25 Feb 2002 – Austrian power group Verbund today announced record profits of €115m – a jump of 38 per cent over 2000 and claimed it had met the challenges of the liberalizing power market.
The sales revenues of the group increased by 30 per cent to €1685m in the last business year and are for the first time clearly above the pre-liberalization sales level again. These positive developments are mainly attributable to the successes in international business and higher wholesale prices, said Verbund in a statement.
Verbund saw an increase of 57 per cent in overseas sales and a leap of 169 per cent in power trading. Domestic sales also improved during 2001 and these now represent 70 per cent of Verbund’s sales with the group being the third largest supplier in Austria. However, due to the market opening, which led to the legal termination of the co-ordination contracts, pressure was put on sales and contribution margins.
The persistent pressure on margins resulting from the liberalization was more than balanced by the sales records and the cost reduction programs. Thus the operating result went up by 5.2 per cent to €317m.
Verbund attributed the extremely positive development of the financial result to the lower level of interest rates, and the decreased unrealized exchange effects from foreign currency liabilities. With the group result, the earnings per share also climbed from €2.74 to €3.74. At the shareholders’ annual meeting the Board of Management will therefore propose an 8 per cent dividend increase and further pursue the targeted reduction of indebtedness.
The liquidity situation has also shown a positive trend. The operating cash flow increased by 16 per cent to €280m. Return on capital employed (ROCE) rose to 9.5per cent and lies already far above the sector average in Europe. The productivity of the group in terms of the EBIT margin dropped to 18.8 per cent but reached a level above sector average again.
Another highlight is the reduction of the indebtedness of the group, which has been pursued for years. After the net liabilities had been reduced considerably in 1999 (€637m) and 2000 (€270m), they were cut by another million Euro in fiscal 2001.
Verbund said it had been successful with its new strategy in the free European power market . Verbund has established itself as low-cost and eco-friendly supplier of clean hydroelectric power in all customer segments. Approximately 90 per cent of Verbund power is produced in its own hydroelectric power stations.
“2001 can be described as being the most successful year of Verbund sales in the company’s history so far. It was characterized by successes in all customer segments, said the company. In the wholesale business, Verbund is still the market leader. In the first year after the full market opening, Verbund now also ranks third in the industrial customer segment.
Following the foundation of subsidiaries in Germany and Italy, subsidiaries were founded in Slovenia and Poland in 2001.