E-CO Energi - lower YTD performance at Q3, but better outlook for the net profit for the year

08.11.16

The net YTD profit after tax was MNOK 256, down MNOK 113 year-on-year. The decline is due to lower contributions from price hedging. Higher power prices towards the end of the quarter and after end-quarter herald better prospects for the net profit for 2016.

Power prices in Q3 2016 were higher than a year ago, mainly due a lower hydrological balance and less inflow. In Q3 2015, power prices were extremely low, as a great deal of snow and late snow melting led to a high inflow throughout the summer.

Towards the end of Q3, and particularly after end quarter, forward prices for the rest of the year and for 2017 climbed significantly, meaning the E-CO Group's financial outlook for 2016 and for 2017 has improved due to higher power prices.

"While there is still uncertainty attached to the trend in power prices, the prices on the futures market suggest that even though YTD profits have been lower than last year, the net profit for 2016 may reach last year's level," comments President and CEO Tore Olaf Rimmereid.

In June, damage to Statnett's cable in the Oslo Fjord reduced transmission capacity with Sweden. In consequence, the area prices in NO1, and to an even greater extent in NO5, were lower than the Nordic system price. Limited transmission capacity and the resultant price differences have led to a significant loss of income for E-CO Energi, which has about two-thirds of its production in price area NO5 and the rest in NO1. The average area price at end-September, weighted by the Group's stake of production in the two price areas, was 0.211 NOK/kWh, compared with 0.169 NOK/kWh in 2015.

YTD operating revenues added up to MNOK 1 685, which was MNOK 90 lower than at 30 September last year (MNOK 1 775). The decline is ascribable to lower actual selling prices owing to substantially lower contributions to income from hedging. The actual YTD selling price was 0.233 NOK/kWh, compared with 0.244 NOK/kWh during the comparable months of last year. The selling price was 11 per cent higher than the production-weighted area price. The selling price was 44 per cent higher during the first three quarters of 2015.

The operating profit at end-September came to MNOK 857, down MNOK 68 from 2015. The profit before taxes declined from MNOK 751 in 2015 to MNOK 676 this year. Tax climbed by MNOK 38, compared with last year. The increase is ascribable to higher resource rent tax due to higher spot prices and the tax hike from 31 to 33 per cent. The net profit came to MNOK 256, down MNOK 113 from last year.

The Group's YTD power production aggregated 7 327 GWh at end-September 2016. The Group produced 7 288 GWh of power during the same months of 2015.

The Group's YTD investments totalled MNOK 186. The largest investment project is the Rosten Power Plant under the auspices of Oppland Energi. In Q3, it was decided that E-CO Energi will participate in the development of the Nedre Otta Power Plant. The facility will have estimated production of 315 GWh per year and will cost roughly NOK 1.2 billion. E-CO Energi's stake is approx. 27 per cent.

E-CO Energi's reservoirs had a good filling ratio at the end of Q3, and production is expected to be above normal for the year as a whole.

Key figures* - E-CO Energi (MNOK):

 

At Q3 2016

At Q3 2015

2015

Operating revenues

1 685

1 775

2 511

Operating expenses

(828)

(850)

(1 164)

Operating profit

857

925

1 347 

Profit before taxes

676

751

1 116

Profit after taxes

256

369

533

Equity

6 167

6 432

5 911

Equity and liabilities

16 353

15 521

15 636

*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

+47 928 03456

Torill Berdal

Vice President, HR and Communications

+47 241 16590
+47 952 24373