Hafslund – Third quarter 2015: Good result despite historic low electricity prices
Hafslund achieved an EBITDA of NOK 663 million in the third quarter 2015 (NOK 656 million). This is on a par with last year’s result as a result of solid operational performance in all business areas. Higher production volumes and hedging activities partly offset that the average spot price in the NO1 area was NOK 0.10 per kWh, which is 60 per cent lower than in the same period last year. Hafslund made a profit after tax of NOK 237 million, which is a substantial improvement on last year’s figure of NOK 71 million, and is attributable to lower financial expenses and negative non-recurring items in 2014.
Power Production posted an EBITDA of NOK 121 million, down NOK 21 million from the same quarter last year. The business area’s result was negatively affected by extremely low electricity prices. However, this was partially offset by higher precipitation levels and price hedging on output volumes.
“Our results in the third quarter show the importance of hedging the price of output volumes in Power Production and Heat to counteract fluctuations in electricity prices. This evens out the results for the Group as a whole,” says Hafslund’s CEO Finn Bjørn Ruyter.
In September Hafslund decided to invest NOK 920 million in a new power generator at Vamma. The investment will increase output by around 220 GWh, all of which qualifies for electricity certificates. It also postpones the need for investment in the remaining generator park and increases flexibility with respect to future maintenance.
“The investment at Vamma is profitable even with today’s low electricity price expectations. In addition to boosting electricity output, the investment will also lead to the overall modernisation of the power plant,” says Mr. Ruyter.
Hafslund’s district heating operations in Oslo posted a satisfactory EBITDA of NOK 6 million (NOK -9 million) in a quarter of normally low demand for energy. Although low electricity prices had a negative impact on the business area’s financial result, hedging transactions made a positive contribution here, too.
The Markets business area posted a good result in a quarter in which demand for energy was low. An operating profit of NOK 122 million reflects good progress for the electricity sales business, as a result of higher margins, lower costs and a larger number of customer benefit schemes.
The Network business area posted an EBITDA of NOK 350 million in a third quarter characterised by stable operations. This is on a par with the business area’s performance in the same quarter last year. With a normal demand for energy to the close of the year, operating profit for 2015 as a whole is expected to be around 10 per cent higher than in 2014.
On 1 May last year Hafslund agreed the purchase of a network company with 100,000 customers in Østfold County. Integration of this new business, with the establishment of a new organisation, the transfer of customer services and the creation of a shared operational control centre has now been completed.
“The integration of the business in Østfold has been accomplished quickly and effectively. This has successfully paved the way for synergies worth NOK 45 million in 2016, rising to NOK 60 million per year after the roll-out of AMS in 2018. At the same time, a new, highly competent organisation has been established to undertake extensive and demanding projects in the years ahead,” says Finn Bjørn Ruyter.
Hafslund’s networks business, Hafslund Nett, is set to install new smart meters in around 700,000 customer premises by 1 January 2019. The first pilot customers will receive their new meters before the end of this year, though the general roll-out will not start until next summer. This is a massive undertaking, with a budgeted cost of NOK 2.4 billion.
“Together with the introduction of new technological components in the grid network, the automatic electricity meters will help to modernise the electricity supply in Oslo, Akershus and Østfold counties,” says CEO Finn Bjørn Ruyter.
You can read the report at www.hafslund.no/reports.
Hafslund ASA
Oslo, 22 October 2015
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