MVV Energie comes through crisis year in good shape
Sales exceed three billion euros for first time in past 2008/09 financial year; operating earnings marginally down on previous year - Mannheim-based energy group investing in renewable energies, energy efficiency and cogeneration
The Mannheim-based energy group MVV Energie AG met its quanti-tative targets in the past 2008/09 financial year (1 October 2008 - 30 September 2009), posting sales growth of 20 percent and operating earnings only slightly lower than in the previous year. Dr. Georg Müller, CEO of MVV Energie, thus had reason to be satisfied at this year's Annual Results Press Conference held in Frankfurt on Wednesday. "Our Group has emerged from the crisis year in good shape. We have successfully maintained our position in the market." This underlined the stability as well as the growth opportunities of the company's business model. "With our MVV 2020 strategy project, we have at the same time laid foundations for investments in the future, thus setting a clear course towards further profitable growth adding value to our company," added Dr. Müller. Over the next ten years, the Group would thus be investing Euro 1.5 billion in its key focal areas of renewable energies, energy efficiency and cogeneration and a further Euro 1.5 billion in modernisation measures enabling it to exploit market opportunities and to sustainably enhance its own competitive position.
The implications of the economic and financial crisis also did not leave MVV Energie unaffected in the past 2008/09 financial year. The decline in production due to the economic downturn in virtually all sectors of the economy made itself felt in the form of reduced demand, especially in the electricity business. The company nevertheless managed to increase its external sales (excluding electricity and natural gas taxes) by 20 percent to Euro 3.2 billion, thus exceeding the three billion mark for the first time in its history.
At the same time, the company posted operating earnings (adjusted EBIT) of Euro 239 million following adjustment for valuation items in connection with financial derivatives and a one-off restructuring charge. Consistent with the forecast issued at the beginning of the year, adjusted EBIT were thus 4 percent, and thus only marginally down on the previous year's figure of Euro 249 million. The adjusted net surplus after minority interests reduced from Euro 110 million to Euro 98 million, while adjusted earnings per share decreased from Euro 1.69 to Euro 1.48.
Increased electricity and gas turnover
This sales growth was driven above all by sharp growth in electricity and gas turnover. By introducing new innovative products, MVV Energie more than offset the downturn in volumes caused by the economic crisis in the highly competitive national market for electricity and gas sales to industrial, commercial and secondary distribution customers. Electricity turnover thus grew year-on-year by 7 percent to 18.7 billion kilowatt hours, while gas turnover rose 21 percent to 10.5 billion kilowatt hours.
That adjusted EBIT in the electricity business nevertheless reduced by Euro 29 million to Euro 35 million was due above all to lower revenues from electricity generation, positive one-off income in the previous year and losses incurred on the resale of electricity volumes no longer needed by industrial customers on account of the economic crisis. In the gas segment, on the other hand, MVV Energie managed to boosts its operating earnings by Euro 31 million to Euro 66 million. Earnings here benefited from strong turnover growth due to the successful expansion in nationwide gas sales, as well as from optimised gas procurement for special contract customers and one-off income resulting from the sale of two local gas grids and of a gas cavern at the Kiel subgroup.
Earnings in the district heating segment were affected by the disposal of the district heating shareholdings in Poland, which led sales to decline 3 percent to Euro 294 million and adjusted EBIT to drop 5 percent to Euro 36 million. In the water supply business, the ongoing decline in volumes due to customers' more sparing consumption continued in the past year as well. Turnover thus decreased 3 percent to 52.9 million cubic metres.
Sales in the value-added services segment rose 11 percent to Euro 308 million, while adjusted EBIT declined year-on-year by Euro 2 million to Euro 18 million. At Euro 194 million, sales in the environmental energy segment were at the same level as in the previous year. Adjusted EBIT fell by Euro 10 million to Euro 71 million due to the decline in commercial waste prices and to downtime at the energy from waste plants in Mannheim and Leuna as a result of inspection measures and interruptions to operations.
Unchanged dividend, positive outlook
The positive overall earnings performance allows the Executive and Supervisory Boards to propose an unchanged dividend of Euro 0.90 per share for the past 2008/09 financial year for approval by the Annual General Meeting to be held at Mannheim's Rosengarten Congress Center on 12 March 2010. This is equivalent to an unchanged dividend total of Euro 59.3 million.
The unusual circumstances caused by the economic and financial crisis and the resultant uncertainties, also in terms of future developments in commodity and energy prices, make it difficult to issue any forecast. Following the slight decrease in earnings in the previous year, the company expects its sales and adjusted EBIT in the current 2009/10 financial year to more or less match the previous year's figures.
Irrespective of this, MVV Energie expects to see further change in its market environment due to increasing pressure on costs and competitive pressure, the second phase of incentive regulation, falling energy demand and political climate protection targets. "We are relying on energy efficiency, renewable energies and efficient cogeneration as offering a suitable response to the challenges of the future," explained Dr. Müller. "At the same time, we are also doing our homework so as to achieve further cost savings."
Climate protection offers growth potential
The company CEO sees climate protection targets in particular as harbouring medium and long-term potential for profitable growth at MVV Energie. According to Dr. Müller, this was true both for new product offerings and for the expansion of proprietary electricity generation. With immediate effect, MVV Energie was offering its gas customers the possibility of switching to "Natura Biogas", and thus to an inexpensive supply of gas meeting all of the requirements of renewable heating energy legislation in the state of Baden-Württemberg without having to invest in any new technical equipment.
In the past year MVV Energie generated 18 percent of its electricity from renewable energies, with a further 25 percent attributable to cogeneration. With an aggregate total of 43 percent of its electricity resulting from environmentally-friendly and energy-efficient generation, the company was thus well ahead of the national average of just 24 percent.
"In terms of our investments, focused as they are on the company's further growth, our adjusted equity ratio of 33.9 percent provides us with a good basis for achieving a balanced mix of financing on the capital markets in future as well," added Dr. Müller. The company had thus also been able to fully finance the increased volume of investment in the past financial year, amounting to Euro 255 million, from the company's cash flow from operating activities.
|Key figures of the MVV Energie Group in accordance with IFRS|
|Euro million||2008/09||2007/08||% change|
|Sales excluding electricity and natural gas taxes||3 161||2 636||+ 20|
|Adjusted EBITDA1||385||398||- 3|
|Adjusted EBITA1||239||249||- 4|
|Adjusted EBIT2||239||249||- 4|
|Adjusted EBT2||165||181||- 9|
|Adjusted annual net surplus2||112||123||- 9|
|Adjusted annual net surplus after minority interests2||98||110||- 11|
|Earnings per share in Euro2,3||1,48||1,69||- 12|
|Free cash flow||20||54||- 63|
|Adjusted total assets (as of 30.9.)4||3 566||3 361||+ 6|
|Adjusted equity5||1 208||1 192||+ 1|
|Number of employees (as of 30.9.)||6 053||5 901||+ 3|
|1||excluding non-operative IAS 39 valuation items in connection with financial derivatives|
|2||excluding non-operative IAS 39 valuation items in connection with financial derivatives and excluding one-off charges for write-downs at energy-related services subgroup|
|3||increase in number of shares (weighted annual average) from 65.3 million to 65.9 million due to capital increase|
|4||excluding positive and negative fair values under IAS 39|
|5||excluding net balance of positive and negative fair values under IAS 39|