HNA/HNB - Hafslund third quarter 2009: Solid cash flow from operations
The third quarter has distinguished itself by high electricity output compared to the average output level and the corresponding period last year. Profits were affected by changes in the fair value of the venture portfolio and lower electricity prices.
Hafslund made an operating profit of NOK 221 million in the third quarter 2009, and generated a cash flow from operating activities of NOK 480 million. Sales revenues in the third quarter totalled NOK 1,834 million, NOK 461 million less than in the same quarter last year. This can be ascribed largely to lower electricity prices compared with last year. While this had a particular impact on electricity sales revenues, it also affected the performance of the power generation, district heating and other renewable energy business units.
High electricity output and solid cash flow
Output in the third quarter was high. At 962 GWh, it was 11 per cent higher than in the third quarter 2008. However, electricity prices in the third quarter were 35 per cent lower than last year. As a result power generation posted an operating profit of NOK 196 million in the third quarter, NOK 101 million down on the same quarter in 2008. The Group's cash flow remains solid at NOK 480 million, compared with NOK -306 million in the same quarter last year.
More electricity customers
Hafslund's electricity sales companies made a combined operating profit of NOK 20 million, an improvement of NOK 70 million compared with last year. Sales revenues totalled NOK 662 million, 30 per cent less than last year. "The result must be seen in light of what is normally a seasonally weak quarter due to low consumption. However, sales of products other than traditional electricity products had a positive impact on profits. The number of customers purchasing electricity also grew, which we are very pleased with in an increasingly tough competitive situation," said President and CEO Christian Berg.
Change in fair value of venture portfolio
Hafslund Venture made an operating loss (excluding REC) of NOK 108 million in the third quarter 2009. This reflects a NOK 86 million reduction in the fair value of the venture portfolio. The continued turbulence in the financial market, which was characterised by a high degree of uncertainty and volatility, makes the market value of the portfolio, comprising unlisted companies (excluding REC), uncertain.
Low season for district heating
Hafslund's district heating results were affected by a seasonal low in heating consumption and district heating prices. The district heating business made an operating loss of NOK 43 million, NOK 3 million lower than in the third quarter 2008. Sales revenues totalled NOK 48 million, down NOK 17 million on the year before. The price of district heating tracks the price of electricity and the reduction is largely due to lower electricity prices. With around 10 per cent of annual output in the third quarter this will seasonally be the weakest quarter of the year. "The district heating business will provide our customers with cheaper and more environmentally friendly heating. Our experience so far is that district heating becomes a popular alternative in those areas in which it is available," said President and CEO Christian Berg.
A growing number of people want to share in this environment-friendly form of heating. High-profile buildings and major consumers, such as the outdoor sports arena Frognerbadet/Frogner Stadion and the Colosseum cinema complex, have recently become district heating customers, and the objective is to increase deliveries of district heating corresponding to the heating needs of a third of Oslo's population over a seven-year period.
Highlights in the third quarter 2009:
- Profit before tax reduced by a NOK 178 million change in the fair value of shares, derivatives, debt and concessionary power liabilities.
- Operating profit of NOK 221 million (loss of NOK 1,636 million). Last year includes a NOK 1,866 million reduction in the value of the investment in REC.
- High output of hydropower - 11 per cent higher than last year and 15 per cent more than normal.
- Loss after tax of NOK 65 million (loss of NOK 1,750 million) and earnings per share of NOK -0.33 (NOK -8.97).
- Solid cash flow from operating activities of NOK 480 million (NOK -306 million).
For more information, please contact:
Morten J. Hansen, Finance Director
Mobile: +47 90 82 85 77
Gunnar Gjørtz, CFO
Mobile: +47 92 21 72 00
Karen Onsager, SVP Communications and CR
Mobile: +47 92 08 70 07
Oslo, 28 October 2009