Higher profitability of TAURON Group in 2013

• 2013 reported EBITDA was slightly lower than in 2012, reaching PLN 3.66bn. Excluding one-off events (impairment charges related to the value of generation assets and color certificates, provision for the shortage of CO₂ emission allowances) EBITDA would be PLN 4.27bn, i.e. an increase versus adjusted – comparable – 2012 EBITDA of almost 30 percent year-on-year.

• Higher margins generated in 2013. EBITDA margin grew 3.5 p.p. to 19.1 proc., EBIT margin grew 1.4 p.p. to 10.1 percent, and net profitability grew 0.7 p.p. to 7 percent.

• Sales revenue was PLN 19.1bn, i.e. a 22.7 percent drop year-on-year. This is the result of consolidation exclusions related to the sale of the majority of electricity produced by Generation in 2013 directly to the Group’s subsidiaries that deal with electricity supply.

• Efficiency improvement program brought savings of PLN 320m in 2013. By the end of 2015 estimated savings will reach almost PLN 900m. 

• Growing investment outlays in 2013 – CAPEX was close to PLN 3.78bn, i.e. 8.9 percent higher year-on-year.

– Taking into account slower economic growth than in previous years TAURON Group’s 2013 financial results are good. We managed to visibly increase the Group’s operational efficiency, as proven by the margins generated. EBITDA margin’s increase to 19.1 percent is also the result of implementation of the efficiency improvement program planned for 2013-2015 that last year brought savings of PLN 320m - says Dariusz Lubera, CEO of TAURON Polska Energia.

Operating data

TAURON Group’s commercial coal production in 2013 was close to the 2012 output, reaching 5.45m tons. The Group’s power plants’ and combined heat and power plants’ electricity generation (19.39 TWh in total) was slightly higher year-on-year. – We observed a significant increase of generated electricity volume in the renewable energy sources segment  – 14 percent year-on-year, including RES net production’s increase by as much as 36 percent. Investing in green energy is one of our priorities. Only in 2013 we commissioned two biomass-fired units – in Tychy and Stalowa Wola, and two wind farms – in Wicko and Marszewo. Total capacity of the new units generating green energy is 182 MW_e – says Dariusz Lubera.

Distributed electricity volume was at the 2012 level (almost 48 TWh), whereas the number of customers connected to the Group’s distribution grid increased by 32 thousand year-on-year (reaching more than 5.3m in total).

Financial results

Sales revenue

 In 2013 TAURON Group posted sales revenue of PLN 19.13bn, i.e. 22.7 percent lower year-on-year. The most important reason for the decline of revenue is the change of the model of trading electricity generated by the Group. In 2012 most of electricity was sold via a public power exchange, while in 2013 electricity sales outside the Group were substantially reduced in favor of direct sales to the Group’s subsidiaries that are subject to consolidation exclusion.

Higher sales revenues were posted by the following lines of business: Heat (4.6 percent) and Customer Service (45.5 percent). Meanwhile lower sales revenues were reported by: Mining (due to lower hard coal prices) and Generation (due to the lack of compensations related to the termination of LTCs and lower prices of electricity and color certificates). Distribution, Supply and RES generated revenues close to the 2012 levels.

EBITDA and net profit

2013 reported EBITDA was slightly lower than in 2012 and reached PLN 3.66bn. Excluding significant one-off events (impairment charges related to the value of generation assets: PLN 276m, impairment charges related to the value of color certificates: PLN 42m, provision for the CO₂ emission allowances (not received in 2013): PLN 270m) EBITDA would be approx. PLN 4.3bn, i.e. an increase versus comparable 2012 EBITDA (adjusted by the revenue due to LTC compensations booked in 2012) of roughly 30 percent year-on-year.

2013 net profit was PLN 1.35bn, i.e.  approx. 13 percent lower than in 2012.

– Results are above market expectations. The decline of own costs of sales is worth emphasizing, and also the reduction of overhead expenses.The Group’s subsidiaries have been implementing measures aimed at optimizing fixed costs which allowed us to reduce the negative impact of the declining revenue on earnings.The only segment that posted a negative operating result for the year was Generation. This is primarily the consequence of a significant drop in electricity prices, and also the result of one-off events: setting up a provision for the lack of CO₂ emission allowances that should have been allocated in 2013 (PLN 270m in Q4), generation assets’ impairment charge (PLN 276m) and no revenue related to the LTCs (PLN 567m in 2012) – says Krzysztof Zawadzki, CFO of TAURON Polska Energia.

In 2013 the biggest increase of profits was reported by the following segments: Supply (EBITDA grew 88 percent), and by Distribution (EBITDA went up 13 percent).

CAPEX and debt

In 2013 TAURON Group’s capital expenditures were PLN 3.78bn, i.e. approx. 8.9 percent higher than in 2012. This was primarily due to intensified strategic investment projects in the following lines of business: Generation, Heat, RES and Distribution. More than 50 percent of the CAPEX was spent on investment projects in Distribution (upgrade of the existing distribution grids and construction of new connections). Another significant item is the construction and upgrade of generation assets. – In 2013 we commissioned a co-generation heat unit in Bielsko-Biała (50 MW), biomass-fired units in Tychy (40 MW) and Stalowa Wola (20 MW) and the Wicko (40 MW) and Marszewo (82 MW) wind farms. Works are underway on the construction of the 450 MW CCGT unit in Stalowa Wola, another unit in Tychy (50 MW), and the Jaworzno III Power Plant project’s issue should be finally resolved in the coming weeks– sums up Dariusz Lubera.

TAURON Group’s debt slightly increased in 2013. The net debt reached approx. PLN 5.23bn, an increase of 15 percent versus the previous year. Also the net debt/EBITDA ratio rose slightly – to 1.43 from 1.18 in 2012, however it continues to remain at a very safe level.