Business development for fiscal year 2020/21
EQS-News: EVN AG / Keyword (s): Annual results
16.12.2021 / 07:30
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Energy sector environment
Fiscal year 2020/21 was impacted by a significant year-over-year drop in temperatures in EVN’s three main markets. The average EEX price of natural gas almost tripled due to the generally higher demand for natural gas, lower natural gas storage volumes in Europe and the economic restart after the drop in demand linked to Covid-19 in 2020. Spot electricity market prices were almost on average twice as high as the previous year due to a significant increase in primary energy prices as well as unfavorable wind flows. On the futures market, electricity prices were three and a half times higher than the previous year. The market price of CO2 emission certificates reflected a year-over-year increase of almost 70%.
Effects of the corona crisis
Due to its integrated business model and broad customer base, the corona crisis had only a selective negative influence on EVN’s operating results in 2020/21. However, Covid-19-related lockdowns, travel restrictions and distortions in international supply chains have complicated the activity of international environmental projects and partly resulted in project delays.
Group net profit higher than the previous year
The turnover recorded by the EVN group increased by 13.6% year on year to reach 2,394.9 million euros in 2020/21. This good development was mainly supported by the activity of international projects, in particular by the wastewater treatment project in Kuwait which started in the summer of 2020. An increase in turnover was also recorded by the energy distribution activity in South-Eastern Europe and by operating the networks: weather forecast on the three main markets, the higher network tariffs set by Austrian E-Control on 1 January 2021 also had an effect. Income growth was also supported by increased power generation and higher electricity prices. The weaker valuation effects of power generation hedges were a counter factor.
Other operating income amounted to 250.1 million euros (previous year: 64.4 million euros), mainly due to the effects related to the Walsum 10 plant. EVN acquired rights to additional electricity supply in the first quarter of 2020/21 and, on September 30, 2021, sold its 49% investment in the plant and ended the corresponding electricity purchases.
The cost of electricity purchases from third parties and primary energy expenditure increased by 19.9% to 1,064.7 million euros. The main factors behind this upward trend were higher energy supply costs in South East Europe and at EVN Wärme, a higher volume of thermal generation and the resulting increased primary energy use, as well. as wholesale prices rise. The effects of the valuation of hedges have led to a reduction in these costs. The cost of materials and services increased by 60.7% to 509.2 million euros due to the development of international project activity. Personnel costs increased by 3.4% compared to the previous year to 361.3 million euros. In addition to the adjustments required by collective agreements, this increase results, among other things, from additional hires for the wastewater treatment project in Kuwait.
The share of operating profit of equity-accounted companies increased to 239.6 million euros (previous year: 94.1 million euros), mainly due to the improvement in operating profit and valuation effects covers held by EVN KG. In addition, the impairment losses recognized at Verbund Innkraftwerke GmbH and at the Ashta hydropower plant the previous year (20.7 million EUR, respectively 4.9 million EUR) were offset in 2020/21 by revaluations of 25 , EUR 3 million and EUR 23.8 million, respectively.
Based on these developments, EBITDA increased 41.7% year-on-year to € 836.5 million. Higher investments and amortization of anticipated project costs capitalized for the Kuwait project resulted in a 13.8% increase in scheduled amortizations to € 337.7 million. In addition, impairment losses of 113.1 million euros were recorded on a thermal power plant in the first quarter of 2020/21 following the reversal of an additional electricity supply right. EBIT for fiscal year 2020/21 amounted to 386.4 million euros (previous year: 273.1 million euros).
The financial results decreased to -20.0 million euros (previous year: -15.8 million euros) despite the better performance of the R138 fund and an increase in the dividend of Verbund AG to 0.75 EUR per share for fiscal year 2020 (previous fiscal year: 0.69 EUR). The reduction results from an interest rate hedge that was entered into for the entire duration of the bank financing of the Walsum 10 power plant but was terminated prematurely following the sale of the stake in this power plant on September 30, 2021.
The Group’s net income for fiscal year 2020/21 increased by 62.9% to € 325.3 million.
Strong balance sheet structure
EVN has a strong and stable capital structure which provides a solid basis for the realization of its investment focal points in Lower Austria in the years to come. Net debt amounted to € 813.8 million as of September 30, 2021.
Energy. The water. Life. – Developments in the energy and environmental services activity
Electricity production from renewable energies increased by 1.5% to reach 2,283 GWh in 2020/21. A decrease in wind flows compared to the previous year was offset by an increase in water flows. However, wind power production declined year over year despite the increase in capacity. EVN had an installed wind capacity of 394 MW as of September 30, 2021 (previous year: 367 MW). This increase results from the commissioning of the Kettlasbrunn II wind farm (8.4 MW) in December 2020 and the acquisition of an existing wind farm (18.5 MW) in Lower Austria on June 30, 2021.
In accordance with Strategy 2030, EVN plans to expand the Group’s wind capacity to 750 MW by 2030 if the conditions in the energy sector are suitable. This objective will be achieved through projects in Lower Austria and Bulgaria. Photovoltaic projects will also be carried out in Lower Austria, Bulgaria and North Macedonia, with a Group-wide installed capacity of 300 MW.
Thermal electricity production increased by 11.7% to 1,715 GWh in 2020/21 because the Walsum 10 plant was used more than in 2019/20. Thermal generation capacity reflects a new step towards future reduction of CO emissions2 emissions: As of September 30, 2021, EVN has sold its 49% investment in the Walsum 10 coal-fired power plant to the STEAG joint venture partner and has ceased purchasing electricity from this source. This marked the final exit of EVN from coal-based power generation. The Theiss gas-fired power plant remains operational to provide the Austrian grid transmission operator with contractually agreed reserve capacity, which was used only for grid stabilization in 2020/21. A reserve capacity of 470 MW has been contractually agreed for 2021/22.
Environment and water company
Investments in drinking water supply remain focused on expanding interregional pipeline networks, for example building a new 60 km transport pipeline from Krems to Zwettl to protect water supplies in the Waldviertel regions and Weinviertel. In addition to other pipeline projects, EVN is also investing in the construction of its fifth natural filtration plant. It will be commissioned at Petronell in January 2022 and will supply ten municipalities east of Vienna International Airport with naturally softened drinking water.
As of September 30, 2021, WTE Wassertechnik was working on the planning and construction of 14 projects in Germany, Poland, Lithuania, Romania, Bahrain and Kuwait. Included here are four thermal sludge use installation projects in Germany.
Outlook for the 2021/22 financial year
EVN expects the Group’s net profit to be between approximately € 200 million and € 240 million for the 2021/22 financial year. However, stronger or longer distortions in the energy markets could have a negative impact on expected earnings. The investments will increase to around 500 million euros and will focus primarily on the regulated and stable business areas of network infrastructure, renewable energy production and drinking water supply. These activities are intended to protect EVN’s strong business base and support continued growth.
For the full full report for fiscal year 2020/21, see www.investor.evn.at.
16.12.2021 This Corporate News was distributed by EQS Group AG. www.eqs.com