Statkraft AS - results for the fourth quarter of 2011:
Lower prices and write-downs
(Oslo, 16 February 2012) In the fourth quarter of 2011, Statkraft achieved an underlying1 operating profit before depreciation (EBITDA) of NOK 3028 million, compared with NOK 5686 million in the corresponding quarter in 2010. As a result of unrealised changes in value for energy contracts and write-downs on production assets, the posted result after tax was a loss of NOK 673 million, compared with a profit of NOK 692 million in the fourth quarter of 2010.
"The result from Statkraft's underlying operations is satisfactory in a market with lower Nordic power prices, but write-downs on plant assets yield a negative result for the quarter. Our faith in the future of environmentally friendly energy remains strong, and we have a long-term perspective on our investments," says CEO Christian Rynning-Tønnesen.
Wet and mild quarter resulted in lower demand
Market conditions in the fourth quarter were characterised by a lot of precipitation, high temperatures, low consumption and, as a result, surplus of power in the market. This yielded lower Nordic power prices, 45 per cent lower on average than in the corresponding quarter in 2010. The Nordic system price in the period ended at 34.3 EUR/MWh, compared with 62.0 EUR/MWh in 2010. In this situation, Statkraft has maintained a lower power production than in the fourth quarter of 2010. The drop in revenues was offset somewhat by the new long-term power deliveries to industry, lower energy purchases and grid tariffs, as well as a decline in operating costs. Overall, EBITDA fell by 47 per cent compared with the fourth quarter of 2010.
"2011 was a year with large fluctuations in temperature and inflow. In the fourth quarter, Statkraft held back some production due to low prices. As in previous years, Statkraft succeeded in exploiting the substantial flexibility of our power plants in 2011. Statkraft is well-positioned at beginning of 2012," says Rynning-Tønnesen.
The Group's power production for the fourth quarter was 15.7 TWh, compared with 17.9 TWh in 2010. For the year as a whole, the production amounted to 51.5 TWh, compared with 57.3 TWh in 2010. The resource situation has improved quickly, and at the end of the fourth quarter the total reservoir water level in the Nordic region was 112 per cent of normal.
Write-downs in Germany and the UK
In the fourth quarter, Statkraft has written down assets in three German gas power plants and two biomass power plant by NOK 1087 million, which affects the recorded result. Low demand for power, strong increase in new renewable power generation, as well as high gas prices, have resulted in low margins for the German gas power plants.
"We have recently carried out a thorough assessment of the gas power portfolio in Germany, due to the declining profitability in this market. We have concluded that replacing the old gas power plant in Emden will not be profitable. By mothballing the plant and reducing the staff, combined with the completion of Knapsack II, Statkraft will achieve a more competitive gas power portfolio in Germany," says Rynning-Tønnesen.
Statkraft's 50 per cent shareholding in the Sheringham Shoal offshore wind farm has been written down by NOK 338 million, primarily as a result of delays and associated cost overruns in the development project.
For 2011 as a whole, the underlying EBITDA was NOK 10 851 million, compared with NOK 15 161 million in 2010. The loss after tax was NOK 275 million, compared with a profit of NOK 7451 million in 2010. This is a result of lower power prices and production than in 2010, as well as writedown of asset values, energy contracts and the E.ON shares.
1 Adjusted for unrealised changes in value and significant non-recurring items
Statkraft is a European leader within renewable energy. The Group develops and produces hydropower, wind power, gas power and district heating, and is a major player on the European energy exchanges. Statkraft has more than 3300 employees in more than 20 countries.
For additional information:
Vice president Investor Relations Yngve Frøshaug, tel.: +47 24 06 78 76 / +47 900 23 021
Press spokesperson Knut Fjerdingstad, tel.: +47 24 06 71 61 / +47 901 86 310
Communication advisor Lars Magnus Günther, tel.: +47 24 06 71 50 / +47 912 41 636
Disclosure of this information is required pursuant to Section 5-12 of the Securities Trading Act