Higher gas sales, cost reductions and incidental items
- Net profit rises to EUR 269 million for the first half of 2010 (H1 2009: EUR 226 million)
- Net turnover falls by 10% to EUR 2,682 million due to lower prices
- Operating profit and margins under pressure due to changing market conditions
- Operating expenses sharply lower compared to the first half of 2009
- Capital expenditure rises to EUR 355 million (H1 2009: EUR 241 million)
- Customer numbers stable, thanks to growth in Belgium.
Jul 29, 2010 | Amsterdam Nuon posts profit of EUR 269 million; margins under pressure
Profit for the first half of 2010 rose compared with the first half of 2009, mainly because of higher sales of gas as a result of the cold winter, sharp cost reductions and incidental items. Margins on electricity production were under pressure during the first half of the year due to weak demand for electricity as a result of the economic crisis. The margin on electricity sales was lower because the sales price for electricity fell faster than the contracted purchase price. The number of customers in the Netherlands fell slightly compared with last year but this decrease was offset by 12% growth in the number of customers in Belgium. Nuon invested considerably more in new power stations and renewable energy in the first half year.
Commenting on the figures Huib Morelisse, CEO of Nuon, said, “Nuon is able to report a satisfactory result despite difficult conditions in the energy market. The cold winter, which boosted demand for gas, had a positive effect on our figures. Lower margins were offset by major cost reductions and some incidental items. We invested more in security of supply and renewable production compared to last year and this growth will continue with the construction of a new, efficient gas-fired power station in Amsterdam.”
Profit increases due to higher gas sales, cost reductions and incidental items
Profit rose despite lower margins on electricity production and sales and on gas production. The increase in profit stemmed primarily from higher gas sales because of the cold winter. Secondly, operating expenses fell by EUR 98 million, mainly due to fewer external hires and EUR 41 million lower incidental expenses on projects such as the unbundling. A third factor contributing to the higher profit was the release of a provision relating to an announced amendment to the Heat Distribution Act.
Lower energy prices and less profit on production
The variable retail price of electricity fell by 23% on 1 January 2010 but purchase prices did not fall at the same rate because of advance purchases. Consequently, the margin on electricity sales fell by EUR 60 million. Electricity production was also less profitable due to lower margins brought about by lower demand for electricity resulting from the economic crisis. In addition, less electricity was produced because of scheduled maintenance of the power station in Amsterdam. Finally, lower sales prices for gas reduced the margin on gas production compared with last year.
Nuon increased its investments in new, more efficient power stations and renewable energy (EUR 355 million) compared with 2009 (EUR 241 million). Construction of the new power station in the Eemshaven continued in recent months. Also a second cooling station was opened in Amsterdam. This station cools buildings with water from the Ouderkerkerplas. It saves half the CO2 emissions compared with traditional air conditioning. In Almere, Nuon opened a solar island, which uses solar collectors to provide heating and hot water to 2,700 households in the adjacent residential district. Nuon is continuing to invest, constructing a new gas-fired power station at the existing site in Amsterdam to replace the older gas fired power station. The new power station will use a third less gas and operate at 59%, the highest possible efficiency for gas-fired power stations.
|In EUR million unless otherwise stated||H1 2010||H1 2009||%|
|Earnings before interest, tax and depreciation and amortisation (EBITDA)||517||427||21%|
|Operating profit (EBIT)||334||294||14%|
|Incidental items affecting comparability|
|Incidental gains such as fair value movements commodity contracts held for own use and the release of a provision for the Heat Distribution Act||146||119|
|Incidental losses related to unbundling and other strategic projects and the recognition of a provision for the Heat Distribution Act||-15||-56|
|Total impact on operating profit||131||63|
|Total impact on net profit||98||47|
|Employees (in FTEs)|
|Number of own employees||5.840||6.086||-4%|
|Number of external hires||873||1.064||-18%|
Nuon is an energy company whose almost 6,000 employees serve around 2.6 million consumers, businesses and organizations in the Netherlands and Belgium. Its key commitment is to supply energy that is reliable, affordable and as clean as possible. Nuon produces and supplies gas, electricity, heat and natural cooling and helps customers to reduce their energy use. The company is part of the Vattenfall Group.
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For the editors
The results of Nuon include the results of Nuon’s sales and production activities, together with the results of Nuon’s wind and trading activities. With effect from 1 July 2009, the wind and trading activities have been integrated within Vattenfall Business Group Pan Europe and Vattenfall Energy Trading respectively. However, as long as these activities are not legally transferred within the Vattenfall group, the results of these activities will be included in the financial reports of Nuon.
Parts of this press release contain prospective information. These parts may include unqualified statements on future operating results, government measures, the impact of other regulatory measures on Nuon’s activities, Nuon’s shares and those of its subsidiaries and joint ventures in existing and new markets, industrial and macro-economic trends and Nuon’s performance in these, and statements preceded or followed by or containing words such as ‘believes’, ‘expects’, ‘anticipates’ or similar expressions. These prospective statements are based on the current assumptions concerning future activities and are subject to uncertainties and other known and unknown factors, many of which are beyond Nuon’s control, so that future actual results may differ significantly from these statements.