VERBUND AG 
Interim Report Quarter 1/2024
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INTERIM FINANCIAL REPORT Contents | 3 |
Contents
At a glance | 4 |
Report of the Executive Board | 5 |
Investor relations | 7 |
Interim Group management report | 9 |
Business performance | 9 |
Opportunity and risk management | 18 |
Segment report | 19 |
Events after the reporting date | 26 |
Consolidated interim financial statements | 27 |
Income statement | 28 |
Statement of comprehensive income | 29 |
Balance sheet | 30 |
Cash flow statement | 32 |
Statement of changes in equity | 34 |
Selected explanatory notes | 36 |
Responsibility statement of the legal representatives | 52 |
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At a glance
- Decrease in EBITDA (down 8.7% from €967.3m to €883.4m) and Group result (down 4.3% from €529.0m to €506.0m)
- Average sales price achieved for own generation from hydropower down by €84.7/MWh, from €202.8/MWh to €118.1/MWh
- At 1.29, water supply in quarter 1/2024 was 29 percentage points above the long-term average and 36 percentage points higher than in quarter 1/2023 (0.93)
- At 0.89, the new renewables coefficient from wind and photovoltaic in quarter 1/2024 was 11 percentage points below the long-term average and 14 percentage points lower than in quarter 1/2023 (1.03)
- Lower contribution from flexibility products in quarter 1/2024
- Earnings forecast for 2024 adjusted: EBITDA expected to reach between around €2,800m and €3,300m and the Group result to between around €1,450m and €1,750m based on average levels of own generation from hydropower, wind power and photovoltaic production in quarters 2 - 4/2024 as well as the opportunities and risks currently identified
KPIs
Unit | Q1/2023 | Q1/2024 | Change | |||||
Revenue | €m | 3,262.7 | 2,007.8 | - 38.5% | ||||
EBITDA | €m | 967.3 | 883.4 | - 8.7% | ||||
EBITDA adjusted | €m | 967.3 | 883.4 | - 8.7% | ||||
Operating result | €m | 841.4 | 744.7 | - 11.5% | ||||
Group result | €m | 529.0 | 506.0 | - 4.3% | ||||
Group result adjusted | €m | 529.0 | 506.0 | - 4.3% | ||||
Earnings per share | € | 1.52 | 1.46 | - 4.3% | ||||
EBIT margin | % | 25.8 | 37.1 | - | ||||
EBITDA margin | % | 29.6 | 44.0 | - | ||||
Cash flow from operating activities | €m | 1,363.7 | 929.3 | - 31.9% | ||||
Additions to property, plant and equipment | €m | 117.2 | 159.5 | 36.1% | ||||
Free cash flow before dividends | €m | 1,160.5 | 675.0 | - 41.8% | ||||
Free cash flow after dividends | €m | 1,160.5 | 675.0 | - 41.8% | ||||
Average number of employees | 3,659 | 4,030 | 10.1% | |||||
Electricity sales volume | GWh | 14,430 | 17,116 | 18.6% | ||||
Hydro coefficient | 0.93 | 1.29 | - | |||||
New renewables coefficient | 1.03 | 0.89 | - | |||||
Unit | 31/12/2023 | 31/3/2024 | Change | |||||
Total assets | €m | 19,485.3 | 20,197.3 | 3.7% | ||||
Equity | €m | 11,220.9 | 12,013.6 | 7.1% | ||||
Equity ratio (adjusted) | % | 58.9 | 60.7 | - | ||||
Net debt | €m | 1,758.7 | 1,129.0 | - 35.8% | ||||
Gearing | % | 15.7 | 9.4 | - |
INTERIM FINANCIAL REPORT Report of the Executive Board | 5 |
Report of the Executive Board
Dear Shareholders,
Having posted the best result in its history last year, VERBUND can look back on an extremely successful 2023 and is starting 2024 strong, resilient and well-positioned. However, the energy market value drivers that are key to VERBUND's earnings have deteriorated compared to the highs of 2022. The second half of 2023 saw another sharp fall in prices for emission allowances and gas, which have a knock- on effect on wholesale electricity prices. The marked decline in gas prices was driven by lower demand as a result of the mild winter, Europe's somewhat sluggish economy and relatively high natural gas storage levels. Given these factors along with a lower anticipated earnings contribution from regulated grid operations, the earnings outlook for 2024 as a whole remains very healthy, but well below the results for 2023.
Despite the changes in the energy market environment, we are systematically forging ahead with our sustainable Strategy 2030, which aims to strengthen our integrated positioning in the domestic market, expand new renewables electricity generation in Europe and develop a green hydrogen economy. Mission V, which we launched at the beginning of 2023, is our roadmap for mastering the challenges ahead and pushing on with the grid and energy transition. As such, VERBUND achieved further milestones in quarter 1/2024, both in generation from renewables and in the Grid segment, designed to ensure a sustainable and reliable supply for our customers. The Reißeck II plus, Limberg III and Stegenwald hydropower plant projects under construction to boost our renewable electricity generation proceeded as planned. Reißeck II plus is slated for completion in quarter 4/2024. Over the next three years (2024-2026), we will be investing around €1.8bn in further grid expansion projects such as "Energy Security in Upper Austria (Central region)" and the 380 kV Salzburg line. VERBUND's strategy also envisages significant growth in photovoltaics, wind power and battery storage between now and 2030, by which time we aim to generate around 25% of our total electricity from photovoltaic systems and onshore wind power plants. Austria, Spain, Germany and Italy are some of the countries identified as strategic target markets for this. Expanding wind and solar power will expose the grid to major fluctuations that have to be balanced out by (pumped) storage power plants and, in future, increasingly by battery storage. VERBUND therefore plans to install 1 GW of battery storage capacity by the end of 2030.
VERBUND posted slightly lower results in quarter 1/2024 due to a weaker energy market environment. EBITDA fell by 8.7% year-on-year to €883.4m. The Group result was down 4.3% to €506.0m. At 1.29, the hydro coefficient for the run-of-river power plants was 36 percentage points above the prior-year figure and 29 percentage points higher than the long-term average. By contrast, generation from annual storage power plants fell by 4.8% in quarter 1/2024 compared with the prior-year reporting period. Generation from hydropower thus increased by 1,804 GWh to 7,893 GWh. Earnings were hard-hit by the sharp drop in futures prices for wholesale electricity that were relevant for the reporting period. Spot market prices likewise retreated in quarter 1/2024. The average sales price achieved for own generation from hydropower fell by €84.7/MWh to €118.1/MWh. Despite higher generation from photovoltaic installations and wind power plants, particularly those that came on stream in Spain, the earnings contribution from the New renewables segment declined slightly due to lower sales prices. A significantly higher earnings contribution in the Sales segment had a positive effect, partly due to lower procurement costs, while the contribution from the Grid segment suffered from a significant drop in
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earnings at Gas Connect Austria GmbH. Earnings were also reduced by a lower contribution from flexibility products.
Based on expectations of average levels of own generation from hydropower, wind power and solar power as well as the current opportunities and risks identified, VERBUND expects EBITDA of between around €2,800m and €3,300m and a Group result of between around €1,450m and €1,750m in financial year 2024. VERBUND's planned payout ratio for financial year 2024 is between 45% and 55% of the Group result of between around €1,450m and €1,750m, after adjusting for non-recurring effects.
The earnings forecast and the information on the expected payout ratio are contingent on VERBUND not being impacted by any further measures to partially tax windfall profits at energy companies.
Mag. Dr. Michael Strugl, MBA | Dr. Peter F. Kollmann |
Mag. Dr. Achim Kaspar | Dr. Susanna Zapreva-Hennerbichler |
INTERIM FINANCIAL REPORT Investor relations | 7 |
Investor relations
Despite a bullish trend in the equity markets driven mainly by tech and consumer stocks, the capital markets were still plagued by uncertainty in quarter 1/2024. Ongoing geopolitical turmoil and upcoming political decisions such as the European elections in quarter 2/2024 and the US elections in November of this year continue to undermine confidence. Nevertheless, industrialised nations showed the first signs of economic recovery in the first three months of 2024 and expectations of interest rate cuts are firming up. Inflation fell, primarily in the eurozone, but the downward trend was also apparent in other economic regions. However, when and to what extent the ECB and the US Federal Reserve will herald a turnaround in interest rates is still unclear.
The US benchmark index Dow Jones Industrial Average ended quarter 1/2024 up 5.6%. The Euro Stoxx 50 performed much better in the reporting period, closing 12.4% higher than at year-end 2023. The Japanese benchmark index Nikkei 225 rallied even further, up 20.6% compared with 31 December 2023.
VERBUND share price: relative performance 2024
110 | |||
ATX | 2.9% | ||
100 | |||
90 | STOXX Europe 600 Utilities | -5.4% | |
VERBUND | |||
80 | -19.4% | ||
70 | |||
1/1/ | 1/2/ | 1/3/ |
Contact: Andreas Wollein
Head of Group Finance and Investor Relations
Tel.: + 43 (0)50 313-52604
E-mail: investor- relations@verbund.com
VERBUND shares took a marked downturn in quarter 1/2024 until mid-February. This was due to generally poor performance in the utilities sector - notably the sharp drop in wholesale electricity prices and negative sentiment on the capital market around long-term value creation from investment in new renewables -, ongoing regulatory uncertainties such as the extension of the windfall tax in Austria in particular, and the profit warning issued on 8 February 2024 owing to the marked divergence between external analysts' consensus estimates and internal forecasts for financial year 2024. Following the announcement of a special dividend for financial year 2023 and the best annual results in the company's history, the share price stabilised and recovered slightly by the end of quarter 1/2024, closing at €67.8 on 31 March 2024 - down 19.4% on year-end 2023.
As such, the shares underperformed significantly against the Austrian ATX (+2.9%) and the STOXX Europe 600 Utilities sector index (-5.4%).
Upcoming dates: Dividend payment date: 17 May 2024
Interim financial report quarters 1-2/2024:
25 July 2024
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KPIs - shares
Unit | Q1/2023 | Q1/2024 | Change | |||||
Share price high | € | 82.5 | 86.5 | 4.9% | ||||
Share price low | € | 72.2 | 62.6 | - 13.2% | ||||
Closing price | € | 80.0 | 67.8 | - 15.3% | ||||
Performance | % | 1.7 | - 19.4 | - | ||||
Market capitalisation | €m | 27,793.3 | 23,537.4 | - 15.3% | ||||
ATX weighting | % | 10.7 | 8.7 | - | ||||
Value of shares traded | €m | 1,287.2 | 1,414.0 | 9.9% | ||||
Shares traded per day | Shares | 256,080 | 317,539 | 24.0% |
INTERIM FINANCIAL REPORT Interim Group management report | 9 |
Interim Group management report
Due to a comprehensive reorganisation of the Group-wide platform for data processing and the preparation of management information, this Interim Financial Report differs from those previously published by VERBUND.
Business performance
Electricity supply and sales volume
Group electricity supply | GWh | ||||
Q1/2023 | Q1/2024 | Change | |||
Hydropower1 | 6,089 | 7,893 | 29.6% | ||
Wind power | 337 | 558 | 65.6% | ||
Solar power | 35 | 77 | - | ||
Thermal power | 307 | 328 | 6.7% | ||
Battery storage2 | - | 8 | - | ||
Own generation | 6,768 | 8,863 | 31.0% | ||
Electricity purchased for trading and sales | 7,691 | 8,034 | 4.5% | ||
Electricity purchased for grid loss and | |||||
control power volumes | 1,061 | 1,191 | 12.3% | ||
Electricity supply | 15,520 | 18,088 | 16.5% |
1 incl. purchase rights // 2 drawing of stored power; the stored quantities are shown under own use
In quarter 1/2024, VERBUND's own generation increased year-on-year by 2,095 GWh, or 31.0%, to 8,863 GWh. Generation from hydropower plants rose by 1,804 GWh in the reporting period to 7,893 GWh. At 1.29, the hydro coefficient for the run-of-river power plants was 29 percentage points above the long-term average and up 36 percentage points on the comparative prior-year figure. Generation from VERBUND's annual storage power plants declined by 4.8% in quarter 1/2024, due in particular to a drop in generation from turbining.
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Hydro coefficient (monthly averages)
2.0 | ||||
long-term maximum | ||||
long-term average | since 1926 | |||
1.5 | ||||
1.0 | ||||
0.5 | ||||
long-term minimum | ||||
since 1926 | ||||
0.0 | ||||
2020 | 2021 | 2022 | 2023 | 2024 |
At 558 GWh, the volume of electricity generated by VERBUND's wind power plants in quarter 1/2024 was up 221 GWh on the comparative prior-year figure. Electricity generated from proprietary photovoltaic installations rose by 41 GWh to 77 GWh. The new renewables coefficient dropped to 0.89: 11 percentage points below the long-term average and 14 percentage points lower than the comparative prior-year figure. The upswing in generation from photovoltaic installations and wind power plants was largely due to new plants in Spain coming on stream.
New renewables coefficient (monthly averages)
2.0 | ||||
1.5 | long-term average | |||
1.0 | ||||
0.5 | ||||
0.0 | ||||
2020 | 2021 | 2022 | 2023 | 2024 |
Despite lower congestion management due to better market conditions for deploying the Mellach combined cycle gas turbine power plant to supply electricity and district heating, generation from thermal power increased by 21 GWh year-on-year.
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Disclaimer
Verbund AG published this content on 08 May 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 08 May 2024 06:26:05 UTC.
