VERBUND AG: Results for quarter 1/2023: strong income trend despite lower water supply

The situation in the energy markets eased slightly in quarter 1/2023, continuing the trend that had begun at the end of 2022. Wholesale prices for gas and electricity receded significantly in the quarter now ended – at times even falling below the levels recorded before the outbreak of the war in Ukraine – as concerns about Europe having adequate supplies of gas for the winter were allayed by filling levels of gas storage facilities reaching all-time highs.

VERBUND achieved further milestones in the implementation of its strategy in quarter 1/2023, not only in its Hydro and New renewables segments, but also in the Grid segment. The hydropower projects (Reißeck II plus, Limberg III, Gratkorn) are proceeding as planned. By driving the development of new renewables in Europe, VERBUND will also help reduce reliance on fossil fuels in the medium term and contribute to a climate-neutral Europe. Implementation of the wind and photovoltaic projects in Spain as well as the other projects in the international markets were further expedited in quarter 1/2023. However, strong, stable grids are imperative for a successful transition to clean energy, which is why the main emphasis of our ambitious investment programme is currently on investments in expansion of the power grids. VERBUND achieved yet another milestone in putting Bavaria’s largest battery storage into operation. The two storage facilities in Diespeck and Iphofen together make up VERBUND’s North Bavaria battery storage chain with total capacity of 42 MW and a storage volume of 48 MWh. The large-scale batteries are deployed when the load on the distribution network is particularly high.

Green hydrogen is an important contributor to the energy transition and a pioneering field in which VERBUND will play a vital role. With this in mind, VERBUND signed a Memorandum of Understanding with two enterprises in quarter 1/2023. VERBUND has now partnered with Saudi energy company ACWA Power to explore joint projects for green hydrogen. In addition, VERBUND inked an agreement with Masdar (UAE) with the objective of exploring projects for production of green hydrogen for the Central European market.

VERBUND saw an improvement in the results posted for quarter 1/2023. EBITDA climbed by 18.7% year-on-year to €967.3m. The reported Group result rose by 2.8% to €529.0m and the Group result after adjustment for non-recurring effects was up 14.1%. At 0.93, the hydro coefficient for the run-of-river power plants was 1 percentage point below the prior-year figure and 7 percentage points lower than the long-term average. By contrast, generation from annual storage power plants rose by 13.5% in quarter 1/2023 compared with the prior-year reporting period. Generation from hydropower plants thus increased by 121 GWh to 6,089 GWh. The sharp rise in wholesale electricity prices on the futures markets that were relevant for the reporting period gave earnings a considerable boost. Prices on the spot markets declined in quarter 1/2023. Consequently, the average sales price obtained for our own generation from hydropower rose by €88.9/MWh to €202.8/MWh. Higher generation from photovoltaic installations and wind power plants, especially from the plants put into operation in Spain, also had a positive effect. This stood in contrast to the negative effect caused by a significant decrease in thermal generation and the negative earnings contribution from the Sales segment attributable to high procurement costs, among other factors. The taxation of the windfall revenues of inframarginal power generators in Austria and Germany from December 2022 and corresponding windfall profits in Romania additionally had a negative impact on the Group’s result.

Earnings forecast for 2023 adjusted

Based on expectations of average levels of own generation from hydropower, wind power and photovoltaic production in quarters 2–4/2023 as well as the opportunities and risks identified, VERBUND expects EBITDA of between around €3,700m and €4,300m and a reported Group result of between around €2,000m and €2,400m in financial year 2023. VERBUND’s planned dividend payout ratio for 2023 is between 45% and 55% of the Group result of approximately €2,000m to €2,400m, after adjusting for non-recurring effects.

The earnings forecast and the information on the expected payout ratio are contingent on VERBUND not being impacted further by possible energy policy measures to skim off some of the profits at energy companies.

KPIs
	Unit	Q1/2022	Q1/2023	Change
Revenue	€m	2,531.9	3,262.7	28.9%
EBITDA	€m	814.9	967.3	18.7%
Operating result	€m	705.7	841.4	19.2%
Group result	€m	514.4	529.0	2.8%
Earnings per share	€	1.48	1.52	2.8%
EBIT margin	%	27.9	25.8	–
EBITDA margin	%	32.2	29.6	–
Cash flow from operating activities	€m	209.2	1,363.7	–
Free cash flow before dividends	€m	–105.1	1,160.5	–
Free cash flow after dividends	€m	–105.1	1,160.5	–
Performance of VERBUND shares	%	–3.4	1.7	–
Gearing	%	60.7	27.5	–

 

Additional information as well as the Interim Financial Report for quarter 1/2023 is available on the website www.verbund.com > Investor Relations > Latest financial results.

Contact:

Andreas Wollein
Head of Group Finance and Investor Relations
T.: +43 (0)5 03 13 - 52604
F.: +43 (0)5 03 13 - 52694
mailto:investor-relations@verbund.com