Press release
(Oslo, 12 Nov. 2002) Statkraft Group reported pre-tax income of NOK 169 million in 3rd quarter, compared to NOK 621 million in the same period last year. So far this year, pre-tax income amounts to NOK 1,940 million, compared to NOK 2,952 million in the first nine months of 2001. The decline in the 3rd quarter result is due to higher financial costs and lower electricity prices.
"The core activity, power production, returns acceptable results despite a weak market. Because of the high power production level we have dampened the effect of low electricity prices. However, higher financial costs, which are a consequence of acquisitions, reduces the result considerably", says Bård Mikkelsen, President and Chief Executive Officer.
Statkraft Group reported gross revenues of NOK 2,120 million in the 3rd quarter, compared to NOK 1,501 million in the same period last year. The increase is due to consolidating Skagerak Energi AS from 1 October 2001, and Trondheim Energiverk AS from 1 January 2002. The subsidiaries contributed NOK 673 million in revenue in the 3rd quarter.
The Group's operating income in the 3rd quarter amounted to NOK 828 million, compared to NOK 816 million in the 3rd quarter of 2001. The associated companies Bergenshalvøens Kommunale Kraftselskap AS, Hedmark Energi AS, E-CO Vannkraft AS and Sydkraft AB contributed NOK 70 million to the result. At the end of the 3rd quarter the Group's operating income totalled NOK 2,933 million, down NOK 48 million on the same period last year.
Net income in the 3rd quarter amounted to NOK 74 million, compared to NOK 374 million in 2001. For the first nine months of the year, net income totalled NOK 1,241 million, compared to NOK 2,049 in the same period last year. Last year's good result was in part due to extraordinary gains. Adjusted for this, the decline in net income from last year is NOK 537 million.
The decline in net income in the 3rd quarter is due to financial costs relating to the acquisition of ownership interests in other companies. In the 3rd quarter, net financial costs totalled NOK 729 million, a rise of NOK 426 million compared to the same period last year. In addition, the Nordic energy market experienced significantly lower power prices in the first nine months of 2002, and thus a decline in the result of power sales.
Low prices, higher power production
A great deal of rain, high temperatures and low consumption gave an average spot price of NOK 0.146 per kWh in the first three quarters of the year, compared to NOK 0.192 per kWh in the same period in 2001. The spot price varied a great deal during the period, and was NOK 0.035 per kWh lower in the first quarter, NOK 0.08 per kWh lower in the second quarter and NOK 0.023 per kWh lower in the third quarter.
In total, Statkraft held its production level high during the period. The Group produced 34.5 TWh in the first nine months of the year, a rise of 11.1 TWh compared to last year. Statkraft SF produced 27.9 TWh or 4.5 TWh more than in 2001. The subsidiaries contributed 6.6 TWh. Industrial contracts and licence power at publicly decided prices accounted for 14.5 TWh or 51 per cent of Statkraft SF's revenues.
Acquisitions
In the first nine months of the year Statkraft used NOK 10,137 million to acquire shares in other companies. In January 2002, Statkraft acquired all the shares in Trondheim Energiverk AS. In July, the Norwegian Competition Authority refused to approve the acquisition, a decision that Statkraft has appealed to the Ministry of Labour and Government Administration. In February 2002, Statkraft increased its stake in Bergenshalvøens Kommunale Kraftselskap from 26 per cent to 49.9 per cent, and in March the stake in Sweden's Sydkraft was increased from 35.7 per cent to 44.6 per cent.
In 2001, Statkraft agreed to acquire 45.5 per cent of the shares in Agder Energi AS. The Ministry of Labour and Government Administration has approved the acquisition, but has ordered Statkraft to sell its ownership interests in E-CO Vannkraft AS and Hedmark Energi AS. In addition, Statkraft must sell production capacity representing 1 TWh if transmission capacity to the south of Norway is not increased. It is expected that the parties will approve the final agreement regarding the transfer of the shares in Agder Energi at the beginning of December.
Prospects
Because of the rise in prices in the Nordic energy market during the last few months, Statkraft expects increased revenue from power sales in the fourth quarter. However, Statkraft still expects that the result of its ordinary activities will be lower than in 2001.
Statkraft is Norway's largest producer of electric power. The company's own production capacity is a good 42 TWh p.a., or about 1/3 of the country's total hydropower production. Statkraft has a staff of about 2,500, including the subsidiaries Skagerak Energi, Trondheim Energiverk and Statkraft Grøner. The company is Norway's largest land-based taxpayer. Statkraft has ownership interests in the following Norwegian energy companies: Agder Energi, BKK and Fjordkraft. In terms of size the Statkraft Alliance is the third largest in the Nordic production market and the second largest in the Norwegian consumer market.
