Hafslund — Second-quarter 2013: Operating profit growth and capital freed up
Hafslund had an operating profit (EBITDA) of NOK 569 million for the second quarter of 2013. Operating profit (EBITDA) was up 11.5 percent, compared with the year-earlier reporting period. Improved framework conditions for the Group’s Network business and higher power prices contributed to profit growth, while a decrease in hydropower generation on the Glomma waterway and somewhat higher operating expenses at the Group’s Market segment offset some of the advance. Customer-base growth continues at the power sales business, with 15 000 new customers added in the quarter. Agreements signed to sell businesses will free up NOK 450 million in capital in the third quarter of 2013.
“A sudden, late onset of warm weather and rapid snowpack melting created the most severe flooding in the Glomma waterway since 1995. Such situations show how important it is that the organization prepares the power plants for handling major waterway influx. Future power prices and the price of el certificates determine whether we will be able to expand the capacity of our hydropower facilities and manage resources more optimally,” says Hafslund ASA’s President and CEO Finn Bjørn Ruyter.
Hafslund sold its hydropower at NOK 0.28 per kWh in the second quarter of 2013, up NOK 0.07 compared with the year-earlier reporting period. This year’s concentrated snow melt contributed to Hafslund’s hydropower production dipping seven percent below second-quarter 2012 generation and 13 percent below normal for the quarter. Drainage-basin resources indicate normal power generation in the third quarter of 2013.
District heating production is typically low in the second quarter of the year. Nevertheless, energy deliveries were nine percent above the second quarter of 2012. Along with higher Nord Pool power prices, increased energy deliveries resulted in profit improvement, compared with the second quarter of 2012.
Operating profit (EBITDA) for the Network business was up 15.5 percent from the corresponding second-quarter 2012 figure. The underlying profit growth largely reflects an increase in Network’s income ceiling, subsequent to the regulatory authority NVE applying a higher interest rate when calculating income ceilings. Profit improvement also stems from maintenance costs somewhat below the second-quarter 2012 level. The underlying profit growth is even greater when taking into account a significant charge to the reporting period’s operating profit, a regulatory downward adjustment called under income.
“Improvement of framework conditions is important for the development of an up-to-date power supply infrastructure. Adopting a higher NVE interest rate shows that our regulatory authorities are taking this industry challenge seriously,” says Mr. Ruyter.
Hafslund’s power sales business continues to grow; the number of customers in wholly and partly held companies rose by 15 000 to 927 000 customers in the second quarter of 2013. Increased marketing activities and transition to a new customer service and invoicing system led to an increase in operating expenses but will also contribute to higher sales volumes and reduced costs over time.
“Both NorgesEnergi’s partnership with the low-cost airline, Norwegian, and Hafslund Power Sales agreements for deliveries to Norway’s police force and the military’s facilities management organization (Forsvarsbygg) are examples of sound marketing by our power sales companies. Organic growth and preparations for the anticipated pan-Nordic end-user power market represent great market potential in power sales,” says President and CEO Finn Bjørn Ruyter.