Solid Results for Eneco in Unprecedented Circumstances
· 2021 was an unprecedented year in the energy world, mainly because of price rises and fluctuations in the gas and electricity markets towards the end of the year. In addition, 2021 had a cold spring, a warm autumn and less wind. In these difficult market conditions, Eneco is presenting solid results, thanks in part to some non-recurring gains.
· During 2021 Eneco also presented its One Planet Plan, which is designed to allow Eneco and its customers to be climate-neutral by 2035. Lower gas sales meant a reduction of 0.7 Mton of CO2 emissions while installed sustainable capacity grew to 1,926 MW (2020: 1,726 MW).
· The total number of customer contracts grew from 5.558 million to 5.617 million.
· Income from consumers and business customers was less than in 2020. Higher and more volatile purchase prices reduced profitability of this part of the results by 7% compared with 2020.
· Revenue rose by 26% to €5,211 million (2020: €4,148 million) mainly as a result of higher prices for electricity and gas. Other positive influences were the take-over of customers in Germany (E.On Heizstrom in 2020 and now included for a full year) and the Netherlands (Welkom Energie and Essent’s midmarket business customers).
· EBITDA was up by 18% to €572 million (2020: €484 million) and EBIT by 36% to €222 million (2020: €163 million).
· Profit after income tax was €209 million in 2021, an improvement of 77% compared with the previous year (2020: €118 million).
· Eneco’s result this year included non-recurring gains totalling €49 million from the sale of non-controlling interests in Thermondo, Greenflux, Next Kraftwerke and Ecco Nova.
· Eneco once again invested considerable amounts in 2021: in total €532 million was spent on new operating assets such as wind and solar farms, and on acquisitions, including the German energy service provider Nordgröön.
As Tempelman, CEO of Eneco, says:
“First of all, I wish to say that our thoughts are with Ukraine in this tragic situation and major humanitarian crisis. I hope that agreement on a ceasefire will be reached soon, as a prelude to a speedy end to the fighting.
The situation in Ukraine already started to play a role in 2021, in the form of a high level of market volatility. In combination with other external circumstances such as a cold spring, a warm autumn and little wind, 2021 turned out to be an exceptional year. It was also special to us because we introduced our ambitious One Planet Plan, aimed at achieving climate neutrality for us and our customers by 2035.
Our customers were faced with higher energy bills as a result of high energy prices. Energy poverty also rose strongly, which is a major concern. However, Eneco’s income from consumers and business customers was, in fact, lower in 2021 as a result of higher and more volatile purchase prices.
I am pleased that we are able to present solid results despite these external factors. We are on course with our strategic goals and again demonstrated that care for the climate and a leading role in the energy transition can go hand in hand with solid financial performance.“
Eneco’s One Planet Plan was introduced in June 2021. It is an integral part of our strategy and its main aim is to allow the Eneco organisation and its customers’ energy consumption (scope 1, 2, and 3) to be climate-neutral by 2035. This is 15 years earlier than Eneco had previously aimed for. Eneco wants to achieve this goal through three actions: accelerating the pace of sustainable heating, drastic electrification and phasing out natural gas from the generation and delivery of energy.
In addition to reducing CO2 emissions by 0.7 Mton in 2021 (13.2 Mton compared with 13.9 Mton in 2020) results could be seen in all three areas.
Considerable progress was made on heat projects in Groenoord in Schiedam, Bospolder-Tussendijken in Rotterdam and Bincknet in The Hague, and a number of attractive new contracts were won, including for the WAD Quarter of Amsterdam.
The main results in electrification and phasing out gas were growth in our installed sustainable capacity to 1,926 MW (2020: 1,726 MW). We also helped customers become more sustainable, including Heineken, Coca-Cola, Blijdorp Zoo and McDonalds in the Netherlands and Brouwerij Vanhonsebrouck in Belgium, and there was significant progress in improving the sustainability of the SME market in Germany. The e-mobility partnership with Ford was extended to both Germany and Belgium. The investment decision on an aquathermal project in Utrecht was taken with the Hoogheemraadschap De Stichtse Rijnlanden district water authority.
Revenue rose by 26% to €5,211 million (2020: €4,148 million) mainly as a result of higher prices for electricity and gas. Revenue from deliveries of heat was almost unchanged. In addition, there was an increase in revenue from customers taken over in Germany (E.On Heizstrom in 2020 and now included for a full year) and the Netherlands (Welkom Energie and Essent’s midmarket business customers).
Overall, the gross margin improved by 12% to €1,224 million (2020: €1,094 million) although different parts of the business saw large fluctuations during the year. Positive effects came from Covid-19 no longer depressing the results and new windfarms coming on stream, including the onshore windfarm near Delfzijl and the Borssele (Netherlands) and Seamade (Belgium) offshore windfarms. Margins on Eneco’s trading activities, where we connect supply and demand, were higher than during the previous year.
Eneco’s result from associates and joint ventures were positively influenced by the sale of non-controlling interests in Thermondo, Greenflux, Next Kraftwerke and Ecco Nova, for a total amount of 49 million.
The income from our customers was lower than previous year. Profitability of this part of the results was reduced by 7% compared with 2020. If we would include the negative effects of the electricity supplies at our trading floor, the negative impact would be 11%.
Weather conditions in combination with unprecedentedly high market prices affected the results in various, sometimes conflicting, ways:
• During the year, wind speeds were well below average and so Eneco could produce less electricity from its own wind turbines.
• Consequently, additional purchases had to be made at high prices on the spot market.
• The electricity that was generated could be sold at a high price but then attracted less subsidy.
• 2021 was colder than the previous year, in particular during the first half, and so more gas and heating was sold to our customers.
Total operating expenses rose by €71 million, or 8%, to €1,002 million. There was considerable investment in digitalisation of the business. This transformation will ensure that customers are served better in the future and that operations will be more cost efficient. In addition to ICT, the main items were the increase in the average workforce (2,865 FTEs in 2021 compared with 2,819 FTEs in 2020) and the costs of developing new projects, such as new solar and windfarms.
Eneco has for some years had a social collection and debt policy and we recently received the “Warm Incasseren” accreditation from Warm Rotterdam. Eneco continues to set aside funds for setbacks, including any relating to customers in payment difficulties.
Towards the end of 2020, Eneco presented its revised strategy. The main objectives for 2025 (compared with 2019) are an additional one million customer contracts, doubling of our renewable generation capacity and an increase in the Return on Capital Employed (ROCE) to 5%.
As well as the increase in our installed renewable capacity (1,926 MW; 2020: 1,726 MW), the customer portfolio grew during the year from 5.558 million to 5.617 million, largely as a result of the acquisitions in Germany and the Netherlands. ROCE rose from 3.5% to 4.7%, mainly due to the improved result.
Eneco once again invested considerable sums in 2021: in total €532 million was spent on new operating assets and acquisitions. The main acquisition was of a 25% share in the Norther windfarm off the Belgian coast from Mitsubishi Corporation. Eneco now owns 50% of this windfarm. Overall, €223 million was invested in windfarms and the largest projects in the Netherlands were Maasvlakte II, Hollandse Kust Noord and Delfzijl Oosterhoorn. In Belgium, the Cobelfret Zeebrugge and Fauvillers windfarms were developed further. €18 million was invested in expanding the solar farms in the Netherlands and Belgium and a total of €84 million was invested in maintaining and replacing the heating grids and also in making the heat production facilities more sustainable.
For the Annual Report 2021, and additional information see: reports (eneco.com)