative spread between primary energy procurement costs and electricity prices. The commissioning of the Duisburg-Walsum coal-fired power plant continued during the reporting period. After an examination of the turbines, the general contractor Hitachi cleared the equipment for stress tests and full load status under coal-firing has already been reached. This unscheduled inspection was considered necessary by Hitachi because of damages at two similar machines in Japan. However, it will delay the commercial start-up by at least one month. In Lower Austria, EVN is now installing its 100th wind power turbine in a new wind park near Deutsch-Wagram. Five 3 MW wind turbines will be built at this location together with a partner. The new equipment will be able to supply roughly 10,000 households with environmentally friendly electricity. When this project is completed, EVN will have 14 wind parks with a total capacity of 213 MW in operation. Annual price adjustments by the regulatory authorities in South Eastern Europe led to a reduction in the electricity prices for end customers by an average of 3.0% in Macedonia and an average of 4.2% in Bulgaria. However, there was no equivalent change in procurement prices. These price adjustments will require further efficiency improvements and lead to the revision of investment plans. As of August 1st, 2013 the regulatory authorities in Bulgaria also introduced a new mechanism to cover the additional production costs resulting from renewable energy sources, but this change is not expected to result in additional expenses for EVN. The existing claims by EVN are being pursued in arbitration proceedings at the International Center for the Settlement of Investment Disputes, an organisation established by the World Bank. Discussions are also continuing with the city of Moscow over the realisation of the environmental projects in this city. The main issues involve the still outstanding building permit for the waste incineration plant and the commercial start-up of the completed sodium hypochlorite production plant. Outlook The continuing disruptions on the European energy markets represent major challenges for the industry. These challenges involve the demand-driven management of production forms that are becoming increasingly difficult to plan while maintaining supply security and dealing with a continuously changing market environment. The structural and sustainable adjustment of the market design will be the main topic within the upcoming years. As announced in April 2013, we expect a decline of roughly 40% in Group net profit for the 2012/13 financial year. EVN's Letter to Shareholders Q. 1-3 2012/13 is available at www.investor.evn.at. End of Corporate News --------------------------------------------------------------------- 29.08.2013 Dissemination of a Corporate News, transmitted by DGAP - a company of EQS Group AG. The issuer is solely responsible for the content of this announcement. DGAP's Distribution Services include Regulatory Announcements, Financial/Corporate News and Press Releases. Media archive at www.dgap-medientreff.de and www.dgap.de --------------------------------------------------------------------- Language: English Company: EVN AG EVN Platz 2344 Maria Enzersdorf Austria Phone: +43-2236-200-12294 Fax: +43-2236-200-82294 E-mail: info@evn.at Internet: www.evn.at ISIN: AT0000741053 WKN: 074105 Indices: ATX Listed: Foreign Exchange(s) Wien (Amtlicher Handel / Official Market) End of News DGAP News-Service --------------------------------------------------------------------- 227998 29.08.2013