Hafslund – Result for Q1 2014: Historically strong result

Hafslund posted historically strong EBITDA of NOK 755 million for the first quarter, which was up 18 percent on the previous year. Mild and wet weather resulted in record hydropower production for the period. Hafslund’s agreement to purchase Fortum’s power distribution grid operations in Norway for NOK 1,365 million reinforced the Group’s position as a leading energy and infrastructure company.

The strong EBITDA figure, together with the Norwegian tax authorities’ decision to drop a tax demand, resulted in a profit after tax of NOK 557 million.

“It was particularly pleasing to deliver such a strong result in the same period the company completed its largest acquisition since 2007. While the record hydropower production boosted profits, above all the results reflect efficient operations and the outstanding contribution of our employees in all the business areas,” commented Hafslund’s CEO Finn Bjørn Ruyter.

Hydropower’s operating profit was 44 percent higher than in the comparable prior year period. The strong result was in particular attributable to record production as a result of mild and wet weather. The power price on Nord Pool Spot was NOK 0.06 lower than in the same period the previous year; however, efficient hedging activities limited the effect of lower prices.

Power sales delivered a good result for the quarter. While Hafslund had 161,000 more electricity customers than the previous year, the mild weather reduced energy demand from customers. In overall terms the sold energy volume was on a par with the first quarter of 2013. The Power sales business in Sweden was consolidated through the incorporation of the activities of Energibolaget i Sverige AB under SverigesEnergi AB.

“By bundling activities in Sweden under two brands with strong business models, we are laying the foundations for further growth in the Swedish electricity market,” explained Ruyter.

The mild weather in the quarter led to 20 percent lower year-on-year demand for district heating. Reduced requirements for peak loads for cold periods resulted in lower fuel costs; however, operating expenses came in higher than the previous year. Despite lower wholesale prices for power on Nord Pool Spot, the district heating price was on a par with the previous year. This was attributable to a number of factors including the effects of a more uniform pricing structure. The aggregate operating result was on a par with comparable prior year period.

Networks returned stable results. Operating expenses were slightly higher than the previous year due to higher maintenance costs, and more assignments for individual customers. Occasionally unsettled weather resulted in more operational stoppages in the grid than in the first quarter of the previous year.

The Norwegian Competition Authority approved Hafslund’s purchase of Fortum’s networks business on 2 May. The transaction is expected to be completed on 30 May.

“The purchase of Fortum’s networks business is strategically appropriate, and important, for Hafslund. Since Hafslund already owns the regional grid in Østfold, coordination of the various grid levels will result in more efficient operations and more rational investments. It will also give the company improved negotiating power in the procurement of services, benefits of scale in staff and support functions and more efficient contingency arrangements. The coordination of the two businesses will benefit both Networks’ customers and Hafslund’s owners,” concluded CEO Finn Bjørn Ruyter.

You can read the report at www.hafslund.no/reports

Hafslund ASA
Oslo, 8 May 2014

For further information please contact:

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

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

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