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Second-quarter 2015 presentation to
analysts
Finn Bjørn Ruyter, CEO
Oslo, July 10 2015
Second-quarter 2015 highlights
• Profit after tax of NOK 279 million – up NOK 111 million on the previous
year on the back of a higher operating profit and lower financial
expenses.
• EBITDA of NOK 684 million, against NOK 624 million in comparable prior-
year quarter. Improvements in three of four business segments.
• The highest result since 2007, despite low power prices.
• Stable operations and few operational stoppages for Network, plus results
improvement due to acquired networks business.
• Equity ratio of 32 percent, up one percentage from last year.
2
EBITDA second-quarter 2015 and change from
2014
3
EBITDA Q2 2015 Change in EBITDA from Q2 2014
121
19
332
133
80
684
OtherMarketsNetwork EBITDAHeatProduction
10
20
7
46
22
ProductionEBITDA
Q2 2014
624
MarketsNetworkHeat
684
EBITDA
Q2 2015
Other
NOK mill
2Q152Q14
Seasonally falling NO1 price
Source: nordpoolspot.com4
NO1 2Q15 marked by late snowmelt and hydrological surplus
NO1 2Q14 marked by work on the transmission grid and spring floods
System price vs. NO1 price Price areas Nordics
Significant
price difference
due to
temporarily
limited
transmission
capacity and
spring floods
Price fall due
to late
snowmelt and
hydrological
surplus
0,10
0,15
0,20
0,25
0,30
0,35
NO
K/k
Wh
System price (NOK/kWh) NO1-Oslo (NOK/kWh)
1H 15 production volume ~ 5 % above normal –
1H 14 ~ 20 % above normal
*Normal = Median water flow last 10 years5
Water flow and maximum capacity utilization give the premises… …for actual production volume
616817
Normal
944
1 559
1H20151H2014
966
1 783
1st quarter
2nd quarter
0
500
1 000
1 500
2 000
2 500
3 000m3/sek.
Jun SepApr Jul Oct DecMay NovAugMarFebJan
Max. capacity utilization2014 Normal *2015
GWh
Cool weather has delayed the snowmelt
Source: Senorge.no, amount of snow in percent of median (1981-2010)6
Amount of snow – June 30th, 2014 Amount of snow – June 30th, 2015
Delayed snowmelt can increase inflow in 2H15
2Q152Q14
Strong hydrological balance
Source: Nena (hydrological balance for the Nordics)7
-15
-10
-5
0
5
10
15
20
25
30
Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Apr-15 May-15 Jun-15
TW
h
Hydbal Nordics (TWh)
Power prices against last year
Source for price data:www.nordpoolspot.com and www.nasdaqomx.com/commodities June 30th, 2015.8
0,00
0,05
0,10
0,15
0,20
0,25
0,30
Apr Jun JulMayJan MarFeb
NOK/kWh
Nov DecOctSepAug
Oslo price (NO1) 2015 Forward prices 2015Oslo price (NO1) 2014
Forward
0.00
0.50
0.10
0.20
0.30
0.40
2003200220012000 2018P2017P2016P2015201420132006 20112010200920082007 2024P2023P2022P2021P2020P2019P
NOK/kWh
20052004 2025P2012
Long term power prices
Source: www.nordpoolspot.com and www.nasdaqomx.com/commodities July 2nd, 2015. 9
• Potential upside in the CO2-price
• Phase-out of nuclear generators
• New interconnectors+
• Expected power surplus in the
Nordics
• Continued CAPEX-reductions for
new renewable energy production
-
Historical system prices and forward prices
Second-quarter profits 2012 – 2015
10
684
624
569
510
279
168151140
0
100
200
300
400
500
600
700
201520142012 2013
NOK million
Profit after taxEBITDA
Production
• Volume on par with normal levels, but
slightly lower than last year.
• Hedging activity contributed of NOK
24 million (NOK 29 million) in the
quarter.
• More snow than normal leads to
expected production 7 percent above
normal levels in the third quarter.
• Decision regarding construction of
new generator (Vamma 12) expected
autumn 2015.
11
177 163 163 155 143 142 159
70
121
0
40
80
120
160
200
0
150
300
450
600
750
Q4 14Q3 14Q2 14Q1 14Q4 13Q3 13Q2 13
Last 12 months
NOK mill
Quarter
NOK mill
Q2 15Q1 15
Development EBITDA
NOK million Q2 2015 Q2 2014 YTD 2015 YTD 2014
Operating revenue 193 203 359 440
Gross margin 186 209 348 434
EBITDA 121 143 191 298
Operating profit 108 131 166 274
Power price (NOK/kWh) 0.19 0.20 0.21 0.22
Production volume (GWh) 944 966 1 559 1 783
Investments 5 1 17 4
Production volume
* Normal = 3100 GWh based on 10 years data adjusted for efficiency improvements.12
0
100
200
300
400
GWh
FebJan Nov DecSepAugMar OctApr May Jun Jul
2015Normal* 2014
Heat
13
112161
116
201
37
-50
0
50
100
150
200
250
0
100
200
300
400
Quarter
NOK mill
Last 12 months
NOK mill
Q2 15
19
Q1 15Q4 14Q3 14
-9
Q2 14
9
Q1 14Q4 13Q3 13
6
Q2 13
• Satisfactory results in a quarter with
normally low energy demand and low
power prices.
• Operational improvements and organic
growth compensates for lower power
prices over time.
• Colder weather and growth increased
production by 13 percent.
• Price hedging contributed NOK 5
million (NOK 5 million).
• 50 percent hedging ratio next 6
months.
EBITDA development
NOK million Q2 2015 Q2 2014 YTD 2015 YTD 2014
Operating revenue 131 131 570 533
Gross margin 79 71 336 292
EBITDA 19 9 220 170
Operating profit (17) (28) 149 96
Production volume (GWh) 278 247 905 866
Gross margin (NOK/kWh) 0.30 0.29 0.38 0.32
Investments 20 15 30 20
Production volume
14
0
60
120
180
240
300
GWh
DecNovOctSepAugJulJunMayAprMarFebJan
20152014Normal *
Network
15
283 286 266 279 312 345 378304 332
0
100
200
300
400
0
200
400
600
800
1 000
1 200
1 400
Q1 14Q4 13Q3 13Q2 13
Quarter
NOK mill
Last 12 months
NOK mill
Q1 15Q4 14Q3 14Q2 14 Q2 15
• Expected profit in line with or slightly
higher than in 2014.
• Increase in expected profit due to
lower power prices reducing costs
associated with energy losses in the
grid.
• Purchased network business
contributes to increased energy
deliveries and profit for first half of
2015.
• Higher investment activity mainly due
to increasing AMS investments.
EBITDA development
NOK million Q2 2015 Q2 104 YTD 2015 YTD 2014
Operating revenue 1 053 950 2 124 1 932
Gross margin 715 678 1 384 1 278
EBITDA 332 312 635 591
Operating profit 212 182 398 338
Delivered volume (TWh) 4.1 3.5 10.2 8.6
Investments 211 131 373 233
Markets
16
71 83 96
140 126 140
78
181
133
0
50
100
150
200
0
100
200
300
400
500
600
Quarter
NOK mill
Q4 14 Q1 15
Last 12 months
NOK mill
Q3 14Q2 14Q1 14Q4 13Q3 13Q2 13 Q2 15
• Good results in a quarter with low
energy demand.
• Markets with a nordic growth strategy.
• 2015 characterized by establishment
of operating platform in Sweden and
Finland in order to facilitate further
customer growth.
• 1,062,000 customers, including
321,000 in Sweden and Finland –
decrease of 7,000 customers in
Finland and Sweden in the quarter.
EBITDA development
NOK million Q2 2015 Q2 2014 YTD 2015 YTD 2014
Operating revenues 1 233 1 246 3 322 3 331
Gross margin 361 332 761 721
EBITDA 133 126 313 266
Operating profit 113 113 275 240
Sold volume (GWh) 3 895 3 814 9 670 9 513
Change in net debt during the quarter
17
105
123
487
308
285
684
Net debt Q1 2015 EBITDA Paid interest
9 263
Paid dividendsPaid taxes Change in working
capital etc
Net debt Q2 2015
9 887
Net investments etc
NOK mill
Solidity development last years
* EBITDA for core business (Production, Heat, Network, and Markets, last 12 months)18
Debt / EBITDA *Equity ratio (percent)
Q2 14
4.2
3.6
Q2 15
4.7
Q2 12
4.3
Q2 13Q2 13
26%
Q2 12
32%
Q2 15
31%
29%
Q2 14
Summary of second-quarter 2015 profit
19
684
28624
EBITDA Q2 15Operating
expenses
20
Gain/loss
financial items
12
Gross marginEBITDA Q2 14
232
49
124
279
684
Profit after
tax Q2 15
Financial
expenses
DepreciationEBITDA Tax
Change in EBITDA from Q2 2014 Profit after tax Q2 2015
Earnings per
share NOK 1.43
Includes gain on
loan portfolio of
NOK 33 million
(NOK -17 million)
Outlook
20
• Planning of new generator at Vamma power plant going
according to plan – a decision expected autumn 2015.
• Following co-location of operating center functions in Oslo
autumn 2015, the most important milestones in the network
business integration work in will be completed.
• Power sales with a Nordic growth strategy, 2015 characterized
by the establishment of operating platform in Sweden and
Finland.
• At the end of first-half, the forward price for delivery of power in
the second-half of 2015 was NOK 0.19 per kWh, down NOK
0.07 per kWh from 2014.
Appendix
21
Group profit and loss account
22
NOK million Q2 2015 Q2 2014 YTD 2015 YTD 2014
Operating revenue 2 610 2 550 60 6 387 6 284
Cost of energy (1 295) (1 263) (32) (3 605) (3 552)
Gross margin 1 315 1 287 28 2 781 2 731
Gain/loss financial items 49 37 12 60 48
Operating expenses (679) (700) 20 (1 380) (1 401)
EBITDA 684 624 60 1 461 1 379
Depreciation and write-downs (232) (216) (16) (436) (418)
Operating profit 452 408 44 1 025 961
Interest expences (81) (96) 15 (176) (189)
Market value change loan portfolio 33 (17) 50 60 (33)
Financial expenses (49) (114) 65 (116) (223)
Pre-tax profit 403 294 109 909 739
Tax (124) (126) 2 (272) (14)
Profit after tax 279 168 111 636 725
Earnings per share (EPS) in NOK 1.43 0.86 0.57 3.26 3.71
Group balance sheet
23
NOK million 2015-06-30 2015-03-31 Q1 15 2014-12-31
Intangible assets 2 956 2 962 (6) 2 970
Fixed assets 19 074 19 021 53 19 011
Financial assets 1 046 832 213 786
Accounts receivables and inventory 1 866 2 307 (441) 2 703
Cash and cash equivalents 265 1 060 (795) 742
Assets 25 207 26 182 (975) 26 212
Equity (incl. min. int.) 8 154 8 246 (92) 7 877
Allocation for liabilities 4 018 3 937 81 3 858
Long-term debt 8 485 8 188 297 8 692
Other current liabilities 1 723 2 186 (463) 2 668
Short-term debt 2 827 3 624 (798) 3 117
Equity and liabilities 25 207 26 182 (975) 26 212
Net interest-bearing debt 9 887 9 263 624 10 577
Equity ratio 32 % 31 % 1 % 30 %
Cash flow
24
NOK million Q2 2015 Q2 2014 Year 2014
EBITDA 684 624 60 2 795
Paid interests (105) (115) 10 (452)
Paid tax (123) (124) 1 (58)
Marketvalue changes and other liquidity adjustments (18) (28) 10 (67)
Change in working capital, etc. (290) (206) (84) (64)
Total cash flow from operations 148 151 (2) 2 154
Net operations and expansion investments (271) (1 191) 920 (1 896)
Net purchase/sale of shares etc. 0 (332) 332 (379)
Cash flow from investments activities (271) (1 523) 1 252 (2 275)
Cash flow to down payments and interests (123) (1 372) 1 249 (121)
Earnings per share
Profit after tax Q3 2012 negatively affected NOK 551 million relating to extraordinary write-downs and provisions.
Profit after tax Q1 2014 was positively impacted by NOK 288 million related to tax waived claims regarding Hatros.
Profit after tax Q3 2014 negatively affected by NOK 93 million relating to write-downs Bio-el and secondary networks Søndre Nordstrand25
-0.06 3.83
Per quarterNOK
2012 2013 2014
2.85 **
1.060.86
0.36 ***
1.83
1.43
1.071.081.05
-2.97 *
0.91
1.50
1.15
0.770.72
5.14
*
**
***
2015
3.26
Capital employed and return on capital employed
2013 - Includes the sale of shares in Infratek with gain of NOK 90 million
2014 - Includes write-downs of Bio-El and secondary networks Søndre Nordstrand of NOK -127 million .
2015 – Last 12 months26
Capital employed NOK 21.5 billion per
30.06.2015Return on capital employed
Markets
9%
Network 46%
Other
4%Heat
21%
Production
20%
2015 ***2014 **2013 *
8.3%8.0%
8.5%
*
**
***
Loans – portfolio data
27
Debt maturity profileNOK million
Loans at maturity next 12 monthsNOK million
743
300400
0
1 000
2 000
3 000
2021
420
2020
701
2019
1 706
2018
1 460
2017
1 410
2016
2 143
2015
700
2022 20242023
Other loansBondsCommercial paper
400
500
300300
0
200
400
600
JunMayAprMarFebJanDecNovOctSepAugJul
Other loansCommercial paper Bonds
Q2 15 Q1 15
Bonds 77 % 73 % 4 %
Commercial paper 6 % 3 % 3 %
Other loans 17 % 24 % -7 %
NOK million Q2 15 Q1 15
Nominal value - market value of loans (294) (326) 33
Market value interest rate and fx derivatives (47) (48) 1
Average interest incl. derivatives (%) 3.8 % 3.8 % 0.0 %
Proportion of loan portfolio with fixed
interest (%)55 % 51 % 4 %
Loans at maturity next quarter 0 986 (986)
Unused drawdown facilities 3 800 3 800 0
Key figures
28
Group YTD 2015 YTD 2014
Capital matters
Total assets 25 207 25 321
Capital employed 21 513 21 528
Equity 8 154 7 814
Market capitalization 11 066 10 121
Equity ratio 32 % 31 %
Net interest-bearing debt 9 887 10 548
Profitability
EBITDA 1 461 1 379
Earnings per share (EPS) 3.26 3.71
Cash flow per share 8.59 7.97
Power Generation YTD 2015 YTD 2014
Capital employed 4 329 4 270
Sales price (NOK/kWh) 0.21 0.22
Production volume (GWh) 1 559 1 783
Heat YTD 2015 YTD 2014
Capital employed 4 582 4 346
Sales price District heating (NOK/kWh) 0.65 0.60
Gross margin (NOK/kWh) 0.38 0.32
Sales volume (GWh) 905 866
Network YTD 2015 YTD 2014
Capital employed 9 879 9 914
Regulated gross margin for the year 2 614 2 432
NVE-capital (regulatory) 7 501 7 225
Markets YTD 2015 YTD 2014
Capital employed 1 935 1 880
- of this working capital 377 294
Volume power sales (GWh) 9 670 9 513
Shareholders as of 30.06.2015
29
# ShareholderClass A shares
held
Class B share
heldTotal Ownership
Share of
voting rights
1 City of Oslo 67 525 37 343 104 868 53.7 % 58.5 %
2 Fortum Forvaltning AS 37 853 28 706 66 559 34.1 % 32.8 %
3 Kommunal Landspensjonskasse 5 201 2 848 8 049 4.1 % 4.5 %
4 MP Pensjon PK 0 1 979 1 979 1.0 % 0.0 %
5 Gjensidige Forsikring 0 1 000 1 000 0.5 % 0.0 %
6 Folketrygdfondet 85 784 869 0.4 % 0.1 %
7 Skandinaviska Enskilda Banken 18 400 418 0.2 % 0.0 %
8 Greenwich Land Securities AS 83 317 400 0.2 % 0.1 %
9 New Alternatives Fund, Inc 328 0 328 0.2 % 0.3 %
10 JP Morgan Chase Bank 10 313 323 0.2 % 0.0 %
Total, 10 largest shareholders 111 103 73 691 184 794 94.7 % 96.3 %
Other shareholders 4 325 6 067 10 392 5.3 % 3.7 %
Total 115 428 79 758 195 186 100 % 100 %
Definitions
30
Group
Capital employed Equity + Net Interest-bearing debt + Net tax positions
Equity ratio (in %) (Equity incl. Minority interests / Total assets) X 100
Earnings per share Profit after tax / Average no. of shares outstanding
Cash flow per share Net cash from operations / Average no. of shares
Return on equity last 12 months Result after tax last 12 months / Average equity (incl. Minority interests) last 12 months
Return on capital employed last 12 months Operating profit last 12 months / Average capital employed last 12 months
Hedge ratio Hydro powerRatio of the estimated production portfolio hedged in the period (excluding fixed-price
contracts)
Hedge ratio District heatingRatio of the estimated net power price exposure hedged, by: Sales reduced with
electricity use and 1/3 heat pumps
Investor information
• Additional information is available from Hafslund’s website:
– www.hafslund.no
– You can subscribe to Hafslund press releases
• Group CFO, Heidi Ulmo
– Tel: + 47 909 19 325
• Financial Director and Investor Relations contact, Morten J. Hansen
– Tel: +47 908 28 577
31