Flexibility and comprehensive focus on analysis to realise excess value in the market
Over the past few years, Statkraft has succeeded in creating good financial results. Large flexibility has, in combination with a comprehensive and focused drive to strengthen the Group's analysis and market expertise, contributed to enabling Statkraft to generate added value from the market. The Group's flexible production capacity and unique expertise in power plant operation, power optimisation and energy trading are Statkraft's most important competitive advantages. Occasional major market fluctuations from one year to another is a characteristic of the energy sector, and the result for 2009 fell back to a more normal level when compared with 2008, which was an atypical year with both good capacity utilisation and high power prices.
The Group has seen a positive profit trend in recent years. Gross operating revenues and underlying profit after tax has risen from NOK 15.0 billion and NOK 6.5 billion, respectively, in 2005 to NOK 25.7 billion and NOK 5.7 billion, respectively, in 2009. In 2009, operating revenues also rose as a result of new production capacity from the asset swap with E.ON AG and the consolidation of SN Power as a subsidiary. However, the market situation in 2009, with lower demand resulting from reduced industrial activity and plummeting power prices in both the Nordic region and Germany, resulted in less production from the power plants in the existing portfolio. Overall, the increase in income was therefore less than the increase in costs, resulting in a lower result when compared with 2008.
Statkraft's balance sheet assets have grown considerably in recent years. From the end of 2005 to the end of 2009, the balance sheet total rose from NOK 90.9 billion to NOK 144.0 billion, an increase of NOK 53.1 billion. The major increase from 2007 is mainly related to the asset swap with E.ON AG and the consolidation of SN Power. The increase resulting from these transactions merely entails an accounting revaluation, with no particular inflow of new liquidity. It is assumed that there are substantial assets in addition to the book value in the Group's balance sheet related to the Norwegian hydropower plants.
The Group's cash flow has been steady and good in recent years, and the cash flow from the operations was NOK 12.7 billion in 2009, an increase of 11 per cent from 2008.
See graph Key figures 2005-2009
Statkraft's revenues
Statkraft's revenues come from spot sales (sale of own production in spot markets), contract sales to the industry, financial trading and grid activities, as well as district heating and power sales to end-users. The fundamental factors in Statkraft's income are power price and production.
Statkraft's expenses
Statkraft greatly emphasises efficiency improvements and cost control. Through management by objectives, the costs related to operation of power plants and other parts of the value chain are monitored continuously, both as regards internal scorecard follow-up and systematic comparison with other energy companies. Achieving cost synergies is emphasised, not least in connection with the integration of new activities in the Group. The operating expenses, excluding depreciation, amortisation and impairments, amounted to 28 per cent of the gross operating revenues in 2009 – somewhat higher than the average for the years 2005-2008, which was 23 per cent. Slightly more than 60 per cent of the increase is related to the asset swap with E.ON AG and the consolidation of SN Power.
EBITDA margin remains good
Historically, Statkraft has had very high EBITDA margins as a result of operating expenses in connection with hydropower production being generally low. Power prices can therefore be very low before having a critical impact on the EBITDA margin.
Cash flow
Statkraft has a good cash flow from the operational activities, but this has to a large degree been eaten up by higher dividends to the owner.
Lower yield from capital employed
The return on capital employed has been generally high in recent years, but there was a decline from 2008 to 2009.
Financing capacity
At present, the Group's balance sheet is robust and the recognised equity amounted to NOK 64.9 billion at the end of 2009, corresponding to 45.1 per cent of the total assets.
Value increases in the group
Statkraft realised some of the added values in the Group through the asset swap with E.ON AG at the end of 2008. E.ON AG acquired Statkraft's shareholding of 44.6 per cent in E.ON Sverige AB in return for assets and shares in E.ON AG. E.ON Sverige had an annual mean production of about 32 TWh and about one million electricity and distribution grid customers.
Financial performance
Higher income base as a result of new activities
Good operations, but lower result due to weaker demand
Growth ambitions dependent on strengthened equity
