VERBUND AG — Earnings Release 2010

Apr 27, 2010

News Details

Ad-hoc | 27 April 2010 07:59

Österreichische Elektrizitätswirtschafts AG: Q1/2010 Declining Result in a Difficult Market Environment

Österreichische Elektrizitätswirtschafts AG / Interim Report/Interim Report

27.04.2010 07:59

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Verbund, Austria's leading electricity company, presents a declining result
for Q1/2010.

Compared to Q1/2009, sales declined by 8.5% to EUR 806.4 million, the
operating result fell by 24.1% to EUR 194.3 million, and the group result
was down by 39.4% to EUR 119.8 million. The control-specific ratios
displayed the following development: The EBIT margin declined from 29.0% to
24.1%, gearing increased from 91.3% to 131.9% and the operating cash flow
rose from EUR 207.8 million to EUR 225.1 million. Economic Value Added, the
control-specific ratio for value creation within the Verbund Group, sank by
EUR 106.0 million to EUR 24.9 million.

Ratios Unit Q1/2009 Q1/2010 Change
Sales EUR m 881.6 806.4 -8.5%
Operating Result EUR m 256.0 194.3 -24.1%
Group Result EUR m 197.8 119.8 -39.4%
Economic Value Added EUR m 130.9 24.9 -81.0%
Gearing % 91.3 131.9 44.5%
Operating Cash Flow EUR m 207.8 225.1 8.3%

Low wholesale prices and reduced water supply impact result

European wholesale prices for electricity continue to list at a relatively
low level brought about by the reduction in prices for primary energy
sources, low demand for electricity and a low level in CO2 spot market
prices. As part of its hedging strategy, Verbund sells approximately 60% of
its annual own generation a year in advance and the remaining 40% on the
basis of spot market prices and quarterly and monthly forwards. The average
price for year base 2010 electricity forward contracts traded in 2009 was
EUR 49.2/MWh, 30.0% below the level recorded in the previous year. The
electricity spot market price level in Q1/2010 also fell to EUR 41.0/MWh,
representing a 13.5% reduction from Q1/2009. The quarterly and monthly
forwards relevant to the current interim result also listed significantly
below the previous year's level.

In addition to the weak wholesale prices for electricity, the below-average
water supply from rivers had a negative impact on the quarterly result. The
hydro coefficient lay at 0.92 in Q1/2010 and was therefore 8% below the
long-term average and 5% below the value recorded in the previous year.
However, despite the low water supply, Verbund's hydropower generation rose
4.5% to 5,257 GWh. This can be attributed to the purchase of the power
plants on Bavaria's Inn river in August of the previous year and to higher
generation by annual storage power plants. Thermal generation rose 30.1 %
from the previous year to 1,317 GWh. Verbund's portion of the volume at the
POWEO power plant in Pont-sur-Sambre, which began operating at the end of
September 2009, accounts entirely for this increase.

Concentration, frugality and increased efficiency

Because no lasting economic improvement is in sight for Europe at the
present time, concentration, frugality, and increased efficiency are a high
priority for Verbund at this time. Focus and consolidation dominate the
current year. Taking absolute priority will be the Limberg II and Mellach
power plants, which are under construction according to plan, and the
completion of the 380-kV Austrian ring.

Moreover, we are considering further steps to streamline the capital
structure and to improve results. Initial results are the signing
of the syndicate agreement between EVN and Verbund for the Ashta hydropower
plant in Albania. This gives Verbund and EVN each a 50% share in the plant
on the Drin river. Intensive negotiations also continue over a
participation by Bavarian administrative districts, municipalities and
regional authorities in the power plants on the Inn river acquired in
August of the previous year. The sale of an initial tranche of holdings is
close to being finalised.

Outlook

Continued challenges in economic conditions and persistently weak wholesale
prices for electricity lead us to expect a decline in operating result and
group result of about 25% from the previous year for 2010 as a whole.
Dividends will approach a payout ratio of 45% to 50%.

Further information and the interim report 1/2010 can be seen on
www.verbund.at

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@verbund.at

27.04.2010 Ad hoc announcement, Financial News and Media Release distributed by DGAP.
Media archive at www.dgap-medientreff.de and www.dgap.de

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Language: English
Company: Österreichische Elektrizitätswirtschafts AG
Am Hof 6A
1010 Wien
Österreich
Phone: 0043-1-53113-52616
Fax: 0043-1-53113-52694
E-mail: andreas.wollein@verbund.at
Internet: www.verbund.at
ISIN: AT0000746409
WKN: 877738
Indices: ATX
Listed: Regulierter Markt in Frankfurt (General Standard);
Freiverkehr in Berlin, Düsseldorf, München, Hamburg,
Stuttgart; Foreign Exchange(s) Wien

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