Highlights
- Group net result above previous year due to lower valuation effects from hedges
- Corona crisis only with selective impacts on operating results; diversified business model as stabilising factor
- Unchanged outlook for the full financial year: Group net result of EUR 180m to EUR 200m
- Confirmation of dividend policy: ordinary dividend of EUR 0.47 per share
- Share of renewable electricity generation rises to 59.7% (previous year: 42.6%)
- Focus of expansion on cross-regional drinking water pipelines in Lower Austria to cover peak demand periods; start of construction on a new 60 km pipeline from Krems to Zwettl
- General contractor assignments received for the construction of thermal sludge treatment plants in Berlin, Hanover and Straubing
- As of 29 July 2020, all requirements met for the start of the Umm Al Hayman wastewater treatment plant project in Kuwait
Key results
- Revenue: -6.8% to EUR 1,596.9m
- EBITDA: +17.9% to EUR 513.6m
- EBIT: +20.3% to EUR 284.5m
- Group net result: +25.2% to EUR 210.7m
- Net debt: EUR 1,086.4m (30 September 2019: EUR 999.5m)
Energy sector environment
The temperature-related energy demand was substantially below the long-term average in EVN's three core markets during the first three quarters of 2019/20. The prices for CO2 emission certificates recently quoted at the pre-crisis level of roughly EUR 25 per tonne, which supported the normalisation of forward prices for base load and peak load electricity.
EBITDA, EBIT and Group net results above previous year
Revenue recorded by the EVN Group declined by 6.8% year-on-year to EUR 1,596.9m in the first three quarters of 2019/20. This development resulted, above all, from a lower volume of thermal generation and a reduction in the Networks Segment. Network sales volumes were also negatively influenced by the decline in energy demand due to the Covid-19 pandemic. Positive factors included higher energy revenue in Bulgaria and growth in the international project business.
In line with the development of energy revenue, the cost of electricity purchases from third parties and primary energy expenses fell by 16.5% to EUR 711.7m. The main reasons included the lower use of primary energy carriers which accompanied the reduction in thermal generation as well as declines in wholesale prices and purchased volumes.
The cost of materials and services rose by 1.2% to EUR 196.5 m.
The share of results from equity accounted investees with operational nature rose to EUR 98.5m in the first three quarters of 2019/20 (previous year: EUR 17.3m). In addition to positive non-recurring effects at RAG and Energie Burgenland, this increase resulted mainly from an improvement in earnings at EVN KG. This company's prior year results were influenced by rising wholesale prices and the related higher procurement costs and by negative effects from the valuation of hedges. Contrasting factors included the negative earnings contributions from the Ashta hydropower plant (an impairment loss in the second quarter of 2019/20 to reflect the higher country risk premium resulting from the Covid-19 pandemic) and from EnergieAllianz.
EBITDA recorded by the EVN Group rose by 17.9% to EUR 513.6m in the first three quarters of 2019/20. Higher investments, the capitalisation of rights of use following the initial application of IFRS 16 and the increased carrying amount of property, plant and equipment that resulted from revaluations as of 30 September 2019 led to an increase of 7.5% in scheduled depreciation and amortisation to EUR 214.6m. An increase in the country risk premiums due to the Covid-19 pandemic in the second quarter of 2019/20 also led to the recognition of impairment losses to energy generation equipment in South East Europe and to the customer base in North Macedonia. EVN recorded an increase of 20.3% in EBIT to EUR 284.5m in the first three quarters of 2019/20.
Financial results improved to EUR -6.7m in the reporting period (previous year: EUR -14.4m) based on a higher dividend from Verbund AG. Group net result for the first three quarters of 2019/20 amounted to EUR 210.7m, which represents an increase of 25.2% over the previous year.
Solid balance sheet structure
EVN has a solid and stable capital structure which will support the realisation of its planned investments in Lower Austria over the coming years. Net debt rose by 8.7% over the level on 30 September 2019 to EUR 1,086.4m as of 30 June 2020, among others due to the recognition of non-current lease liabilities in connection with the above-mentioned initial application of IFRS 16. Consequently, gearing increased to EUR 25.1% as of 30 June 2020 (30 September 2019: 22.0%).
Medium-term investment plan
EVN is committed to the systematic implementation of its investment strategy, which is focused on the network infrastructure, renewable generation, natural heat and drinking water supplies in Lower Austria. Annual investments are estimated at approximately EUR 400m per year, including roughly EUR 300m in Lower Austria. The government-ordered measures to combat the spread of the Covid-19 pandemic have recently led to delays on selected construction projects. These delays will be recovered as soon as possible.
Developments in the energy and environmental services business
Energy business
Electricity generation from renewable energy totalled 1,720 GWh in the reporting period and was 7.5% lower than the previous year. The commissioning of new wind power plants supported an increase in wind power generation despite a decline in wind flows, but the hydrological conditions for small hydropower plants were clearly less favourable than in the exceptionally good previous year.
Electricity generation from thermal power plants fell sharply by 53.7% because the use of the thermal power plant in Theiss for network stabilisation was lower than the previous year and electricity generation from hard coal at the Dürnrohr power plant was terminated in 2019.
Environmental and water business
EVN registered a further increase in drinking water sales volumes based on strong demand for cross-regional supplies and by end customers during the first three quarters of 2019/20. In view of this rising demand and to protect high-quality drinking water supplies, EVN is continuing to focus on the construction of new and the strengthening of existing pipelines. One major project involves the construction of a new 60 km pipeline from Krems to Zwettl.
WTE Wassertechnik, which is responsible for the international project business, had ten projects under planning and construction as of 30 June 2020: in Germany, Poland, Lithuania, Romania, Croatia, Bahrain and Kuwait. Included here is a new large-scale contract for a thermal sludge utilisation plant in Berlin (contract volume: approximately EUR 190m, share in earnings roughly 50%). In this new business field, WTE Wassertechnik also registered further successes as a 50% joint venture partner in sludge2energy. This company received contracts for two thermal sludge utilisation plants in Hanover and Straubing (contract volume: approximately EUR 40m, respectively EUR 50m).
New shareholder structure following closing of the transaction between Wiener Stadtwerke and EnBW
Wiener Stadtwerke GmbH acquired 51,000,000 EVN shares from EnBW Trust e.V. on 5 August 2020 based on the share purchase agreement concluded by the parties on 5 March 2020 after all requirements to implement the transaction, in particular the non-prohibition by the federal antitrust authority, were received. Wiener Stadtwerke GmbH, which is wholly owned by the City of Vienna, is now the second largest shareholder of EVN AG with a stake of 28.4%. The province of Lower Austria remains the majority shareholder of EVN AG with 51.0%. The remaining 20.6% of the shares represent free float (incl. 1.0% treasury shares).
Outlook confirmed for the 2019/20 financial year
EVN expects Group net profit of EUR 180 to 200m for the 2019/20 financial year - under the assumption of average conditions in the energy business environment and a stable situation in connection with the corona crisis during the fourth quarter of this financial year.
The Letter to Shareholders on the first three quarters of 2019/20 is available under
27.08.2020 Dissemination of a Corporate News, transmitted by DGAP - a service of EQS Group AG.
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