Good progress with unbundling process
Highlights
- Net turnover rose 6% in the first quarter of 2008 to EUR 1,834 million
- Operating profit fell 25% to EUR 316 million (Q1/2007: EUR 422 million)
- Net profit fell 23% to EUR 245 million ( Q1/2007: EUR 318 million)
- Customer numbers stable in the Netherlands and Belgium, further growth in Germany
May 14, 2008 | Amsterdam Market conditions hold down Nuon first-quarter profit
In the first quarter of 2008, lower margins on electricity generation, a decline in trading results and higher purchasing and operating costs, including marketing costs, led to lower results in comparison with the first quarter of 2007.
The rise in net turnover to EUR 1,834 million (2007: EUR 1,728 million) was caused by higher gas sales than in the first quarter of 2007, partly because of the cold weather. Electricity sales also were slightly higher than in the same period of last year and consumer prices for gas and electricity were lower. Excluding incidental items, net turnover was EUR 1,805 million (2007: EUR 1,747 million), a rise of over 3%.
The reported net profit fell from EUR 318 million in the first quarter of 2007 to EUR 245 million in 2008. In the first quarter of 2008 lower trading revenue and increased purchasing costs led to a drop in margin in comparison with the first quarter of 2007. Operating expenses rose by EUR 60 million in comparison with last year. This was mainly caused by higher purchasing and operating costs, including marketing costs and general salary increases.
In reaction to the results Management Board chairman Øystein Løseth says:
"With a net profit of 245 million, the figures in this quarter are lower than the first quarter of 2007, but that was actually an exceptionally good quarter in which we were able to benefit from particularly favourable market developments. We kept the focus on our customers and at the same time made progress in the radical operation that will make our organisation ready for unbundling."
Market development
In the first quarter of 2008 the number of customers in the Dutch consumer market that take gas and electricity from Nuon remained stable in comparison with the end of 2007. In Belgium the number of customers remained stable too. On the other hand, the number of electricity customers on the German consumer market increased in the first quarter of 2008 by more than ten thousands to far over 200,000. Also the number of gas customers on the German consumer market grew substantially in the first quarter.
Service
Nuon’s customer satisfaction levels in both the consumer market and the business market remained virtually stable in the first quarter of 2008. Last week, the quarterly survey by the DTe, a benchmark of energy suppliers in terms of the punctuality of the basic customer processes showed that Nuon performed very well in the first quarter (see www.dte.nl).
Incidental items
The incidental items and fair-value movements in the first quarter of 2008 ended up on balance at plus EUR 17 million after tax (Q1/2007: minus EUR 21 million). The incidental items consisted of movements in the value of energy commodity contracts and sufferance tax levies.
Cash flow from operating activities and net debt position
The cash flow from operating activities in the first quarter of 2008 was EUR 3 million, as against EUR 108 million in the first quarter of last year.
The higher investments in comparison with the same period last year are due in particular to the investments in the new Nuon Magnum power plant.
The net cash position at the end of the first quarter of 2008 was EUR 192 million, as against EUR 293 million on 31 December 2007. The drop in the net cash position in comparison with last year is mainly the result of the negative free cash flow. The balance of cash and cash equivalents is being maintained because of the significant investment programmes for the years ahead.
Unbundling and strategy
With a view to the unbundling of Nuon into a network company and a production and supply company, the overall structure of the two companies was decided in the first quarter of 2008.
Moreover, discussions were held in the first quarter with the Supervisory Board and the shareholders about the strategic development of Nuon after unbundling. Later in the year this process will lead to strategic decisions by Nuon, especially with respect to the production and supply company.
Profile of Nuon
Nuon is an ambitious energy company, serving more than three million consumers and organisations with over 10,000 employees in the Netherlands, Belgium and Germany. Nuon produces, transports and delivers electricity, gas, heating and cooling, and engages in energy trading in the major international markets. Nuon also supplies additional services and technological innovations to businesses and consumers. In doing so, Nuon aims to provide a reliable, sustainable and affordable energy supply.
With a turnover of EUR 5.7 billion in 2007, Nuon occupies a prominent position in the Dutch energy market. The shares are held by local and regional authorities.