Stable operating profit Eneco
• Total revenues decrease from €5.2 billion to €4.9 billion• Operating profit stable at €274 million (2009: €268 million)• Unbundling-related costs amount to €46 million (2009: €41 million)• Net profit was €141 million as opposed to €177 million in 2009• Investments increased from €556 million to €734 million• Gas position strengthened by long-term purchase agreements
Chairman of the Board Jeroen de Haas: “We have achieved a good result in 2010. In a market characterised by fierce competition, poor economic conditions and widely fluctuating prices, realising a stable operating result is an achievement that all our employees can be proud of. 2010 was also the year in which the forced unbundling of the energy production and supply company and the network company was called off. The result was, nevertheless, strongly influenced by the costs that Eneco had to incur to prepare for the unbundling that did not take place. Eneco will continue as a group with three core companies: Energy company Eneco, Stedin and Joulz.”“During the past year, Eneco group made substantial investments in its networks, sustainable electricity production and gas. Our sustainable electricity production is supported by the flexible use of gas-fuelled plants. The Enecogen gas plant and our gas storage installation in Germany will strongly contribute to optimising our electricity production. Both projects are in an advanced stadium and we expect these installations to become operational at the end of this year. In combination with the recently concluded long-term gas contracts, Eneco has also significantly strengthened its supply position.”“We have made substantial steps to firmly establish the sustainable character of the company. These include a partnership with WWF for a three-year period and being the first energy company in the world to become a member of WWF’s international Climate Saver Programme. And as of 1 January 2011, Eneco supplies green electricity to all its retail and small and medium business customers in the Netherlands.”
Revenues and operating profit
At €274 million, the operating profit of Eneco group for 2010 was similar to that for 2009 (€268 million). Total revenues fell from €5,245 million to €4,922 million in connection with lower tariffs. The result was higher due to the cold winter, but this was cancelled out by lower revenues from electricity production contracts and a lower spark spread (margin on energy plants). Other revenues fell during the course of the financial year, in particular at Joulz, as a result of the poor economic situation. The lower revenues were offset by the strong focus on cost savings and restraint in filling vacancies. The number of employees fell by 83 FTEs compared with 31 December 2009 to 6,545 FTEs. A provision of €12 million was formed in connection with a reorganisation at Joulz.
In 2010, Eneco again incurred expenses for unbundling the organisation. Although the unbundling of Eneco group was called off, many related activities had been undertaken or commitments made by the time the court gave its judgement. The operating profit included €21 million of unbundling-related costs (2009: €36 million), including consultancy fees and costs related to the termination of cross-border leases. Anticipating a possible unbundling, more liquid funds were drawn and held than was strictly necessary. The associated interest charge was €25 million (2009: €5 million).
Net profit in 2010 was €141 million (2009: €177 million including a non-recurring gain of €20 million for non-controlling interests). Excluding the above-mentioned expenses relating to unbundling and other non-recurring items, net profit including tax effect was €184 million (comparable result 2009: €188 million).
Eneco increased its investments considerably in 2010 to €734 million compared with €556 million in the previous year. Stedin invested €312 million (2009: €260 million) in replacing and expanding the gas and electricity networks. The Energy company invested a total of €413 million (2009: €282 million) in vertical integration of the chain and increasing the sustainability of the energy production. Once again in 2010, major projects were Enecogen, the efficient gas-fuelled power plant in the Europort area with a capital expenditure of €175 million in 2010 and Gasspeicher, the gas storage facility in Epe (Germany) in which investments were made to the amount of €69 million in 2010. Both projects are expected to be in production by the end of 2011. €81 million was invested in developing wind farms and €59 million in replacing and expanding district heating networks.
Energy company Eneco
On 1 January 2010, the acquired former Econcern activities, with the exception of Ecofys, were integrated fully into the new Heating & Cooling, Wind and Solar, Bio & Hydro business units within the Energy company. The consultancy agency Ecofys has an independent position. Eneco Belgium’s supply activities were transferred along with the Dutch supply activities to a new business unit which now carries out joint operations under the name Eneco Supply. This structure lays the foundations for the Energy company to meet its national and international sustainability ambitions.The Energy company’s operating profit amounted to €120 million in 2010 (2009: €153 million). This decrease can be contributed to the market situation (in particular declining margins at energy plants) and poor wind conditions. The supply activities enjoyed good results because of the cold winter (17% more degree days than in 2009) and a continuously stable market share on the highly competitive markets. The new gas shipping activities have a positive effect on the result.
Stedin’s revenues fell slightly in 2010 compared with 2009, partly because of lower regulated tariffs, in particular for electricity. Despite this, operating profit was up €16 million, to €200 million as a result of cost reductions. This corresponds to Stedin’s aim to deliver the highest possible quality at acceptable cost to society. High priority is given to safety of the networks, employees and customers
Joulz continued to invest in the future. In 2010, a reorganisation was carried out that resulted in a structural reduction of indirect expenses. It led to some 125 redundancies, and a provision of €12 million was formed for the related costs. The operating profit fell by €17 million to a loss of €9 million. The margin effects resulting from an external fall in revenue, a long period of working time lost as a result of cold weather and pressure on prices were partially offset by lower indirect expenses. Joulz aims for a cost base that is in line with the market to further strengthen its competitive position.
Given current market conditions, Eneco group expects a slightly positive development of the net profit for 2011.