Statkraft AS: Result for the second quarter
Low Nordic power prices impacted second quarter results
(Oslo, 17 July 2020) Amidst the Covid-19 pandemic and high snow-melting in Norway, Statkraft continues to focus on reliable and safe operations. Nordic power prices have been under pressure throughout 2020 and were pushed down during the second quarter.
“High snow melting has given exceptionally low Nordic power prices during the spring and summer, leading to a weak second quarter result. Statkraft maintains a robust financial position and continues to develop new renewable energy projects across our markets,” says CEO Christian Rynning-Tønnesen.
A significant hydrological surplus due to high snow reservoirs has put pressure on the Nordic power prices. In the second quarter, the average Nordic system price was exceptionally low at 5.6 EUR/MWh, a decrease of 84 per cent compared with the same quarter in 2019. Total generation was 15.9 TWh in the quarter, an increase of 3.6 TWh. The increase in generation was primarily related to Nordic hydropower.
Statkraft recorded a negative underlying EBIT amounting to NOK 100 million in the second quarter of 2020. This was a decrease of NOK 2689 million from the corresponding quarter last year. The decrease was mainly driven by the substantially lower Nordic power prices.
A strengthening of NOK led to positive currency effects amounting to NOK 2.3 billion, which are mainly unrealised. The quarterly net profit was NOK 491 million, a decrease of NOK 1631 million.
Statkraft has a strong liquidity position, and rating agencies recently confirmed the company’s solid credit rating. Cash flow from operating activities in the quarter was NOK 303 million. Net interest-bearing debt to equity ratio was 20.7% at end of quarter.
For the first half year of 2020, Statkraft reported an underlying EBIT of NOK 3990 million, a decrease of NOK 5360 million compared with the same period in 2019. The main driver for the decrease was the low Nordic power prices. The net result for the first half year was also influenced by impairments and negative currency effects and ended with a loss of NOK 1397 million.
In June, commercial operations started for the Moglicë hydropower plant in Albania. Statkraft’s power generation in Albania will now reach 700 GWh per year, equal to approximately 13 per cent of the country’s total electricity generation.
Due to the outbreak of the pandemic, three construction projects in the UK, Chile and India were temporarily halted earlier this year. These projects will gradually restart in accordance with the respective national guidelines on Covid-19.
In line with the strategy, Statkraft continues to grow the customer business and has signed a 12-year power supply agreement in the Nordics with an annual contract volume of 500 GWh. Statkraft has also acquired three greenfield wind projects in Europe.
Statkraft’s investment capacity has been reduced due to lower expected energy prices but is still at a significant level. The growth target of developing 9 GW by 2025 remains, however more projects are likely to be divested at completion. The investment plan will be adapted to the market development and the company’s commitment to the existing rating target.
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This information is subject to the disclosure requirements pursuant to section 5-12 of the Norwegian Securities Trading Act.
Statkraft is a leading company in hydropower internationally and Europe’s largest generator of renewable energy. The Group produces hydropower, wind power, solar power, gas-fired power and supplies district heating. Statkraft is a global company in energy market operations. Statkraft has 4000 employees in 17 countries.