Highlights
- Group net result of approximately EUR 200m
- Selective negative effects from corona crisis
- Increase in share of renewable electricity generation to 59.5% (previous year: 41.4%)
- Continued investments in network infrastructure, renewable generation, district heating and drinking water supplies for Lower Austria
- Start of construction on a 60 km cross-regional drinking water pipeline from Krems to Zwettl
- Acquisition of three projects for thermal sewage sludge utilisation in Germany
- Dividend proposal: EUR 0.49 per share
Key results
- Revenue: -4.4% to EUR 2,107.5m
- EBITDA: -6.5% to EUR 590.4m
- EBIT: -32.3% to EUR 273.1m
- Group net result: -33.9% to EUR 199.8m
- Net debt: EUR 1,037.7m (30 September 2019: EUR 999.5m)
Energy sector environment
The 2019/20 financial year was characterised by a significant year-on-year increase in the temperatures in EVN's three core markets. Well-filled storage facilities and weaker demand - among others, due to the Covid-19 crisis - led to a decline in the spot market prices for natural gas. The influence of Covid-19 on wholesale prices was limited to the short-term range. On the forward market, electricity prices are gradually returning to the pre-corona level. The price of CO2 emission certificates remained volatile but was slightly higher than the previous year on average.
Effects of the corona crisis
As a critical infrastructure operator, EVN was very well prepared to deal with the pandemic. The corporate guideline "EVN Pandemic Prevention", which was prepared in 2009, served as a benchmark for the necessary activities. The corona crisis had only a selective negative influence on operating results in 2019/20 due to EVN's integrated business model and widely diversified customer base. Delays on individual construction projects and investments caused by the lockdown in spring 2020 will be offset during the coming 2020/21 financial year.
Group net result below previous year due to absence of positive non-recurring effects
Revenue recorded by the EVN Group declined by 4.4% year-on-year to EUR 2,107.5m in 2019/20, chiefly due to a substantial reduction in thermal generation and lower revenue from the Networks Segment and natural gas trading. In contrast, positive development was recorded in energy revenue from Bulgaria and revenue from the international project business.
The cost of electricity purchases from third parties and primary energy expenses reflected the development of energy revenue with a decline of 17.9% to EUR 888.3m in 2019/20. The main causal factors included the lower use of primary energy carriers due to the reduction in thermal generation, a decline in wholesale prices and lower electricity purchases.
The cost of materials and services increased by 13.1% to EUR 316.9m due to contract performance in the international project business. Personnel expenses were 3.1% higher than the previous year at EUR 349.3m owing to the annual salary and wage adjustments required by collective bargaining agreements and additional hiring for the realisation by WTE Wassertechnik of the large-scale project in Kuwait.
The share of results from equity accounted investees with operational nature was influenced by contrary developments and fell by 27.8% year-on-year to EUR 94.1m. Negative effects from impairment testing, above all at Verbund Innkraftwerke GmbH, were offset in part by the normalisation of the earnings contribution from EVN KG and positive non-recurring effects at RAG and Energie Burgenland.
Based on these developments, EBITDA declined to EUR 590.4m in 2019/20 (previous year: EUR 631.7m). Scheduled depreciation and amortisation increased as the result of higher investments, the capitalisation of rights of use following the initial application of IFRS 16 and revaluations to property, plant and equipment as of 30 September 2019. The effects of impairment testing - after a positive effect of EUR 41.6m in the previous year - amounted to EUR -20.6m as of 30 September 2020 and were related primarily to EVN's investment in the Walsum 10 power plant.
EBIT for the 2019/20 financial year totalled EUR 273.1m (previous year: EUR 403.5m).
Financial results improved by 47.3% to EUR -15.8m, chiefly due to an increase in the Verbund dividend. Group net result for the 2019/20 financial year equalled EUR 199.8m and was 33.9% below the previous year, which was influenced by non-cash, non-recurring effects.
Solid balance sheet structure
EVN has a solid and stable capital structure which provides a sound foundation for the implementation of its investment focal points in Lower Austria over the coming years. Net debt currently approximates EUR 1bn.
Energy. Water. Life. - Developments in the energy and environmental services business
Energy business
EVN's energy business in 2019/20 was influenced by generation and market price conditions which were less favourable than the previous year. Electricity generation from renewable energy declined by 2.8% to 2,250 GWh. A slight rise in wind power - which was based on the commissioning of 49 MW of additional capacity that was operational for the first time for an entire year in 2019/20 - was unable to fully offset the decline in electricity production from hydropower. As of 30 September 2020, EVN had an installed wind power capacity of 367 MW. Two wind power plants in Kettlasbrunn with an output of roughly 8 MW are currently under construction and scheduled for commissioning by the end of 2020. EVN plans to expand its wind power capacity to roughly 500 MW by the end of 2023, subject to appropriate framework conditions.
Thermal electricity generation dropped by 53.2% to 1,535 GWh in 2019/20. The previous year included the electricity production from the Dürnrohr power plant which was terminated prematurely at the beginning of August 2019. Moreover, the Theiss gas-fired power plant was called on less frequently during the reporting period to support network stability. The thermal power plant was under contract in 2019/20 to provide 430 MW of reserve capacity for the Austrian network transmission operator. A thermal sewage sludge utilisation plant and a large-scale photovoltaic plant are currently in planning for the energy location in Dürnrohr.
Environmental and water business
In the area of drinking water supplies for Lower Austria, EVN successfully continued its work on further major projects despite the corona crisis. The start of construction on a new 60 km supply pipeline between Krems and Zwettl represents an important step to increase supply capacity in the Waldviertel region and to expand the cross-regional drinking water network. EVN's fifth natural filter plant to reduce the hardness of the water by natural means is currently under construction in Petronell-Carnuntum and is scheduled for commissioning in spring 2022. In total, EVN plans to invest roughly EUR 165m in drinking water supplies for Lower Austria by 2030.
Activities in the international project business included the completion of all requirements at the end of July 2020 for the start of work on the Umm Al Hayman wastewater treatment project. WTE Wassertechnik, the subsidiary responsible for this business, will serve as the general contractor for the planning and construction of a wastewater treatment plant and - together with partners - of a sewage network with pumping stations.
As of 30 September 2020, WTE Wassertechnik was involved in the planning and construction of 12 projects in total in Germany, Poland, Lithuania, Romania, Croatia, Bahrain and Kuwait. Included here are three new projects for thermal sludge utilisation plants in Germany. The sustainable utilisation of sewage sludge opens an attractive new activity field for the international project business, where EVN's long-standing experience in wastewater treatment and thermal waste utilisation create an important strategic advantage.
Outlook for the 2020/21 financial year
Assuming average conditions in the energy business environment, Group net result is expected to range from approximately EUR 200m to EUR 230m in 2020/21. However, the further course of the corona crisis and the resulting macroeconomic effects could have a negative influence on individual business areas at EVN and, in turn, on the development of earnings for the entire Group. The focus of investments in the regulated and stable business areas of network infrastructure, renewable generation and drinking water supplies is designed to protect the solid operating basis and drive continued growth in line with EVN's strategy. Investments are expected to average approximately EUR 450m annually over the coming years, depending on the realisation of individual projects.
For the complete Full Report on the 2019/20 financial year, see www.investor.evn.at.
16.12.2020 Dissemination of a Corporate News, transmitted by DGAP - a service of EQS Group AG.
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