Alpiq posts satisfactory results

Although the general economic and financial conditions stabilised during the first half of 2010 compared with the same period last year, they remain constrained. Amid this challenging environment, also marked by the low euro exchange rate and some downslides in the stock markets, Alpiq delivered satisfactory results. Consolidated revenue was marginally lower than in the same period last year at CHF 7.041 billion (down 0.8 per cent). Declines were also seen in EBIT (CHF 482 million, down 4.6 per cent) and Group profit for the period (CHF 293 million, down 10.4 per cent), whereas EBITDA rose (CHF 735 million, up 1.8 per cent).

Energy segment: marked increase in energy sales

The Energy segment recorded consolidated revenue of CHF 6.1 billion (down 0.9 per cent) for the first six months of 2010, about matching the year-ago level. Energy sales increased by 13.3 per cent to 70.452 terawatt hours. EBITDA also grew (CHF 731 million, up 1.7 per cent), whereas EBIT fell by 3.8 per cent to CHF 510 million.

The primary contributors to earnings growth in the Energy segment were the Swiss generation facilities, enhanced by the addition of the recommissioned Bieudron (Cleuson-Dixence) storage power station, as well as asset trading and optimisation business. Performance was also boosted by improved operating margins in Central European sales and wholesale business. At the same time, the results were weighed down by falling prices at the beginning of the year, the generally adverse market conditions in Italy and higher fuel costs incurred by the Central European power stations.

Energy Services segment: revenue at the year-ago level

In the first half of 2010, revenue in the Energy Services segment all but reached the level achieved in the same period last year (CHF 965 million, down 0.2 per cent). As expected, the segment’s operating profit (EBIT) was down from the same period last year, dropping by CHF 13 million to CHF 15 million due mainly to seasonal factors and in part to a deterioration in contract pricing quality. During the first six months of 2010, market conditions for the Energy Services segment were generally more stable than a year ago. In Switzerland, building services enjoyed satisfactory demand overall, although prices came under heavy pressure in urban centres and for large-scale projects. Capital spending by network operators is being dampened by the regulators’ pressure on transmission charges, sales of networks and tedious licensing procedures.

Outlook: sights still set on matching last year’s figures

With the economic environment remaining difficult and the relatively low euro exchange rate, Alpiq expects results to show a slight decline. Excess supply and competitive pressure will persist, leading to further margin erosion. No signs of a sustainable trend reversal are yet in sight for Alpiq. Despite redoubled efforts on the sales, trading and optimisation sides, coupled with consistent cost management, it will be virtually impossible to make up for the shortfall in results that is already apparent versus 2009.

"We still have our sights set on matching last year’s figures", says Alpiq CFO Kurt Baumgartner. "But to achieve this, we need to see marked improvements in key profit drivers – in particular in the currently low spreads on gas- and coal-fired generation and the euro."

*Average number of full-time equivalents.