Statkraft AS 1st Quarter 2007
10.05.2007 08:04 | stock exchange information
Result influenced by lower electricity prices and lower volum
In the 1st quarter of the year the Group posted a profit before tax of NOK 3,533m (NOK 2,282m) and profit after tax of NOK 2,605m (NOK 1,494m). The above figures represent improvements of 55% and 74% respectively compared with the corresponding prior-year quarter. NOK 1,403m of the pre-tax improvement of NOK 1,251m is attributable to unrealised changes in value.
Markets and profits
The Group posted gross revenues of NOK 4,951m in the 1st quarter of 2007, NOK 361m (-7%) lower than in the corresponding prior-year period. The reduction is primarily attributable to a fall in production from 16.0 TWh in the 1st quarter of 2006 to 10.8 TWh in the first three months of 2007 (-33%) and a 40% decrease in the average spot price to 218 NOK/MWh, which together resulted in a fall in revenues from net physical spot sales of NOK 2,483m. This was partially offset by an increase of NOK 956m in revenues from hedging activities. The increase in revenues from end-users is attributable to the fact that Fjordkraft has been consolidated as a subsidiary since 1 January 2007. Energy purchases amounted to NOK 650m, which represents an increase of NOK 570m and is also primarily attributable to the first-time consolidation of Fjordkraft.
Operating expenses increased by NOK 169m to NOK 1,448m in the 1st quarter of the year. Salaries and payroll costs rose by NOK 73m as a result of the consolidation of Fjordkraft, new business, increased staffing levels in existing business and ordinary salary increases. Other operating expenses totalled NOK 429m in the reporting period. The increase of NOK 57m is attributable to the consolidation of Fjordkraft, new business and project development.
The Group's operating profit increased by 7% to NOK 2,605m (NOK 2,433m).
Profit contributions from associated companies increased to NOK 1,028m (NOK 280m). The Norwegian regional companies contributed an improvement of NOK 255m, while E.ON Sverige posted an increase of just over NOK 300m. The remainder of the improvement relates to unrealised changes in the value on power sales agreements in Germany.
At NOK 100m, net financial expenses in the 1st quarter of 2007 were NOK 331m lower than in the corresponding prior-year quarter. The reduction is primarily attributable to an increase of NOK 288m in the unrealised values of the Group's interest rate and currency agreements.
The spot price on the Nordic market was lower in the 1st quarter of 2007 than in the first three months of 2006. Prices in the 1st quarter were primarily impacted by hydrologic conditions. Precipitation was higher and consumption lower than normal due to the relatively warm weather. The average spot price for the 1st quarter of 2007 was 218 NOK/MWh compared with 364 NOK/MWh for the corresponding quarter in 2006, and 213 NOK/MWh in the 1st quarter of 2005.
Total power consumption in the Nordic market was 6.0 TWh lower in the 1st quarter of the year than in the same period in 2006, a reduction of 5%. Total year-on-year consumption in Norway fell by 6.0%.
Together with its partner Catamount Energy Corporation, Statkraft was granted its 1st final licence in the United Kingdom. Blaengwen Wind Farm in Wales will consist of 10 turbines and have a total capacity of 20-30 MW.
In Norway Småkraft AS was granted six licences for the construction of hydropower plants.
The Group introduced a new profile on 30 March 2007 through the adoption of a joint logo for Statkraft, Skagerak Energi and Trondheim Energiverk, with the latter company changing its name to Trondheim Energi from the same date.
Cash flow and capital structure in 2006
The net cash flow from operating activities in the first three months of 2007 was NOK 2.9bn, compared with NOK 3.8bn in the 1st quarter of 2006. Net investments in the 1st quarter of the year totalled NOK 0.6bn, where the largest items comprised NOK 0.2bn for the gas power projects in Norway and Germany, NOK 0.1bn for the extension of the Leirfossene power plant in Trondheim and NOK 0.3bn for other investments.
Statkraft AS issued three bond loans under the EMTN scheme in the 1st quarter of the year. These have terms of 6, 10.5 and 15 years and respective volumes of EUR 300m, EUR 600m and NOK 1,500m. The new borrowing was issued to finance loan maturities and new investments. Total new borrowings in the 1st quarter of 2007 amounted to NOK 8.8bn, while NOK 1.4bn was used for repayment on loans.
Net liquidity changed by NOK 9.7bn during the quarter. At the balance sheet date the Group's cash and cash equivalents totalled NOK 11.5bn.
High inflows into the water reservoirs during the quarter and relatively good snow reservoirs have resulted in a robust resource situation and mean that forward contract prices will remain relatively low in the coming periods. Assuming normal future inflow conditions and continued low prices, production is expected to be lower than in 2006. The Group therefore expects to generate lower revenues from ongoing production in 2007 than in the previous year, but achieve a higher contribution from hedging operations. In overall terms, the forecasts point to a further good annual result for the Statkraft Group in 2007. However, significant uncertainty is attached to price developments and revenue and profit forecasts.
The Group focuses strongly on innovation and the development of new technologies for power production, and places particular emphasis on ocean energy and osmotic power. Work on the development of profitable new investments in water, wind and gas power in the Norwegian and European markets will be continued. On the development side, the current focus is on the completion of Statkraft's two gas power plants in Germany and Naturkraft's plant at Kårstø in Norway. All three gas power plants are scheduled to start operation in autumn 2007.
Important future framework conditions for climate policy are currently being established in both the EU and Norway. The formulation of targets and establishment of policy instruments to be used as part of the climate policy will have an important bearing on power markets and the choice of energy carriers for new investments in power production. More ambitious targets and further development of the European carbon quota market are expected to underpin Statkraft's focus on environment-friendly energy in the years to come.
EVP/CFO Eli Skrøvset, tel: +47 2406 7914/+47 909 86 495
VP Investor Relations Yngve Frøshaug, tel: +47 2406 7876/+47 900 23 021
|Report Q1 2007|
|Presentation Q1 2007|