EQS-News: VERBUND AG: results for quarters 1–3/2022: Positive income trend fuelled by increase in wholesale prices for electricity; earnings forecast for 2022 adjusted because of the lower water supply

EQS-News: VERBUND AG / Key word(s): 9 Month figures/Quarter Results
VERBUND AG: results for quarters 1–3/2022: Positive income trend fuelled
by increase in wholesale prices for electricity; earnings forecast for
2022 adjusted because of the lower water supply

03.11.2022 / 07:58 CET/CEST
The issuer is solely responsible for the content of this announcement.

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Tough geopolitical and energy market developments cast a shadow over
VERBUND in quarter 3/2022. The ongoing war in Ukraine, record inflation
and expectations of interest rate hikes were the principal factors
impacting on the Group’s business performance. The difficult economic
climate caused significant distortion in Europe’s energy markets above all
and presented challenges that led to rocketing prices and price
volatility. Prices for primary energy sources shot up during the course of
the year, with gas prices in particular being hugely affected by changes
in gas supply volumes and the off-take structure. European wholesale
prices for electricity continued to rise as a result of soaring global
market prices for primary energy and the increasing risks, reaching fresh
highs.

In response to the headwinds in the European energy sector and to address
the severe impending price pressure facing all customer groups, national
and EU-level discussions on short- and long-term market intervention and
skimming off of profits began with the intention of bringing down the
extremely high energy prices and giving countries financial scope to
reduce prices to the consumer. These discussions and decisions relating to
market intervention generated uncertainty in the capital markets and also
pushed down VERBUND’s share price. Trading at a closing price of €87.5 as
at 30 September 2022, VERBUND shares recorded a loss of 11.6% in
quarters 1–3/2022 against year-end 2021, which meant that the stock still
outperformed the Austrian benchmark index ATX (–30.3%) and the sector
index STOXX Europe 600 Utilities (–20.0%).

As a consequence of the dry summer, the volume of electricity VERBUND
generated from its run-of-river power plants in quarter 3/2022 was well
below average. The hydro coefficient was 0.75. Especially in July (0.71)
and August (0.69), the hydro coefficient was significantly below the
long-term average. The coefficient for quarters 1–3/2022 was 0.84. The
reduced volume of electricity generated from hydropower had a pronounced
negative impact on the development of earnings (EBITDA effect of around
€640m in Q1–3/2022). The underproduction of hydroelectricity made it also
necessary to purchase large volumes of electricity so that the electricity
volumes that had already been sold on the basis of the long-standing
hedging strategy could be delivered. Due to the market conditions, some of
these purchases had to be made at exceedingly high prices, which put
additional pressure on earnings. Another challenge in the European energy
sector was the margining payments for hedging transactions in electricity
trading provided as security for open positions held with exchange
clearing houses. VERBUND overcame this challenge without suffering adverse
effects thanks to its foresighted financial planning, excellent credit
standing and the timely increase in credit lines. However, measurement
effects arising from customary hedging transactions in the energy sector
largely for own generation had a material adverse effect on the Group’s
result (EBITDA effect of around €310m in Q1–3/2022). These effects will
essentially be offset in subsequent periods by the realisation of the
underlying transactions.

While VERBUND’s earnings were diminished by the effects described above,
they received a significant boost from the sharp increase in wholesale
electricity prices on the futures and spot markets in particular. The
average sales prices obtained for VERBUND’s own generation from hydropower
rose by €60.3/MWh to €111.6/MWh. The consolidation of Gas Connect
Austria GmbH, the regulated gas transmission and distribution system
operator in Austria acquired with effect from 31 May 2021, and the
significantly higher contribution from flexibility products also had a
positive effect. VERBUND therefore saw a significant improvement in the
results posted for quarters 1–3/2022. EBITDA rose by 68.0% to €1,933.3m.
The Group result surged by 81.4% to €1,065.2m compared with the same
period of the previous year. The Group result for quarters 1–3/2022 was
influenced by non-recurring effects of €82.6m (Q1–3/2021: €21.2m).
Adjusted for these non-recurring effects, the Group result rose by 73.5%
to €982.6m.

 Earnings forecast for 2022 adjusted

The earnings forecast for financial year 2022 has been adjusted as a
result of the poor water supply in quarter 3/2022 and the EU’s measures to
skim off profits at energy companies, which will be implemented beginning
December 2022. Based on average own generation from hydropower, wind power
and photovoltaic production in quarter 4/2022 and the opportunities and
risks currently identified, VERBUND expects EBITDA of between
approximately €2,800m and €3,300m and a reported Group result of between
approximately €1,530m and €1,880m in financial year 2022.

VERBUND is also planning an ordinary dividend based on a payout ratio for
2022 of between 45% and 55% of the Group result of between around €1,450m
and €1,800m, after adjustment for non-recurring effects. In addition, the
Executive Board of VERBUND AG resolved to propose a special dividend of
€400m to the 2023 Annual General Meeting.

The earnings forecast and the information on the expected payout ratio are
contingent on VERBUND not being impacted further by possible energy policy
measures to skim off some of the profits at energy companies.

 

         
KPIs        
  Unit Q1–3/2021 Q1–3/2022 Change
Revenue €m 2,819.8 7,617.3 170.1%
EBITDA €m 1,150.6 1,933.3 68.0%
Operating result €m 843.6 1,621.7 92.2%
Group result €m 587.4 1,065.2 81.4%
Earnings per share € 1.69 3.07 81.4%
Cash flow from operating activities €m 510.6 1,120.8 119.5%
Free cash flow before dividends €m –264.1 –150.5 –
Free cash flow after dividends €m –595.8 –628.4 –
Performance of VERBUND shares % 25.6 –11.6 –
Gearing % 42.4 89.6 –
         

 

Additional information as well as the Interim Financial Report for
quarters 1–3/2022 is available at www.verbund.com > Investor Relations >
Latest financial results.

Contact: Andreas Wollein
Head of Group Finance and Investor Relations
T.: +43 (0)5 03 13 – 52604
F.: +43 (0)5 03 13 – 52694
investor-relations@verbund.com

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03.11.2022 CET/CEST This Corporate News was distributed by EQS Group AG.
www.eqs.com

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Language: English
Company: VERBUND AG
Am Hof 6A
1010 Wien
Austria
Phone: 0043-1-53113-52604
Fax: 0043-1-53113-52694
E-mail: investor-relations@verbund.com
Internet: www.verbund.com
ISIN: AT0000746409
WKN: 877738
Indices: ATX
Listed: Vienna Stock Exchange (Official Market)
EQS News ID: 1478037

 
End of News EQS News Service

1478037  03.11.2022 CET/CEST

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