Sound underlying operations and a stable supply capability were the cornerstones of a quarter remarkable for extremely strong demand for electricity and district heating.

 

Hafslund's operating profit in the first quarter 2010, excluding the impact of its investment in REC, totalled NOK 511 million, up NOK 56 million on last year. Sales revenues totalled NOK 4.9 billion, a rise of 40 percent compared with 2009. The increase can largely be ascribed to higher electricity prices, which had a particular impact on power sales revenues.

 

Higher electricity output and higher prices
The power generation business made an operating profit of NOK 167 million, NOK 75 million more than last year. This must be seen in light of the fact that electricity prices were 47 percent higher than in 2009, while electricity output was 49 GWh higher. At the same time, output was 9 percent lower than normal levels.

 

High season for district heating
The first quarter was good in terms of both the high demand for district heating and the price achieved. Output of district heating in the first quarter totalled 720 GWh, 24 percent more than last year.

 

At NOK 123 million, operating profit was 10 percent higher than last year. The improvement must be seen in light of the strong demand for district heating. At the same time the high level of consumption made it necessary to cover a larger proportion of the peak load through the use of oil or electricity, which has reduced the contribution margin per kWh compared with last year.

 

Higher grid costs due to higher costs payable to Statnett
Power grid operations generated sales revenues of NOK 1,396 million in the first quarter 2010, an increase of NOK 490 million compared with 2009. The bulk of this increase can be ascribed to the passing on to customers of higher costs payable to Statnett for the overlying grid - which came to NOK 548 million in the quarter - in other words an increase of NOK 309 million compared with last year. Profits from grid operations continued to grow, ending the quarter at NOK 137 million, an increase of NOK 42 million from last year.

 

Sales revenues for the first quarter are based on a revenue cap for 2010 as a whole of NOK 2,759 million (excluding costs payable to the overlying grid), which is NOK 298 more than for 2009. The main reason for the rise in the revenue cap is increased compensation for grid losses based on higher electricity prices and a higher cost base for Hafslund Nett and the power grid sector.

 

Power sales: Solid sales revenues and record volumes, but low operating profit
Power sales revenues totalled NOK 2,621 million, an increase of 45 percent compared with last year. The increase must be seen in light of extremely high electricity prices on Nord Pool, particularly in February, and the fact that the cold weather led to a 13 percent rise in consumption compared with 2009.

 

A total of 5,001 GWh was sold during the quarter, 13 percent more than in the first quarter in 2009. This is the highest volume of electricity in a single quarter that Hafslund has ever supplied. The increase was due to a 20 percent rise in demand caused by higher consumption, cold weather and an increase in customer numbers. At the end of the quarter the power sales business had around 631,000 private customers, a rise of 28,000 so far this year. The increase derives from the acquisition of Total Energi and organic growth in the customer base. The rise in volume in the commercial market was 3 percent. At the end of the quarter the segment had just under 53,000 business customers.

Operating profit totalled NOK 49 million, a drop of NOK 79 million compared with last year. This can be ascribed to a challenging market situation in January and February, with a sharp rise in wholesale prices on Nord Pool and considerable differences in electricity prices between the various price zones in Norway. The sharp increase in wholesale prices on Nord Pool was not fully compensated by a corresponding rise in retail prices to the customer in January and February.

Highlights in the first quarter 2010:

<li>          Operating profit of NOK 511 million from operating activities (ex REC), a rise of 12 percent compared with the first quarter 2009.

<li>          The cold winter prompted record demand for electricity and district heating.

<li>          A challenging market situation resulted in a drop in operating profit of NOK 79 million for the power sales business.

<li>          Profits from grid operations continue to rise.

 

 

Hafslund ASA

Oslo, 6 May 2010

For further information please contact:
Financial Director Morten J. Hansen:
Mobile: + 47 90 82 85 77
Email: mjh@hafslund.no

 

CFO Gunnar Gjørtz:
Mobile: + 47 92 21 72 00
Email: gunnar.gjortz@hafslund.no

 

SVP Communications & CR Karen Onsager:
Mobile: + 47 92 08 70 07
Email: karen.onsager@hafslund.no

 

Digital page flip edition here: www.hafslund.no/english/report

 

This information is subject of the disclosure requirements acc. to §5-12 vphl (Norwegian Securities Trading Act)