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Hafslund – Provisional result for the year and result for the fourth quarter of 2013: Unsettled weather and customer growth

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Hafslund posted an operating profit before depreciation (EBITDA) of NOK 2,446 million in 2013. Higher power prices, improved framework conditions for the Networks business and operational improvements helped to boost EBITDA for the year by NOK 223 million compared with 2012. The operating profit before depreciation for the fourth quarter of NOK 606 million was strongly impacted by customer growth and low energy demand towards the end of the year due to mild weather. Following the streamlining of operations and a capital release, the Group is well equipped to satisfy the need for increased energy supplies as a result of population growth and to leverage opportunities for structural growth.

“The weather had a particular impact on the company’s operations in 2013. The start of the year saw a protracted cold spell that generated high energy demand, followed by a rapid snowmelt during which we were unable to exploit significant volumes of water in our power plants, while December was unusually warm with a number of storms and outages. Factors such as the above all impact the energy supply in our area, and Hafslund’s results,” explains CEO Finn Bjørn Ruyter

Security of supply in the power grid is steadily improving, and Hafslund Nett’s security of supply is among the best of any grid company in Norway. The number of outages has been falling for many years. However, strong winds in December meant the average customer was without power for just under one hour in 2013, compared with 45 minutes in 2012.

Fourth-quarter EBITDA in the Networks business came in lower than the corresponding prior-year period, in part due to higher maintenance activities, plus higher costs associated with maintaining sufficient contingency arrangements in periods of predicted strong winds as in December.

The strong winds in December tested the company’s contingency arrangements. Early mobilisation of external suppliers, efficient planning and the commendable efforts of employees all contributed to efficient re-establishment of the power supply. Stable power supplies are critical for modern society. It is important that our contingency arrangements function,” states Ruyter.

Hafslund Produksjon’s achieved power price of NOK 0.30 per kWh for the fourth quarter of 2013 was NOK 0.03 per kWh higher than the same period the previous year. Hedging activities made a positive contribution to the result. However, 21 percent lower power production than in the corresponding prior-year period pushed EBITDA down compared with the previous year.

Hafslund Varme’s EBITDA for the fourth quarter were down 8 percent on the previous year. Energy sales were lower as a result of the mild weather in December, despite slightly higher prices. The result was also impacted by closure costs after Hafslund relinquished the district heating concession at Jessheim.

District heating in Oslo is now practically fully renewable in a normal year, with consumption of oil and gas for 2013 as a whole amounting to just 3 percent. The reduction in the use of oil and gas from 7 percent in 2012 is attributable to the commissioning of the new pellets boiler at Haraldrud and the bio-oil boiler at Rodeløkka.

More customers and improved margins for the power sales business enabled Markets to post EBITDA of NOK 96 million, which was up from NOK 54 million in the fourth quarter of 2012. At the end of 2013, Hafslund had 1,069,000 customers. This represents an increase of 164,000 during the year, of which 44,000 relate to organic growth and 120,000 to the acquisition of the remaining 51 per cent of shares in Energibolaget i Sverige (EBS).

“The company has focused its activities on the four business areas of Networks, Heat, Production and Markets, and we are well positioned within all areas. At the same time we are continually improving our operations. Hafslund is therefore well equipped to satisfy the need for increased energy supplies in the Østland region and expected changes in the Nordic end-user market. We will use this position to exploit the opportunities for profitable organic and structural growth within our four core areas,” concludes CEO Finn Bjørn Ruyter.

Read the full shareholders’ report at www.hafslund.no/reports

Hafslund ASA
Oslo, 5 February 2014

For further information please contact:

Chief Financial Officer (CFO), Heidi Ulmo, Tel.: +47 909 19 325, E-mail: heidi.ulmo@hafslund.no

Senior Vice President Corporate Communications and Public Affairs, Johan Chr. Hovland: Tel.: +47 917 63 491, E-mail: johan.hovland@hafslund.no

Financial Director, Morten J. Hansen, Tel.: +47 908 28 577, E-mail: morten.j.hansen@hafslund.no