VERBUND AG — Earnings Release 2010

Mar 2, 2011

News Details

Ad-hoc | 2 March 2011 08:00

VERBUND AG: Declining Results 2010 due to Slump in European Wholesale Prices

VERBUND AG / Key word(s): Final Results/Final Results

02.03.2011 08:00

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As forecast, VERBUND, Austria's leading electricity company, has presented
a declining result for fiscal 2010.

Compared to 2009, sales dropped by 5.0 % to 3,307.9 million EUR, the EBITDA
fell by 15.4 %, the operating result sank by 20.5 % to 828.5 million EUR,
and the group result was reduced by 37.8 % to 400.8 million EUR. The
controlling group ratios developed as follows: The EBIT margin sank from
29.9 % to 25.0 %, the gearing saw an improvement from 140.4 % to 96.8 %,
and the operating cash flow decreased from 968.0 EUR to 778.2 million EUR.

A dividend of 0.55 EUR/share will be proposed at the annual shareholder's
meeting on 13 April 2011. The proposed dividend therewith continues to be
oriented on a dividend payout ratio of 45 to 50 % and amounts to 47.7 % for
2010.

Ratios Unit 2009 2010 Change
Revenue EUR million 3,483.1 3,307.9 -5.0%
EBITDA EUR million 1,251.5 1,059.2 -15.4%
Operating result EUR million 1,042.3 828.5 -20,5%
Group result EUR million 644.4 400.8 -37,8%
Gearing* % 140.4 96.8 n.a.
Operating Cash Flow EUR million 968.0 778.2 -19,6%
(Proposed)
dividend/share** EUR 1.25 0.55 -56,0%

*The key figure has been revised. Previous year figures have been adjusted.
**2009 dividend included a special dividend of 0,25 EUR per share

Water Supply, Wholesale Prices and One-Off Effects Put a Strain on the
Result

The weaker water supply from rivers, in comparison to 2009, has had a
negative impact on the results since VERBUND generates some 90 % of the
electricity in Austria from hydro power. Although, at 0.99, the hydro
coefficient only lay at 1.0 % under the long term average, it was 7.0 %
points under that of the previous year. However, it was possible to
compensate for the inferior, weather-related, generation from the
run-of-river power plants by means of the 2009 acquisition of the Bavarian
Inn power plants. The production of the annual reservoir power plants sank
by 9.7 % on account of the significant decline in inflows compared to 2009.
In 2010, VERBUND generated 26,708 GWh from hydro power, including
procurement rights, amounting to some 1.4 % less than 2009.

By way of contrast, thermal generation rose by 56.9 % to 4,258 GWh. A
determining factor for this was the higher thermal own generation, as well
as the pro-rata production of electricity from the POWEO power plant,
Pont-sur-Sambre, which has been in operation since the end of September
2009.

In addition, the result was considerably influenced by the extremely weak
development of the wholesale prices. Traded in 2009, the relevant prices
for fiscal 2010 of the electricity forward contract, 'Year Base 2010', thus
lay, at an average 49.2 EUR/MWh, 30.0 % below the previous year's level.
The prices for the front year peak contracts, traded in 2009, sank over the
2009 annual average by 29.8 % to 69.8 EUR/MWh. In contrast, somewhat higher
prices were again realised on the spot market in 2010. At 52.1 EUR/MWh,
the average achieved contract price achieved by VERBUND for 2010 was 9.2
EUR/MWh below that of the previous year.

In 2010, the development of VERBUND results were also swayed by one-off
effects. With some 30 million EUR, they had an impact on the operating
result, as well as on the financial result.

Capital Increase Powers Investment in Hydropower

A milestone in VERBUND's history was the capital increase to the tune of
some 1 billion EUR, which was carried out on 24 November 2010. The new
capital enabled the further rapid implementation of the planned investments
on the basis of a solid capital structure and an 'A' rating. The next six
years will see VERBUND investing 2.4 billion EUR in growth projects, such
as the large pumped storage power plants Limberg II in Salzburg and
Reisseck II in Carinthia. In addition, the expansion of Austria's high
voltage grid is being further pushed ahead and investment in Turkey
continued.

Outlook

Based upon an average water supply, roughly the same results are being
anticipated for fiscal 2011. The dividend policy continues to be oriented
on a constant dividend payout ratio of between 45 and
50 % of the group result.

Please find further information and the annual report 2010 on
www.verbund.com

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.com

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Language: English
Company: VERBUND AG
Am Hof 6A
1010 Wien
Österreich
Phone: 0043-1-53113-52616
Fax: 0043-1-53113-52694
E-mail: investor@verbund.com
Internet: www.verbund.com
ISIN: AT0000746409
WKN: 877738
Indices: ATX
Listed: Regulierter Markt in Frankfurt (General Standard);
Freiverkehr in Berlin, Düsseldorf, Hamburg, München,
Stuttgart; Wien (Amtlicher Handel / Official Market)

End of Announcement DGAP News-Service

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