Performance at end-September 2015: Hedging ensured satisfactory performance

03.11.15

Press release 06/15

E-CO Energi reported a net YTD profit after tax of MNOK 369, down MNOK 34 year-on-year. The decline is ascribable to lower selling prices. The Group's hedging was successful as the actual selling price has been 44 per cent higher than the area price thus far this year.

"Power prices in Q3 were the lowest in 15 years. Obviously, this has had an impact on performance, although hedging has been a tremendous benefit. This is underscored by the fact that the actual selling price was more than twice the area price in Q3", comments President and CEO Tore Olaf Rimmereid. 

Early in Q3, there were abnormally high levels of snow in the mountains. The summer snowmelt resulted in a high inflow and very low power prices. The system price on NordPool was 0.122 NOK/kWh, the lowest price in 15 years. The area price in southern Norway, where the Group has its power production, was 0.10 NOK/kWh. E-CO Energi was well hedged and obtained a selling price that was more than twice as high as the area price during the quarter. Forward prices continued to drop in Q3, signalling low power prices for the rest of 2015 and in the years ahead.

The Group's YTD operating revenues came to MNOK 1 775, down 8 per cent from 2014. The decline is due to lower power prices. Hedging has curbed the decline, since the power price in E-CO Energi's price areas dropped by 22 per cent. Higher power production also offset the decline in revenues to some extent. The actual YTD selling price obtained was 0.244 NOK/kWh. This is 44 per cent higher than the area price in southern Norway.

Operating expenses came to MNOK 850, up MNOK 31. Last year's financial statements contained a cost-cutting one-off item of MNOK 40 related to pension expenses. Adjusted for this, operating expenses have been marginally lower in 2015 than in 2014.

The operating profit at end-September came to MNOK 925, down 17 per cent from 2014. Tax expenses declined by MNOK 122, or 24 per cent. The reduction is especially large in the resource rent tax due to lower spot prices. A significant share of the Group's earnings thus far in 2015 has come from financial price hedging. The net profit after tax was MNOK 369, which corresponds to a decline of 8 per cent compared with last year.

The Group's YTD power production aggregated 7 288 GWh at end-September 2015. The Group produced 7 201 GWh of power in the same months of 2014. Production came to 2 053 GWh in Q3, compared with 2 177 GWh in Q3 2014.

The Group's YTD investments totalled MNOK 204. The largest investment project is the Rosten Power Plant under the auspices of Oppland Energi. Otherwise, the investments were primarily in the maintenance of existing facilities.

E-CO Energi's reservoirs had a high filling ratio at the end of Q3, and production is expected to be above normal for the year as a whole. Owing to lower power prices, the net profit for 2015 is expected to be lower than the result for 2014.

 

Key figures* (MNOK):

 

At Q3 2015

At Q3 2014

Year 2014

Operating revenues

1 775

1 929

2 863

Operating expenses

(850)

(819)

(1 165)

Operating profit

925

1 110

1 698

Profit before taxes

751

907

1 491

Profit after taxes

369

403

713

Equity

6 432

6 493

6 063

Equity and liabilities

15 521

16 066

16 064

 *E-CO Energi's accounts are NGAAP-compliant.

Contacts:

Tore Olaf Rimmereid

President and CEO

+47 241 16910/+47 909 92515

Stine Rolstad Brenna

CFO

+47 241 16915/+47 928 03456

Torill Berdal

Vice President, HR and Communications

+47 241 16590/+47 952 24373