BKW FMB Energy Ltd
Solid operating profit
Initial assessment of the events in Japan
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Bern (ots)
BKW FMB Energy Ltd (BKW) is following the disastrous events in Japan, and in particular the situation at Japanese nuclear power plants affected by the earthquake and tsunami, with the utmost concern. It is endeavouring to obtain a clear picture and conduct initial analyses as quickly as possible. As things stand at present, based on initial assessments of the unprecedented events in Japan there is no necessity for immediate operational measures to be taken at Mühleberg nuclear power plant.
Production by Mühleberg nuclear power plant is of fundamental importance for power supplies to BKW's customers. As a responsibly-minded operator, BKW takes into account the latest scientific and technological findings as well as the latest information on incidents, and makes every effort to upgrade the safety systems and emergency plans for the plant. Regarding earthquake safety, BKW has based its calculations for Mühleberg nuclear power plant on the strongest earthquake ever recorded in our country: the earthquake which hit Basel around 600 years ago. It will examine these parameters in the light of findings from Japan over the next few weeks. This approach also applies to plans for replacement nuclear power plants, for which the application procedure has rightly been suspended. The new findings must be assessed within an overall context. Clearly the events in Japan will have a major impact on the future direction of energy policy. BKW will make an active contribution to the further development and implementation of electricity supplies that offer the best possible safety and environmental protection.
2010 results The BKW Group held its ground in fiscal 2010 against a challenging market and financial backdrop, and recorded solid operating profit. Consolidated operating revenue amounted to CHF 3,187.2 million, corresponding to a reduction of 11.3% compared to 2009 (*continuing operations CHF 2,788.1 million or - 13.8%). The result was influenced by solid performance of the energy business on the one hand, and low market prices coupled with the weak euro on the other. Operating profit before depreciation, amortisation and impairment (EBITDA) amounted to CHF 480.6 million: CHF 21.0 million or 4.2% lower than the prior year (continuing operations CHF 474.1 million or CHF 28.2 million lower than the prior year). The trend on international currency and financial markets had a negative impact on the financial result and accordingly on net profit, which ended the year at CHF 228.3 million (continuing operations CHF 224.0 million): a good result in view of the circumstances. In 2010 the volume of electricity sold by the BKW Group declined year-on-year by 2.3% to 26,684 GWh (2009: 27,310 GWh). Electricity production was also slightly down, dropping by 26 GWh to 10,552 GWh (2009: 10,578). The good availability and higher production from nuclear power plants (5,921 GWh versus 5,784 GWh in 2009), growth in new renewable energies (177 GWh compared to 94 GWh in 2009) and increased production by the gas-fired combined-cycle power plant in Livorno Ferraris, Piedmont (700 GWh compared to 648 GWh in 2009) compensated for the slightly lower volume of production by hydroelectric power plants (3,754 GWh compared to 4,052 GWh in 2009). In 2010 Mühleberg nuclear power plant once more exceeded prior-year production figures, posting its best result since going into operation (2,980 GWh compared to 2,960 GWh in 2009). This record annual volume is attributable to ongoing investments in modernisation and the plant's excellent operational safety.
Solid Swiss energy business - difficult international environment Energy Switzerland grew total operating revenue by 5.0% to CHF 2,156.2 million. Net sales to external customers rose by 3.0% to CHF 1,151.2 million, while sales in Switzerland were 1.0% higher year-on-year at 8,153 GWh (2009: 8,075 GWh). The increase is chiefly attributable to higher electricity sales in the supply region due to economic factors. Energy International and Trading posted a 15.2% reduction in total operating revenue to CHF 2,623.7 million. Net sales to external customers fell by 20.0% to CHF 1,758.2 million. The main drivers of this trend were the low energy prices and weak euro. Revenue from electricity trading was 27.0% lower at CHF 1,063.7 million. Revenue from international sales fell by 6.3% to CHF 554.1 million although in terms of volume the trend was positive, with Germany recording an increase in sales to existing customers. Nevertheless, this trend was unable to fully offset the effect of falling market prices on revenue. Total operating revenue generated by Networks was 1.6% higher at CHF 657.6 million. As in 2009, the segment results were negatively impacted by regulatory interventions.
Good operating performance - lower financial result Operating profit before depreciation, amortisation and impairment (EBITDA) fell by 4.2% to CHF 480.6 million (continuing operations by 5.6% to CHF 474.1 million). Positive contributions made in particular by the solid earnings trend in the Swiss energy business and reversal of a provision of CHF 28.9 million for onerous energy procurement contracts with partner plants were cancelled out by market-related reductions in trading income. Operating profit (EBIT) ended the year CHF 17.2 million lower at CHF 339.7 million (continuing operations CHF 333.5 million or CHF 24.4 million lower). Developments on equity markets, coupled with higher financing costs and the weaker euro, reduced the 2010 financial result by CHF 84.7 million to minus CHF 56.5 million. The main influencing factor was the lower year-on-year return on shares in the decommissioning and disposal funds, which are measured at fair value, although this was within the expected range. The financial result was weighed down by the lower euro exchange rate to the tune of around minus CHF 20 million. This in turn affected net profit, which fell by 23.5% or CHF 70.2 million to CHF 228.3 million (with continuing operations down from CHF 299.4 million to CHF 224.0 million). This may be considered a good result given the difficult market and financial environment.
Consistent expansion of production capacities In the year under review, strategic measures and projects to strengthen the BKW Group's future market position were consistently pursued. These included the repurchase of treasury shares from E.ON as well as efforts to step up the existing partnership with Groupe E Ltd, cooperation platforms to further boost BKW's presence outside the traditional supply region, and a closer partnership with Energie Wasser Bern. The BKW Group also took steps to strengthen its position by expanding electricity production capacities in Switzerland and abroad, with particular emphasis on expanding the wind power portfolio and further plans for a replacement for Mühleberg nuclear power plant. Moreover, the agreement reached with Axpo AG and Alpiq AG on the planning and construction of two replacement nuclear power plants represented an important milestone for future security of supply in Switzerland.
Difficult regulatory environment - further development of the organisational structure The regulatory framework remained difficult in 2010, with a corresponding impact on the BKW Group's results. BKW was obliged to take legal action against several decisions by the Federal Electricity Commission. It is BKW's declared objective to achieve clarity with regard to the boundary conditions for future investments in the energy and grid areas, as this is an important criterion for maintaining an efficiently-functioning supply infrastructure. Since the ElCom decision on distribution grids and energy is still pending, it is impossible at this point in time to assess the impact on the BKW Groups' results. If measures similar to those used for Grid Level 1 were to be applied, this would have a negative effect in the double-digit millions range.
With a view to addressing future challenges and in particular the requirements governing unbundling, BKW is examining the possibility of adapting its organisational and legal structure. The main objectives in this regard are to give greater impetus to the Group's market positioning, implement its strategy efficiently, and enhance its flexibility in responding to market needs. With this in mind, a change to a holding structure is being explored.
Outlook for 2011 BKW expects to close the current financial year with revenue on a par with the prior-year figure. The difficult environment, marked by sustained low energy prices on the international markets, regulatory requirements and costs related to strategic projects - particularly in connection with the drive to expand production - will continue to impact the operating result in 2011. Taking all these factors into account, EBITDA for 2011 - adjusted for the special effect related to reversal of the provision for onerous energy procurement contracts for partner plants in 2010 - is expected to be within the prior-year range. The result is dependent on energy price developments, the regulatory environment and financial markets. Assuming stable conditions and taking into account the aforementioned special effect, BKW expects to close 2011 with net profit on the prior-year level. The outlook does not factor in the impact of events in Japan.
2011 General Shareholders' Meeting As in 2010, a dividend of CHF 2.50 will be proposed to the General Shareholders' Meeting on 13 May 2011. The dividend will be paid out on 20 May 2011. The half-year results will be presented on 15 September 2011.
The 2010 annual report and financial report can be downloaded from: www.bkw-fmb.ch/annual-report10 www.bkw-fmb.ch/financial-report10
(*) Important note on accounting principles: Due to disposal of the sales business in Germany on 1 January 2011, the provisions of IFRS 5 governing discontinued operations are relevant for the 2010 reporting year. Although the sale was completed at the beginning of 2011, IFRS 5 requires discontinued operations to be disclosed separately in the 2010 figures and, in the case of the income statement, also for the preceding financial year. The income statement is therefore broken down into continued and discontinued operations. The disposal group is disclosed in the balance sheet as "assets and liabilities held for sale".
The statements contained in this press release constitute expectations and forward-looking statements. Because these statements are subject to risks and uncertainties, actual future results may differ materially from those expressed or implied by the expectations and statements. This press release is issued in German, French, English and Italian. The German version is authoritative.
Kontakt:
Antonio Sommavilla
info@bkw-fmb.ch
031 330 51 07