2013 Annual Press Conference - Solid business performance despite difficult market conditions - BKW well-equipped for the future
Bern (ots)
The BKW Group recorded a solid operating profit in 2012 despite the challenging economic and regulatory environment. Both the energy and grid businesses contributed to this positive development, which was supported by higher production volumes from nuclear power plants and renewable energies, the good trend in revenue at Networks, and positive effects from the programme of measures introduced to cut costs and improve efficiency. However, the result was also affected by a fall in electricity sales, persistently low market prices and special provisions for energy procurement contracts. Operating profit before depreciation, amortisation and impairment (EBITDA) grew by CHF 272.6 million to CHF 410.7 million. The trend on international financial markets also had a positive impact on the financial result and thus on net profit, which closed the year at CHF 134.6 million. The BKW Group is adjusting its organisational structure in line with the new BKW 2030 strategy, with a view to tackling the challenges ahead.
Slight increase in consolidated operating revenue
In 2012 the BKW Group grew consolidated operating revenue by 8.6% to CHF 2,860.4 million despite a 3.3% decline in electricity sales to 20,040 GWh. Net sales to external customers rose in the Energy International and Trading business divisions as well as in Networks, while Energy Switzerland saw a slight fall in sales. In 2012 the BKW Group generated 10,811 GWh of electricity, corresponding to an increase of 946 GWh compared to the previous year (9,865 GWh). This was mainly due to increased feed-ins from hydroelectric power plants (+557 GWh), the high availability of nuclear power plants (+396 GWh) and the sizeable share of electricity generated by new renewable energies (+221 GWh). Another positive factor was the gross volume of 3,117 GWh produced by Mühleberg nuclear power plant (KKM): its best result since going into operation. By contrast, the electricity generated by thermal power plants in Italy remained dampened by the difficult economic situation (-228 GWh).
Challenging sales business - increase in revenue at Networks
Energy Switzerland saw total operating revenue drop by 4.2% to CHF 2,167.9 million, with sales down by 8.0% to CHF 1,801.9 million as a result of a decline in volume to 7,465 GWh. This development is attributable to the reduction in business with sales partners, particularly outside BKW's supply region.
Energy International and Trading recorded total operating revenue of CHF 2,203.4 million, corresponding to an increase of 6.3% versus the prior year. The volume of electricity traded remained stable, growing by 0.5% to 10,384 GWh (10,332 GWh). Net sales to external customers grew by 22.5% to CHF 1,402.6 million. The result was negatively impacted by low energy prices, the strong Swiss franc and a narrower difference between peak and off-peak prices. Conversely, the increase in wind power production had a positive effect. The Networks segment improved total operating revenue by 2.2% to CHF 700.7 million. Net sales to external customers rose by 26.7% to CHF 231.7 million. The bulk of this revenue is accounted for by growth in construction and engineering services and the electrical installation business.
Higher adjusted operating profit and solid capital situation
Adjusted to account for special provisions, operating profit before depreciation, amortisation and impairment (EBITDA) was up 25.1% at CHF 523.0 million. There was only a slight change in depreciation expenses versus the previous year. At CHF 333.6 million, EBIT was CHF 101.6 million higher than the adjusted prior-year figure. Buoyed by the positive trend on financial markets, the financial result climbed by CHF 39.2 million to CHF -49.1 million, chiefly driven by the return on shares in the decommissioning and disposal funds, which are measured at fair value. The BKW Group's equity situation remained stable, with an equity ratio of 36.5%. BKW's financial situation is also solid. The first refinancing of outstanding bonds is due only in 2018.
Charges for special provisions
The impairment tests performed on production facilities when preparing the year-end financial statements resulted in the need for a correction totalling CHF -112.2 million. These provisions primarily affect new production plants, namely the Hagneck hydroelectric power plant and the gas-fired power plants in Livorno Ferraris and Tamarete. A slight reversal was made to the provisions formed in 2011 for the coal-fired power plant in Wilhelmshaven. A provision also had to be formed for electricity purchases from Fessenheim nuclear power plant. Adjusted for these special charges, EBITDA amounted to CHF 522.9 million, corresponding to an increase of 25.1% versus the adjusted prior-year figure. After tax, the net effect of the special charges on the annual result is CHF 70.0 million, with an adjusted net profit of CHF 204.6 million (+66.6% compared with the adjusted prior-year figure).
Expansion of production capacities, exploitation of market opportunities, and adjustment to organisational structure
In the year under review the BKW Group began implementing its new "BKW 2030" strategy with a view to strengthening the Group's market position and to take account of the Federal Council's energy policy. In this context, various hydro power projects in Switzerland were driven forward and several new renewable energy facilities were acquired abroad. Future investments in hydro and wind power will continue to focus on facilities in Switzerland and neighbouring countries. In the year under review the Group-wide programme of cost-cutting and productivity enhancement measures, launched to address the changed regulatory framework and difficult market conditions, was further pursued and is on track. Savings of around CHF 50 million were achieved in 2012. Of the 250 jobs to be shed, 180 have already been cut, primarily by not filling vacancies and through natural fluctuation. This will result in targeted cost savings of CHF 95 million by 2015. Thanks to its vertical integration, BKW is in a position to exploit the opportunities afforded by a rapidly changing market environment. Besides the classical energy supply business, new business opportunities will open up for BKW as a service provider, not least due to the increasingly complex situation caused by the growth in decentralised production from renewable energies and the rise in demand for energy efficiency. With its smart grid, smart metering and smart home offerings, BKW will be in a position to further develop its grid and the related installation and grid business, and to offer innovative solutions. To address the challenges of the new market conditions successfully, the BKW Group is adjusting its organisational structure in line with the new BKW 2030 strategy.
Outlook
BKW does not expect any change in the challenging market environment in the current financial year, with energy prices set to remain low and sustained pressure on margins in the international markets. These factors, coupled with regulatory requirements and a persistently strong Swiss franc, will also affect the operating result for 2013. Nevertheless, the efficiency enhancements resulting from the cost-cutting measures will also have a positive impact. Taking all these factors into account, BKW expects to end 2013 with operating profit before depreciation and impairment (EBITDA) and net profit on a par with the figures reported for 2012.
2013 Annual General Meeting
The Board of Directors will propose a dividend of CHF 1.20 per share to the Annual General Meeting on 17 May 2013. The dividend will be paid out on 27 May 2013. The interim results will be presented on 12 September 2013.
The 2012 Annual Report and Financial Report can be downloaded from:
http://www.bkw-fmb.ch/annualreport12 http://www.bkw-fmb.ch/financialreport12 http://www.bkw-fmb.ch/facts12
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 media release is issued in German, French, English and Italian. The German version is authoritative.
Contact:
antonio.sommavilla@bkw-fmb.ch; tel. no.: 031 330 51 07