Prepared for unbundling, agreement on strategic course
2008 second quarter highlights
- Net profit increases to EUR 442 million from EUR 168 million last year
- Higher trading results and other fair value movements
- Acquisitions in gas fields and insulation industry
- Organisation prepared for unbundling, agreement on strategic course
- Increase operating expenses relating to strategic projects including unbundling
Aug 04, 2008 | Amsterdam Good second quarter for Nuon
Nuon’s net profit in the second quarter of 2008 was substantially higher than in the same quarter in 2007. This was attributable above all to higher trading results and other fair value movements, which were influenced by the sharp increase in commodity prices. The decisive factors in this quarter were the completion of the organisational unbundling, the acquisition of a share in gas fields and the decision to search for an international partner for Nuon's production and supply company. Net profit in the first half of 2008 amounted to EUR 687 million (2007: EUR 486 million).
The increase in the net turnover in the second quarter of 2008 to EUR 1,617 million from EUR 1,070 in the previous year was due to the strong trading results and fair value movements. The higher gas volumes supplied also contributed to the increased turnover; gas consumption was much lower in 2007 owing to the unseasonably high temperatures in the second quarter. Electricity volumes supplied increased slightly in the quarter under review. These positive effects were partially offset by the fact that consumer prices of gas and electricity were lower than last year. Turnover increased to EUR 3,451 million in the first half of 2008 from EUR 2,798 million a year earlier.
The gross margin increased from 50% in the second quarter of 2007 to 58% in this quarter. Although the higher purchasing costs of raw materials depressed the margin, this effect was more than offset by the higher trading results and other fair value movements.
The increase in operating expenses of EUR 65 million was due in part to new installation and insulation activities, the marketing efforts, especially in Belgium and Germany and higher personnel costs. In the second quarter of 2008 operating expenses totalled EUR 380 million (second quarter 2007: EUR 315 million). Operating expenses in the first half of 2008 thus amounted to EUR 732 million compared with EUR 607 million in the same period in 2007.
In response, Øystein Løseth, chairman of the Management Board, says:
"Nuon achived good results in the second quarter of 2008 under challenging market circumstances. A continuous focus on cost control remains, however, a prerequisite. Nuon took steps of importance to the future of the company, which is now organisationally
unbundled. For example, it established within the network company a ‘broad’ network manager, which is now the beneficial owner of the networks. Agreement was reached with the members of the Supervisory Board and the shareholders about the future of the production and supply company, which will involve searching for an international partner. This will strengthen our position in the European energy market. The acquisition of Burlington Resources Nederland Petroleum N.V., which has brought the company an interest in North Sea gas fields, should be viewed in the same context.
We are strengthening our advisory role in order to help our customers achieve energy savings. The purchase of insulation companies makes a real contribution to this, as does our campaign to prevent waste.
Although there’s still much to do in the remains of the year, we can look back on a strong second quarter."
Market development
The number of Dutch customers remained stable in this quarter, despite the competition. Customer numbers also remained stable in Belgium. The number of customers in Germany continued to increase in this quarter. Nuon now has over a quarter of a million customers in Germany. This is comparable to the number in Belgium.
Operating cash flow and net debt
As a result of the higher operating cash flow, the free cash flow increased in this quarter to EUR 450 million (EUR 376 million in 2007). This was despite the higher level of investment, particularly in the Nuon Magnum power station in Eemshaven. The increase in the operating cash flow is connected with a substantial improvement in the operating profits, lower corporation tax payments and receipts of interest.
Nuon has a net debt of EUR 110 million as a result of the purchase of Burlington Resources Nederland Petroleum N.V. and dividend payment to the shareholders. At the end of last year Nuon had a net cash position of EUR 293 million.
About 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. As from 1 July 2008 Nuon organisationally separated the company into a network company and a production and supply company. As from that date, both companies operate independently under a single financial holding company and under a joint Management Board.
Further information
Nuon Press Office
Telephone: +31 (0)20 597 42 00
E-mail: pressoffice@nuon.com