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Alpiq presents satisfactory 2013 half-year results

Alpiq Holding AG (Alpiq) achieved satisfactory results in the first half of 2013 despite the reduced size of its business portfolio following divestments, and persistently difficult market conditions. Net revenue totalled CHF 4,791 million and EBITDA CHF 401 million. Due to the divestment programme, the hybrid bond, and the positive cash inflow from business activities net debt was substantially reduced. In addition, an extensive strategy review process has been launched.

In the first half of the year, Alpiq generated a consolidated net revenue of CHF 4,791 million (previous year: CHF 6,497 million) and an EBITDA of CHF 401 million (previous year: CHF 468 million). EBIT amounted to CHF 257 million (previous year: CHF 151 million), while Group profit totalled CHF 115 million (previous year: CHF -34 million).

"The generated results meet our expectations”, says Jasmin Staiblin, CEO of Alpiq. In the first half of the year, we strengthened our finances by taking up hybrid capital amounting to more than CHF 1 billion. Furthermore we grasped the opportunities open to us on the market, reduced costs, as well as launched an extensive strategy review process".

Foreign trade contributes towards satisfactory half-year results

Alpiq’s operating result was slightly lower than that of the previous year, but was in line with expectations. Production volume from new renewable energies was considerably higher, while the wholesale business in Central Europe and the sales business in France both recorded positive performances. The closure of the Spanish sales business coupled with considerably higher earnings in Spanish thermal production also made a positive impact. In addition, the cost-cutting measures initiated in 2011 and 2012 began to take effect this year.

In comparison with 2012, the company suffered a drop in marketing volume, which had a decelerating effect on the results. This was due to the scheduled maintenance work in nuclear production and lower marketing volumes from long-term contracts at Swiss borders.

Furthermore, investments aimed at improving safety in the generation of nuclear power have resulted in increased running costs. Financial performance of the Energy Services business division was slightly below that of the previous year, with the decline in performance most notably recorded in international plant construction.

One-time effects include damages awarded by the court for the system service provider costs unlawfully charged in Switzerland in 2009 as well as impairments for individual projects and supply contracts.

Net debt substantially reduced

As a result of the continued implementation of the divestment programme announced at the end of 2011, Alpiq was able to generate a cash inflow of CHF 512 million in the first half of 2013. This was achieved through the completion of the sale of the 24.6% holding in Repower AG, the disposal of the holding in Romande Energie Holding SA and the transfer of the grid companies to Swissgrid AG.

Because of divestments, a total cash inflow of more than CHF 1.2 billion was achieved. Net debt was reduced to CHF 2.2 billion (previous year: CHF 4 billion) as a result of these divestments, the hybrid bond, and the positive cash inflow from business activities. "Our operating result shows that we made the right decision in dissolving non-strategic holdings and unprofitable businesses, and we intend to maintain this strategy," reports Jasmin Staiblin.

Market environment remains challenging

As a result of its smaller business portfolio following divestments, as well as the regulatory adjustments such as the Spanish Energy Reform Act that has recently entered into force, and the prolonged shutdown of the Gösgen nuclear power plant due to the installation of a new generator, Alpiq anticipates a lower operating result for the full-year in comparison with 2012.

On the one hand, the outlook is difficult to predict due to the political and regulatory framework conditions linked to the upcoming decisions regarding the financing of the decommissioning and disposal fund, and the associated actual costs. On the other hand, energy prices have continued to drop in the current reporting period, falling by more than 20% compared to 2012, whereas charges and grid fees have risen. If this development continues, it will have a negative impact on the intrinsic value of power plant networks and overall profitability of energy companies.

Strategy review process launched

In light of the challenging economic environment, the Alpiq Executive Board and Board of Directors launched an extensive strategy review process in the first half of 2013. "The energy industry is currently undergoing the greatest transformation in the sector's history – energy markets are under pressure and the regulatory environment is unsettled. Alpiq therefore needs to establish a clear medium- and long-term repositioning. We will announce our new positioning during 2014", says Jasmin Staiblin.

Key figures for the Alpiq GroupHalf-year 2013Half-year 2012 *
 Results under IFRSResults of operationsResults under IFRS after exceptional items
Net revenue (CHF millions)4,7916,4976,497
Profit before interest, tax, depreciation and amortisation
(EBITDA) (CHF million)
Profit before interest and tax (EBIT) (CHF million)257 276151
Group profit/(loss) (CHF million)115 128 -34
Energy sales (TWh)50.062 66.027
Employees **7,95111,016

* Restated (IFRS 10/11; IAS 19 revised) **As at cutoff date at the end of the reporting period