Result Eneco impacted by non-recurring charge
- Forced unbundling no longer required
- Operating profit €145 million, net profit €75 million
- Non-recurring charge €35 million
- Acquired Econcern companies integrated
- S&P confirms A- rating for Eneco Holding N.V.
Rotterdam, 31 August 2010 - In the first half of 2010, Eneco Holding N.V. realised an operating profit of €145 million, a 29% decrease compared with the corresponding period in 2009. The operating profit includes a reorganisation charge of €12 million for Joulz and €10.5 million for costs related to the unbundling. The net profit was €75 million compared with €136 million in the first half of 2009. This includes €12.5 million relating to the higher cash position in connection with the forced unbundling, as well as the aforementioned non-recurring charge for reorganisation and forced unbundling.
As a result of lower energy rates and margin control, energy and energy related revenues amounted to €2.4 billion compared with €2.7 billion in the first half of 2009.
During the first half year, a lot of effort was put into creating a solid basis for the three core companies Eneco, Stedin and Joulz in preparation for the forced unbundling of the company. Extensive consultations were held with the shareholders concerning the optimal financing and ownership relations in the event of unbundling. However, on 22 June 2010, the Court of Justice in The Hague stated in a ruling that the forced unbundling is not binding, because it is in breach of European law. The Minister of Economic Affairs has submitted a notice of cassation against the ruling of the Court. Pending the ruling in cassation, the Board of Management has called a halt to the preparations at Eneco for the legal forced unbundling.
The Board of Management aims to further professionalise the three core companies. From their own core activity, the companies each work towards sustainable development, customer-oriented service and high quality at a socially acceptable cost. A cost reduction programme was implemented by each of the three core companies to further improve efficiency and maintain a cost level in accordance with the markets in which they operate.
Jeroen de Haas, chairman of the Board of Management: "Eneco made good progress with the realisation of its strategic goals and the integration of the companies Ecostream, Evelop and Ecofys that were acquired last year. The sustainability of the energy supply is not only increased through the realisation of major projects, but also through intensified cooperation with many local parties. At present, Enecos sustainable production portfolio is sufficient to provide over 675,000 households with sustainably generated electricity."
The implementation of its sustainability strategy confronts Energy Company Eneco with long lead times for the granting of permits and subsidies. The negative effect of the poor economic circumstances on the result was limited, due to the strong focus on cost control and the extra programmes that have been created and are being implemented in connection with this.
Energy Company Eneco realised an operating profit of €73 million. The results of the business units Supply and Heat & Cold were good, but not sufficient to make up for the less favourable purchase contracts, the lower spark spread and the lower wind energy revenues due to poor wind conditions. Gas sales increased as a result of the long period of cold. Electricity sales decreased due to the targeted margin policy in the business segment.
The operating profit of network manager Stedin was €111 million compared with €92 million in the first half of 2009. A slight fall in revenues was more than offset by lower expenses as a result of cost control measures and lower charges for cross border leases.
At Joulz, the operating result was affected by a reorganisation provision of €12 million, which resulted in a loss of €16 million compared with a €5 million profit in the corresponding period in 2009. Factors that affected Joulz' result included a decline in contract work for Stedin and lower rates.
Capital expenditure in the first half of 2010 amounted to €294 million. The focus of energy company Eneco was on investments in large-scale and sustainable energy generation and optimisation of the service level. The main portion was spent on the realisation of the Enecogen plant on the Maasvlakte (€57 million) and the development of the underground gas storage in Epe in Germany (€22 million). Network manager Stedin invests large sums of money in the renovation and extension of the gas and electricity networks. Installation company Joulz mainly invests in the development of new products and services.
S&P again confirmed that Eneco Holding N.V. has an A- credit rating. This credit rating takes into account the new situation of non-forced unbundling by the end of 2010.
Barring unforeseen circumstances, we expect the unbundling costs for this year to be lower due to the fact that the forced unbundling will not take place at the end of 2010. Although we foresee a continuation of the slowdown of economic activity we expect the operating profit for the full year 2010 to be comparable to that of 2009. Compared with 2009, when there was an exceptional item for associates, the net result is expected to be lower, partly as a result of higher interest expense.