VERBUND AG: 2022 annual results: VERBUND posts encouraging business performance in 2022

Difficult geopolitical and energy market developments cast a shadow over 2022, radically changing the conditions in the energy industry. Particularly the war in Ukraine caused significant distortion in Europe’s energy markets that led to rocketing prices and extreme price volatility, along with marked shifts in supply and demand structures. Prices for primary energy sources shot up during the course of the year, with gas prices in particular being hugely affected by changes in gas supply volumes and the off-take structure. European wholesale prices for electricity likewise continued their upward trend fuelled by soaring global market prices for primary energy and the increasing market risks, reaching fresh highs as the year went on. In response to the headwinds in the European energy sector and to address the severe price pressure on residential and industrial customers alike, discussions about market intervention and taxing windfall profits were initiated at both EU and national level and steps were taken. In addition, the Austrian federal government and VERBUND implemented measures to slow the rise in prices to the consumer. However, the discussions and decisions relating to market intervention generated considerable uncertainty in the capital markets and put downward pressure on VERBUND’s share price, which fell by 20.5% in 2022. This meant that VERBUND’s share price performance was slightly below that of the Austrian ATX (full-year performance –19.0%) and far below that of the European sector index STOXX Europe 600 Utilities (full-year performance –11.1%). Nevertheless, with a market capitalisation of €27.3bn VERBUND was still Austria’s largest listed company at the end of 2022 by a large margin.

Significant improvement in VERBUND’s results for financial year 2022

EBITDA climbed by 100.2% to €3,160.7m. The Group result surged by 96.6% to €1,717.0m compared with the same period of the previous year. Particularly as a consequence of the dry summer, the volume of electricity VERBUND generated from its run-of-river power plants in financial year 2022 was well below average. The hydro coefficient dropped to 0.86, or 9 percentage points below the prior-year figure and 14 percentage points below the long-term average. The reduced volume of electricity generated from hydropower had a pronounced negative impact on the development of earnings. The underproduction of hydropower made it necessary to purchase large volumes of electricity so that the electricity volumes that had already been sold on the basis of the long-standing hedging strategy could be delivered. Due to the market conditions, these repurchases had to be made at exceedingly high prices in some cases, which put additional pressure on earnings. The taxation of the windfall revenues of inframarginal power generators in Austria and Germany from December 2022 and corresponding windfall profits in Romania and Spain also had a negative impact on the Group’s result. By contrast, the sharp increase in wholesale electricity prices on the futures and spot markets in particular gave a significant boost to earnings. The average sales prices obtained for VERBUND’s own generation from hydropower rose by €60.2/MWh to €115.1/MWh. The New renewables segment also made a bigger contribution to earnings on the strength of higher average prices and the rise in output. The significantly higher contribution from flexibility products likewise had a positive effect. Moreover, the Group result for financial year 2022 was influenced by non-recurring effects totalling €–37.9m (2021: €+75.0m). Adjusted for these non-recurring effects, the Group result rose by 119.8% to €1,754.9m.

Higher dividend

A dividend of €3.60 per share for financial year 2022 will be proposed to the Annual General Meeting on 25 April 2023. This dividend breaks down into a regular dividend of €2.44 per share plus a special dividend of €1.16 per share. The payout ratio (regular dividend plus special dividend) calculated on the basis of the reported Group result amounts to 72.8% for 2022 and the payout ratio calculated on the basis of the Group result after adjusting for non-recurring effects is 71.3%. The payout ratio for 2022 in relation to the regular dividend will thus be 48.3% based on the adjusted Group result.

Forecast for 2023

Based on expectations of average levels of own generation from hydropower, wind power and solar power as well as the opportunities and risks identified, VERBUND expects EBITDA of between around €3,500m and €4,400m and a Group result of between around €1,900m and €2,500m in financial year 2023. VERBUND’s planned payout ratio for 2023 is between 45% and 55% of the Group result of between around €1,900m and €2,500m, after adjusting for non-recurring effects.

 

KPIs	Unit	2021	2022	Change
Revenue */**	€m	4,776.6	10,346.1	116.6%
EBITDA	€m	1,579.0	3,160.7	100.2%
Operating result	€m	1,266.8	2,626.2	107.3%
Group result	€m	873.6	1,717.0	96.6%
Earnings per share	€	2.51	4.94	96.6%
EBIT margin */**	%	26.5	25.4	–
EBITDA margin */**	%	33.1	30.5	–
Cash flow from operating activities **	€m	98.2	2,019.9	–
Free cash flow before dividends **	€m	–1,010.1	452.1	–
Free cash flow after dividends	€m	–1,329.5	–25.7	–
Net debt/EBITDA	X	2.2	1.2	–
Performance of VERBUND shares	%	41.6	–20.5	–
(Proposed) dividend per share	€	1.05	2.44	132.4%
(Proposed) special dividend per share	€	–	1.16	–
Share of generation from renewables	%	96.4	95.6	–0.8%
Specific GHG emissions (Scope 1/total electricity generated) ***	g CO2e/kWh	13.9	16.8	20.9%

 

* calculation adjusted retrospectively in accordance with IAS 8 in financial year 2019 with effect from 1 January 2018

** calculation adjusted retrospectively in accordance with IAS 8 in financial year 2021 with effect from 1 January 2020

*** from electricity generation and transmission (excl. GCA) as a percentage of total electricity generated (incl. purchase rights, excl. electricity generated for district heating). Preliminary figures before ETS audit

Additional information as well as non-financial KPIs can be found in the Integrated Annual Report 2022, available on the website www.verbund.com > About VERBUND > Investor Relations > Latest financial results.

Contact:

Andreas Wollein
Head of Group Finance and Investor Relations
T.: +43 (0)5 03 13 - 52604
F.: +43 (0)5 03 13 - 52694
mailto:investor-relations@verbund.com