Good annual results in a very difficult environment
2011 Annual Results
The Repower Group's result was affected by the challenging market conditions, notably restrained demand, ongoing low energy prices, little market liquidity and negative currency factors. As expected the result is therefore below that of the previous year. The EBIT fell by 18 % to CHF 130 million (previous year: CHF 159 million) and profit fell by 30 % to CHF 54 million (previous year: CHF 77 million). The total operating revenue increased by 11 % to CHF 2.5 billion (previous year: CHF 2.3 billion). With a cash flow of CHF 138 million, Repower has 20 % more funds available than in the previous year. Equity increased by 5 % from CHF 916 to 965 million, giving Repower a very solid financial basis (equity ratio of 41 %) and preparing the group well to continue its strategy of profitable growth. Repower created around 40 jobs in the reporting year, over half of which were in the canton of Graubünden.
Repower sees positive advances in operating business
"The group's results can be described as good, especially when compared with the sector as a whole. Repower is well positioned, soundly financed, possesses an excellent workforce, and in 2011 both consistently developed its operating business and tapped into new opportunities," comments Repower CEO Kurt Bobst. Margins from electricity and gas trading were a major boost to the positive result - trading experts at Repower managed to make the most of the few opportunities arising despite the difficult market conditions. The group profitably expanded gas trading and improved sales margins, especially in Italy where Repower generates more than two thirds of its sales.
Ongoing negative currency factors - value adjustments
Around three quarters of Repower's sales are made in euros, making the group highly exposed to currency fluctuations. The 2011 financial year also saw some special effects, although overall these had virtually no impact on the final result. While special depreciations, including the value adjustment for the Romanian subsidiary and impairments in IT, impacted negatively on the operating result, the group managed to dissolve transport obligations carried as liabilities which lost their legitimacy as the electricity market opens up. Thanks to active hedging, the negative currency effect was however limited to CHF 15 million. Finally the financial result was affected by the adjustment in value of the minority interest in the coal-fired power plant in Brunsbüttel (Germany) and a higher rate of tax due to the increase in profit from Italy.
Increase in electricity and gas sales
Electricity sales were only slightly below the previous-year level at 18.9 terawatt hours. Sales to end customers rose by 40 % to 6.4 terawatt hours. One of the reasons for this increase was the integration of the Romanian subsidiary, which first contributed to sales for a full year in 2011.
Trading volumes however fell by 17 % to 12 terawatt hours. Repower generated around 25 % more electricity in its own power plants, mainly due to longer operating periods at its Teverola combinedcycle gas power plant. Its own hydropower generation reached 656 gigawatt hours, above the average figure expected for the year. The company tripled gas sales to close to 600 million cubic metres.
Repower's dynamism and new ideas for the markets bear fruit
Repower also made further important in-roads into sales markets in 2011.
In Switzerland, Repower launched Repartner Produktions AG, a generation investment scheme for small and medium-sized Swiss energy utilities, which through participation gain access to Repower's generation and project portfolio diversified by technologies and geographical areas.
In Germany, Repower prepared to enter the gas market.
In Italy, the sales volumes were expanded and profits were boosted. Repower's approach on the Italian market focuses clearly on service and the development of innovative products - the most recent of which is the VERDE DENTRO green power offering launched in 2011.
The situation in Romania, a market still in its infancy, is harder as changed market conditions and low hydraulic generation meant that procurement prices rose unexpectedly. Repower is therefore working to develop its own generation capacities in Romania and is investigating opportunities for wind and hydropower plants.
Repower makes progress in project development
In 2011 Repower again managed to make significant progress in terms of project development. The new Taschinas hydropower plant in Switzerland was connected to the grid. The wind farm in Lucera (Italy) developed by Repower is under construction and will start to generate power in 2012. The concession project for the Chlus hydropower plant in Switzerland will be completed in 2012.
Concession negotiations are currently under way and should be completed over the next few months.
The two pumped storage power plant projects Lagobianco (Switzerland) and Campolattaro (Italy) have made major advances. The Lagobianco project has reached a further milestone by submitting its request for concession approval to the canton of Graubünden and the approval procedure in Campolattaro is also on schedule.
On the Italian market, Repower is supplying customers with more than 4 terawatt hours of electricity for which it requires base and medium loads. Some of this will be covered by a participation in the Saline Joniche hard coal-fired power plant, which is about to complete its environmental impact procedure (Decreto VIA).
Repower has analysed the planned hard coal-fired power plant in Brunsbüttel (Germany). This project, in which Repower has a 36 % share, seems unlikely to be delivered in the foreseeable future given the energy policy situation in Germany. Repower is therefore making full value adjustments amounting to CHF 7 million in the 2011 financial statements. Alternatives are being investigated for the base and medium load urgently needed on the German market and include the planned combined cycle power plant at CHEMPARK in Leverkusen.
Payment of dividends takes future investments into consideration
The Board of Directors will propose to the Annual General Meeting on 9 May 2012 a dividend payment of CHF 5.00 per share or participation certificate. This payment is lower than in previous years. The Board of Directors is thus pursuing a long-sighted dividend policy which is good for the company.
Outlook: cautious optimism in the operating business - major strategic challenge
Given the challenging environment, for 2012 Repower expects profits similar to the previous year and a lower EBIT.
"The difficult environment presents us with both challenges and opportunities. We are following a vertically integrated business model which focuses on profitable continued development in key markets, trading across Europe and strong own generation to underpin sales and trading. Our current results confirm that this is a model that puts us in a good position. Given the current energy policy environment, the strategic decisions we need to take are very challenging," says Kurt Bobst.
The Board of Directors and Executive Board are analysing the national and international situation with regard to energy policy and business on an ongoing basis, a process which will give particular consideration to the "2050 energy strategy" that the Swiss Federal Council is expected to flesh out soon and the future energy strategy of the canton of Graubünden.
Repower is an international energy company headquartered in Poschiavo, Switzerland. It has further offices in Klosters, Ilanz, Bever, Landquart, Zurich, Milan, Dortmund, Bucharest, Prague and Sarajevo. Repower generates an operating revenue of around CHF 2.5 billion through the sale of approx. 19 billion kilowatt hours (kWh) of electricity as well as the sale of gas. Repower also operates as an international energy trader, working all over Europe from trading sites in Poschiavo, Milan and Prague. Repower employs around 730 people, plus 30 trainees in Switzerland and 450 agents in Italy. More than 480 of Repower's staff are employed in Graubünden.
In 2011 Repower generated around 2,500 million kWh of electricity at its own power plants in Graubünden, Switzerland, in Italy and in Germany. The company also owns an interest in Kraftwerke Hinterrhein AG, and markets the entire energy package of Grischelectra AG.
In south-eastern Switzerland, Repower is the leading energy supply company. In Italy, Germany and Romania, the company sells electricity and gas to medium-sized enterprises and public corporations.