Statkraft AS Second Quarter 2007
16.08.2007 08:08 | stock exchange information
Weaker second quarter, but satisfactory half-year result
(Figures in brackets show comparative figures for 2006)
The Statkraft Group posted respective pre- and post-tax profits of MNOK 655 (MNOK 2,540) and MNOK 451 (MNOK 1,705) for the second quarter of 2007. The profit before tax for the first half of the year totalled MNOK 4,188 (MNOK 4,822), while the profit after tax was MNOK 3,056 (MNOK 3,199). The above figures represent respective decreases of 13% and 4% compared with the first six months of 2006. Adjusted for unrealised changes in value, the decrease in the profit before tax was in excess of 30%.
Markets and profits
Gross operating revenues for the second quarter amounted to MNOK 2,906, which corresponds to a fall of 18% compared with the second quarter of 2006. Gross operating revenues for the first half of the year fell by 11% to MNOK 7,858. Output declined by 28% compared with the first half of 2006 to 19.2 TWh, while the average spot price fell by NOK 156/MWh to NOK 200/MWh (-44%).
In the first six months of the year operating expenses totalled MNOK 2,868, which represents an increase of MNOK 442. Salaries and payroll costs increased by MNOK 135 to MNOK 721 as a result of the consolidation of Fjordkraft, new business, higher staffing levels in existing business and ordinary pay rises. Other operating expenses totalled MNOK 892 in the first six months of the year, an increase of MNOK 211, which is primarily attributable to the consolidation of Fjordkraft, new business, project development and higher supplier costs.
The Group's operating income totalled MNOK 3,230 (MNOK 4,790). Adjusted for unrealised changes in value, the above figures represent respective quarter-on-quarter and year-on-year decreases of 58% and 38%.
The share of income from associated companies in the first half of the year was MNOK 1,456. This represents an increase of MNOK 611 compared with the first six months of 2006. The share of income from the regional Norwegian companies, primarily Agder Energi and BKK, is estimated at MNOK 433, an improvement of MNOK 256. E.ON Sverige contributed MNOK 953, an improvement of MNOK 225. The remainder of the improvement relates to unrealised changes in the value of long-term power sales agreements in Germany (Herdecke). Unrealised changes in the value of financial instruments in the first six months of 2007 amounted to MNOK 201 (- MNOK 321).
At MNOK 497, net financial expenses in the first half of 2007 were MNOK 316 lower than in the first six months of 2006. The reduction is primarily attributable to an increase of MNOK 374 in the unrealised changes in value of the Group's interest rate and currency agreements. The change in the unrealised value of put options for E.ON Sverige also contributed to a decrease in net financial items compared with the first half of 2006. Financial expenses were also impacted by higher market interest rates and an increased loan volume.
The spot price on the Nordic region was significantly lower in the first half of 2007 than in the first six months of 2006. Prices in the period were primarily impacted by a strong hydrologic balance. Precipitation was higher than normal, while consumption was low due to the relatively warm weather. The average spot price for the first half of 2007 was NOK 200/MWh (NOK 356/MWh).
Total power consumption in the Nordic region was 5.8 TWh lower in the first half of the year than in the same period in 2006, a reduction of 2.8%. Total year-on-year consumption in Norway fell by 2.4%, primarily as a result of a decrease in general consumption.
The test period for the gas power plants at Knapsack, Herdecke and Karstø began at the start of June, while test operation of the turbine at the Pålsbu hydropower plant also commenced in June.
On 11 May Statkraft was granted a final licence for the Kjensvatn hydropower plant in Nordland.
During the second quarter Småkraft AS took the decision to construct a further four small-scale hydropower plants.
The new waste incineration plant at Heimdal district heating plant in Trondheim entered operation on 13 March 2007, while the plant's official test period started on 5 May.
Agder Energi AS and Statkraft AS signed a letter of intent to collaborate on wind power in June 2007. The agreement covers the development, construction and operation of wind farms in Norway and the rest of Europe.
In April SN Power (Statkrafts owns 50% of the shares) took over the Magat hydropower plant in the Philippines in collaboration with the Philippine company Aboitiz Equity Ventures.
Cash flow and capital structure in 2007
The net cash flow from operating activities in the first six months of 2007 was BNOK 1.8, compared with BNOK 5.1 in the first half of 2006. Investments in the first six months of the year totalled BNOK 1.8. The major items were BNOK 0.6 to gas power projects in Norway and Germany, and BNOK 0.3 to capital deposits in SN Power.
Statkraft AS issued three bond loans under the EMTN Programme in the first half of the year. Total new borrowings in the first half of 2007 amounted to BNOK 9, while BNOK 4.6 was repaid in borrowings.
Net changes in cash flow increased by BNOK 6.7 during the first six months of 2007. At the balance sheet date the Group's cash and cash equivalents totalled BNOK 8.4, compared with BNOK 1.8 at the start of the year.
High inflows into the water reservoirs during the first half of the year and relatively good snow reservoirs have resulted in a robust resource situation and low spot prices. Forward contract prices are higher for the end of the year. Assuming normal future inflow conditions, 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 to 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 attaches to price developments and thus revenue and profit forecasts.
On the development side, the focus is on the testing and commissioning 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.
Following the merger of Statoil and Hydro, the merged company will be joint owners in and co-toller and gas suppliers to the Kårstø gas power plant. This development further highlights the need for a flexible option for selling gas to the market. Statkraft is actively working to find solutions to this problem.
EVP/CFO Eli Skrøvset, tel: +47 2406 7914/+47 909 86 495
VP IR Yngve Frøshaug, tel: +47 2406 7876/+47 900 23 021
|Report Q2 2007|
|Presentation Q2 2007|