TAURON Group: improved results in Q1 2012

PLN 6.5 billion revenues, almost PLN 1 billion EBITDA

• TAURON Group’s revenues in Q1 2012 amounted to almost PLN 6.5 billion, i.e. almost 20% more than in comparable period last year when TAURON had PLN 5.3 billion revenues.
• EBITDA (Earnings before Interest, Taxes, Depreciation, and Amortization) increased by 13% up to almost PLN 1 billion in Q1 2012 from PLN 861 million a year ago. EBITDA margin was 15.1%.  
• Net profit increased by 3.1% from PLN 388 million in Q1 2011 to PLN 400.2 million in Q1 2012.
• Production of coal for sale increased by 5.2% from 1.15 Mt in Q1 2011 to 1.21 Mt in Q1 2012.
• Electricity generation in Q1 2012 amounted to 4.97 TWh. Over a comparable period a year ago it was 5.90 TWh. Over 30% increase in volume of electricity generated from renewable sources – from 0.23 TWh to 0.3 TWh yoy.
• Increased volume of electricity supplied by the Distribution segment. In Q1 2012 it was 12.70 TWh, i.e. 28% more than a year ago.
• Similar (27.6%) growth rate in retail electricity supply, from 9.24 TWh in Q1 2011 to 11.8 TWh in Q1 2012; increased supply volume was achieved thanks to existing clients and acquisition of new ones.
• Sharp increase in the number of clients in the Distribution segment. At the end of March 2012 TAURON had over 5.28 million clients, over 28% more than a year ago. That means the Group strengthened its leading position in this respect on the Polish electricity market.
• High volume increases in the segments of Distribution and Supply as well as in the number of clients result, among other things, from acquisition of Górnośląski Zakład Elektroenergetyczny and its companies.
• Over 120% increase in comparison to Q1 2011 in the value of investments, up to PLN 510 million in Q1 2012, which confirms Group’s coherent investment policy focused on increase of its value.

“Results of the first three months of this year are satisfactory. Diversified operations, additionally strengthened by acquisition of GZE companies from Vattenfall enabled us to achieve two-digit increase in revenues and EBITDA in Q1 this year. Good results are also an effect of activities connected with operational costs reduction and development of transparent Group structure”, said Dariusz Lubera, president of the Management Board at TAURON Polska Energia. ”The Q1 2012 results confirm that the decision to acquire GZE was a good one and is already bringing us profits in the form of sharp volume increase in the segments of Distribution, Supply and RES, although the majority of synergies we expect to achieve after the integration of acquired companies with the TAURON Group is completed”.

Key operating and financial results  

Revenues

In Q1 2012 the TAURON Group had approx. PLN 6.5 billion revenues. That means an increase by 21.8% in comparison to the same period in 2011 when the Group had almost PLN 5.3 billion revenues. Higher revenues result mainly from increased volume of supplied electricity and revenues from its distribution. Increased sales in the segments of Mining and Heat also had a positive impact on revenues. The Group recorded increased compensations due to termination of long-term contracts (LTC). They amounted to approx. PLN 121 million and their share in revenues from sale has not changed significantly and reached 1.9% as compared to 1.4% a year ago.

“When analyzing the Q1 results, attention should be paid to their dynamic increase in most segments despite unfavorable market conditions that could be noticed in particular in the Generation segment”, said Krzysztof Zawadzki, CFO at TAURON Polska Energia. ”We estimate the situation in this segment as temporary and negative trends, in particular referring to electricity prices and production level, should change in the forthcoming quarters. In addition, our actions aimed at efficiency improvement in all segments of the Group’s operations should strengthen our financial results in the periods to come”.

EBITDA and net profit

TAURON Group’s EBITDA (Earnings before Interest, Taxes, Depreciation, and Amortization) in Q1 2012 reached almost PLN 1 billion which means a 13.3% increase in comparison to almost PLN 861 million in Q1 2011. EBITDA margin was 15.1%. The Group recorded EBITDA increase in most segments. The highest increase in terms of percentage was recorded in the Mining segment (approx. 124% up to PLN 48.4 million). Traditionally, Distribution segment recorded the highest increase in terms of value (by PLN 116 million up to PLN 445.1) and its share grew to 46% in total EBITDA of the Group. Good results in this segment, similarly to Supply and RES segments, owe to GZE Group acquisition. 

TAURON Group’s net profit increased in Q1 2012 by over 3% yoy and reached PLN 400.2 million.

Investments and debt

The TAURON Group significantly increased the value of its investments in Q1 2012. They amounted to PLN 510 million and were over 120% higher than in Q1 2011. Majority of investments (approx. 81%) were executed in the segments of Generation and Distribution. Dynamic growth in investments in the Generation segment results mainly from continued execution of investments connected with capacity restoration (50 MW at ZEC Bielsko and RES 50 MW at Elektrownia Jaworzno III) and other expenditures (including mainly NOx installations at Elektrownia Jaworzno III and Łaziska and biomass installation at K-10 boiler at Elektrownia Stalowa Wola). Higher CAPEX in Distribution segment results primarily from increased expenditure on modernization and restoration of existing grid assets.

At the end of March 2012 TAURON Group’s net debt was approx. PLN 5.3 billion vs. approx. PLN 4.5 billion at the end of last year. Increased financial debt level at the end of 2011 is connected primarily with accelerated execution of investments. At the same time, it is worth to notice approx. 7% increase in cash up to PLN 546 million over the first three months of this year. At the end of March 2012 net debt/EBITDA was 1.56 (in relation to EBITDA for 2011).