EQS-News: VERBUND AG: results for quarters 1–3/2022: Positive income trend fuelled by increase in wholesale prices for electricity; earnings forecast for 2022 adjusted because of the lower water supply

EQS-News: VERBUND AG / Key word(s): 9 Month figures/Quarter Results
   VERBUND AG: results for quarters 1–3/2022: Positive income trend fuelled
   by increase in wholesale prices for electricity; earnings forecast for
   2022 adjusted because of the lower water supply

   03.11.2022 / 07:58 CET/CEST
   The issuer is solely responsible for the content of this announcement.

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   Tough geopolitical and energy market developments cast a shadow over
   VERBUND in quarter 3/2022. The ongoing war in Ukraine, record inflation
   and expectations of interest rate hikes were the principal factors
   impacting on the Group’s business performance. The difficult economic
   climate caused significant distortion in Europe’s energy markets above all
   and presented challenges that led to rocketing prices and price
   volatility. Prices for primary energy sources shot up during the course of
   the year, with gas prices in particular being hugely affected by changes
   in gas supply volumes and the off-take structure. European wholesale
   prices for electricity continued to rise as a result of soaring global
   market prices for primary energy and the increasing risks, reaching fresh
   highs.

   In response to the headwinds in the European energy sector and to address
   the severe impending price pressure facing all customer groups, national
   and EU-level discussions on short- and long-term market intervention and
   skimming off of profits began with the intention of bringing down the
   extremely high energy prices and giving countries financial scope to
   reduce prices to the consumer. These discussions and decisions relating to
   market intervention generated uncertainty in the capital markets and also
   pushed down VERBUND’s share price. Trading at a closing price of €87.5 as
   at 30 September 2022, VERBUND shares recorded a loss of 11.6% in
   quarters 1–3/2022 against year-end 2021, which meant that the stock still
   outperformed the Austrian benchmark index ATX (–30.3%) and the sector
   index STOXX Europe 600 Utilities (–20.0%).

   As a consequence of the dry summer, the volume of electricity VERBUND
   generated from its run-of-river power plants in quarter 3/2022 was well
   below average. The hydro coefficient was 0.75. Especially in July (0.71)
   and August (0.69), the hydro coefficient was significantly below the
   long-term average. The coefficient for quarters 1–3/2022 was 0.84. The
   reduced volume of electricity generated from hydropower had a pronounced
   negative impact on the development of earnings (EBITDA effect of around
   €640m in Q1–3/2022). The underproduction of hydroelectricity made it also
   necessary to purchase large volumes of electricity so that the electricity
   volumes that had already been sold on the basis of the long-standing
   hedging strategy could be delivered. Due to the market conditions, some of
   these purchases had to be made at exceedingly high prices, which put
   additional pressure on earnings. Another challenge in the European energy
   sector was the margining payments for hedging transactions in electricity
   trading provided as security for open positions held with exchange
   clearing houses. VERBUND overcame this challenge without suffering adverse
   effects thanks to its foresighted financial planning, excellent credit
   standing and the timely increase in credit lines. However, measurement
   effects arising from customary hedging transactions in the energy sector
   largely for own generation had a material adverse effect on the Group’s
   result (EBITDA effect of around €310m in Q1–3/2022). These effects will
   essentially be offset in subsequent periods by the realisation of the
   underlying transactions.

   While VERBUND’s earnings were diminished by the effects described above,
   they received a significant boost from the sharp increase in wholesale
   electricity prices on the futures and spot markets in particular. The
   average sales prices obtained for VERBUND’s own generation from hydropower
   rose by €60.3/MWh to €111.6/MWh. The consolidation of Gas Connect
   Austria GmbH, the regulated gas transmission and distribution system
   operator in Austria acquired with effect from 31 May 2021, and the
   significantly higher contribution from flexibility products also had a
   positive effect. VERBUND therefore saw a significant improvement in the
   results posted for quarters 1–3/2022. EBITDA rose by 68.0% to €1,933.3m.
   The Group result surged by 81.4% to €1,065.2m compared with the same
   period of the previous year. The Group result for quarters 1–3/2022 was
   influenced by non-recurring effects of €82.6m (Q1–3/2021: €21.2m).
   Adjusted for these non-recurring effects, the Group result rose by 73.5%
   to €982.6m.

    Earnings forecast for 2022 adjusted

   The earnings forecast for financial year 2022 has been adjusted as a
   result of the poor water supply in quarter 3/2022 and the EU’s measures to
   skim off profits at energy companies, which will be implemented beginning
   December 2022. Based on average own generation from hydropower, wind power
   and photovoltaic production in quarter 4/2022 and the opportunities and
   risks currently identified, VERBUND expects EBITDA of between
   approximately €2,800m and €3,300m and a reported Group result of between
   approximately €1,530m and €1,880m in financial year 2022.

   VERBUND is also planning an ordinary dividend based on a payout ratio for
   2022 of between 45% and 55% of the Group result of between around €1,450m
   and €1,800m, after adjustment for non-recurring effects. In addition, the
   Executive Board of VERBUND AG resolved to propose a special dividend of
   €400m to the 2023 Annual General Meeting.

   The earnings forecast and the information on the expected payout ratio are
   contingent on VERBUND not being impacted further by possible energy policy
   measures to skim off some of the profits at energy companies.

    

                                                                 
   KPIs                                                               
                                       Unit Q1–3/2021 Q1–3/2022 Change
   Revenue                             €m     2,819.8   7,617.3 170.1%
   EBITDA                              €m     1,150.6   1,933.3  68.0%
   Operating result                    €m       843.6   1,621.7  92.2%
   Group result                        €m       587.4   1,065.2  81.4%
   Earnings per share                  €         1.69      3.07  81.4%
   Cash flow from operating activities €m       510.6   1,120.8 119.5%
   Free cash flow before dividends     €m      –264.1    –150.5      –
   Free cash flow after dividends      €m      –595.8    –628.4      –
   Performance of VERBUND shares       %         25.6     –11.6      –
   Gearing                             %         42.4      89.6      –
                                                                 

    

   Additional information as well as the Interim Financial Report for
   quarters 1–3/2022 is available at www.verbund.com > Investor Relations >
   Latest financial results.

   Contact: Andreas Wollein
   Head of Group Finance and Investor Relations
   T.: +43 (0)5 03 13 - 52604
   F.: +43 (0)5 03 13 - 52694
   mailto:investor-relations@verbund.com

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   03.11.2022 CET/CEST This Corporate News was distributed by EQS Group AG.
   www.eqs.com

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   Language:    English
   Company:     VERBUND AG
                Am Hof 6A
                1010 Wien
                Austria
   Phone:       0043-1-53113-52604
   Fax:         0043-1-53113-52694
   E-mail:      investor-relations@verbund.com
   Internet:    www.verbund.com
   ISIN:        AT0000746409
   WKN:         877738
   Indices:     ATX
   Listed:      Vienna Stock Exchange (Official Market)
   EQS News ID: 1478037


    
   End of News EQS News Service


   1478037  03.11.2022 CET/CEST

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