HNA/HNB - Substantial improvement for Hafslund in Q4 2010
Hafslund made an operating profit of NOK 1,135 million in the fourth quarter 2010. This result is ascribable to two factors in particular: the sale of Hafslund Fibernett for NOK 1,477 million, which produced a gain of NOK 875 million; and the NOK 300 million write-down of the Averøya wood pellets plant. Combined profits from electricity generation and sales, network operations and district heating totalled NOK 495 million, up NOK 92 million on last year.
Highlights:
- EBITDA of NOK 850 million before gains on the sale of the fibre-optic network - up NOK 286 million on last year.
- Hafslund Fibernett was sold for NOK 1,477 million, which produced a gain of NOK 875 million. Settlement was received in January 2011.
- A weak wood pellets market prompted a NOK 300 million write-down on the Averøya plant.
- Working capital rose to NOK 1,822 million, compared with NOK 784 million in 2009, as a result of high consumption and high electricity prices.
- The board is proposing a dividend of NOK 2,50 per share for 2010, compared with NOK 2,25 per share the year before.
- The Board will assess further dividend capacity ahead of Hafslund's 2011 annual shareholders' meeting.
Power Generation: Higher wholesale prices on Nord Pool
Power Generation achieved sales revenues of NOK 315 million in the fourth quarter 2010, a rise of 55 per cent compared with the same period in 2009. The increase can largely be ascribed to higher wholesale prices on Nord Pool. Operating profits in the quarter totalled NOK 241 million, NOK 97 million higher than the year before. The improvement is largely due to higher electricity prices, though a slight increase in the volume of electricity generated also made a positive contribution.
District Heating: Higher demand and higher prices
District Heating achieved sales revenues of NOK 462 million, a rise of 89 per cent compared with the year before. The increase in sales revenues can be ascribed to both higher demand and higher district heating prices. Operating profit in the quarter totalled NOK 62 million, NOK 31 million higher than in the fourth quarter 2009.
Heat and Bioenergy: Weak wood pellets market behind write-down
Heat and Bioenergy achieved sales revenues of NOK 33 million in the fourth quarter 2010.
The combined output of the heat production business (BioEl Fredrikstad and Borregaard Waste to Energy) totalled 77 GWh in the fourth quarter, compared with 29 GWh in the same quarter in 2009. The increase in energy output can largely be ascribed to the start-up of the Borregaard facility. The trial period for this plant is expected to be completed in the first quarter 2011.
As previously outlined, full production capacity for the Averøya wood pellets plant is not expected to be achieved until late 2011. Due to the low price of wood pellets in recent years, margins are currently extremely small. Hafslund expects supply and demand in the market to become more balanced in the coming years, causing margins to rise somewhat. The challenging market situation has prompted a NOK 300 million write-down of the wood pellets plant, whose book value at the close of 2010 was recorded as NOK 240 million.
Networks: Statnett costs passed on to consumers
Networks achieved sales revenues of NOK 1,219 million in the fourth quarter 2010, compared with NOK 1,008 million in the same quarter the year before. The rise in revenues derives largely from the fact that a larger proportion of costs stemming from the overarching grid (Statnett) were passed on to consumers. Operating profit for the year as a whole totalled NOK 532 million, an increase of 8 per cent on the year before. Based on the announced revenue ceiling for 2011, planned maintenance activities and current interest rates, operating profit in 2011 is expected to remain in line with 2010.
Power Sales: Sharp rise in wholesale prices on Nord Pool and high demand
Power Sales achieved sales revenues of NOK 2,888 million in the fourth quarter 2010, up 110 per cent on the year before. The increase can largely be ascribed to a sharp rise in wholesale electricity prices on Nord Pool. Increased demand and a 6 per cent rise in customer numbers in Norway also contributed to the growth in sales revenues. Throughout 2010 Power Sales' risk management was effective in a market that was, at times, difficult - particularly in the first and fourth quarters. Together with strong growth in volumes and customer numbers, this made a major contribution to the business's NOK 328 million operating profit for 2010. This corresponds to an after-tax profit of NOK 360 per customer.
Venture: Shares in Hafslund Fibernett sold for NOK 1,477 million
Operating profit, excluding REC, came to NOK 832 million in the fourth quarter 2010. This includes a gain of NOK 875 million from the sale of shares in Hafslund Fibernett for NOK 1,477 million.
The Hafslund Group has recently been moving towards a more distinct direction regarding increased production of renewable energy and the further development of energy-related infrastructures, while simultaneously expanding its power sales. The sale of the fibre-optic network business was a natural step in this strategy of concentration.
Hafslund ASA
Oslo, 2 February 2011
For further information, please contact:
CFO Finn Bjørn Ruyter:
Mobile: +47 911 38 199
Email: finn.bjorn.ruyter@hafslund.no
Financial Director/IR Morten J. Hansen:
Mobile: + 47 908 28 577
Email: mjh@hafslund.no
SVP Communications and CR Karen Onsager:
Mobile: +47 920 87 007
Email: karen.onsager@hafslund.no
Read the report online at www.hafslund.no/english/report