Oslo, 5 May 2006
Press release 5/2006
The power market was characterised by rising prices in Q1 2006. The spot price climbed from about 0.27 NOK/kWh early in the year to roughly 0.42 NOK/kWh at end quarter. The average price in March was the third highest monthly price noted over the past 10 years. The average monthly price has only been higher in December 2002 and January 2003. The price hike was also reflected in forward prices. Significant factors contributing to the price rise included the high cost of CO2 permits in the EU, high fossil fuel prices, and a situation with less abundant snow reserves than usual. The cold weather Scandinavia experienced in March also pushed the spot price up.
E-CO reported Q1 revenues of MNOK 1024, compared with MNOK 810 in Q1 2005, i.e. an increase of 26 percent. This is ascribable to more production volume and higher selling prices. Production climbed by some 400 GWh. The new power plants in Øvre Otta accounted for 55 GWh of that figure. The selling price was about 20 per cent higher than in Q1 last year. Owing to the price hedging strategy, the average selling price obtained was somewhat lower than the spot price.
The operating profit in Q1 2006 was up MNOK 132 from Q1 2005, i.e. an increase of 32 per cent. Operating expenses rose from MNOK 202 in Q1 2005 to MNOK 224 in Q1 2006. The increase was due to generally higher costs for feeding power into the central grid because the cost of power losses in the feed-in charge is contingent on the spot price, and the volume was higher.
Financial expenses declined by MNOK 14 compared with Q1 2005, primarily due to lower interest-bearing liabilities. In Q1 this year, the Group paid down MNOK 495 in debt, increasing its liquid reserves by MNOK 256. Earnings before taxes came to MNOK 712, which was MNOK 209 higher than in 2005. However, taxes were high during the quarter since the resource rent tax is calculated on the basis of spot prices. In 2005, the actual selling price was higher than the spot price, while the opposite was true in Q1 this year. This implies a significantly higher tax rate than in Q1 last year. The Q1 profit after tax came to MNOK 350. In the comparable months of 2005, the profit after tax was MNOK 304.
The average system price was 0.364 NOK/kWh in Q1 2006. By comparison, the average system price was 0.213 NOK/kWh during the
same months of last year. The Group obtained a selling price of about 0.295 NOK/kWh, as against about 0.25 NOK/kWh in Q1 2005.
The Group's power production totalled 3 515 GWh in Q1 this year. The company produced 3 108 GWh of power during the same months
of 2005.
At 31 March 2006, the Group's equity ratio was 32.6 per cent, compared with 31.1 per cent at the beginning of the year and 31.5 per cent at the same date last year.
There is considerable uncertainty attached to future production as well as to future power prices. Owing to relatively modest snow reserves, it is expected that the Group's production will be slightly below normal for the rest of the year, provided precipitation is normal. There may be substantial volatility in power prices in future, although hedging will reduce this uncertainty significantly during the current year. Based on the current situation, a somewhat higher net profit is expected for 2006 than for 2005.
Key figures - E-CO Energi (MNOK):
|
|
Q1 2006 |
Q1 2005 |
2005 |
|
Operating income |
1 024 |
810 |
2 310 |
|
Operating expenses |
(224) |
(202) |
(807) |
|
Operating profit |
800 |
608 |
1 503 |
|
Earnings before tax (EBT) |
712 |
503 |
1 098 |
|
Net profit |
350 |
304 |
647 |
|
Equity |
5 882 |
5 639 |
5 532 |
|
Liabilities and equity |
18 045 |
17 921 |
17 798 |
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Download the Q1-2006 report (pdf 0,2 Mb)
Contacts:
|
President and CEO, |
+47 241 16910 |
|
|
Per-Arne Torbjørnsdal |
Vice President, Corporate Communications, E-CO Energi |
+47 241 16920 |
