EuroSibEnergo Group summarizes performance results of the first half of 2011
In the first half of the year 2011 the following key factors had a significant impact on the Company’s business:
• Increase in the share of market liberalization up to 100% (except 15% of electricity supplied on a tariff basis to meet the needs of population and consumers equivalent to this category)
• Growth in prices in the 2nd zone of day-ahead market by 11 % in comparison to the first half of the year 2010;
• Introducing the tariffs on HPP capacity that are significantly lower than the price cap;
• Reducing the cost of the capacity of “forced” generators to the level of the price cap;
• Absence of demand growth in the key region – the Irkutsk region.
At the same time, the Group successfully implemented a series of measures to optimize its debt portfolio, such as issue of three-year commercial papers of Irkutskenergo with more than five times active demand excess and change of conditions of the credit agreement with Sberbank to bring the interest rate to market environment. Also, starting from 2011, due to optimization of Krasnoyarsk HPP performance at the wholesale electric power and capacity market, the average monthly actual capacity sales volume of Krasnoyarsk HPP increased more than twice.
In the first half of 2011, performance indicators were expectedly lower year on year because of abnormally warm weather in 2011 and record water content in 2010, however, they remain above the long-term averages. In six months in 2011, power plants of EuroSibEnergo produced 41.1 billion kWh of energy (- 8.7% over the same period in 2010); hydro power plants (Krasnoyarsk HPP, Bratsk HPP, Ust-Ilimsk HPP, Irkutsk HPP) produced 33.3 billion kWh, heat power plants – 7.9 billion kWh. The volume of heat energy supply by EuroSibEnegro power plants in January-July 2011 was 15,331.0 Gcal (- 11.2% year on year).
The volume of coal production in the sections of the Group was 7.4 million tons, that is 3.8% higher than last year, while Irkutskenergo completely refused from external coal supplies.
Consolidated revenue of EuroSibEnergo (IFRS) for six months in 2011 increased by 17.9% to 51.8 billion rubles. Revenue increase in the first half on 2011 year on year is determined by the well-chosen strategy of the Group’s operations under tightening electric power and capacity market regulations, as well as increase in coal sales. Adjusted EBITDA was 18.2 billion rubles (increase of 35.2% compared to the first half of 2010).
In the first half of 2011, EuroSibEnergo invested 4,903 million rubles in ongoing projects of assets modernization. The key investment projects are: reconstruction of Krasnoyarsk HPP generating unit; continued construction of heating main 6 Angarsk-Irkutsk (“Small South” project); creating private car fleet for coal transportation; organization of external power supply for the Taishet industrial hub, which is now under construction; modernization of Avtozavodskaya TPP (Nizhny Novgorod).
According to the forecasts for 2H 2011, financial highlights of the Group (revenues, EBITDA, net income) will go up as compared to the same period in 2010, while production indicators are expected to be lower than in 2010, but above the long-term annual average levels. Within the framework of investment programs of EuroSibEnergo, preparation of the feasibility report concerning the Lena TPP (1200 MW) construction project will continue; pre-feasibility report concerning the projects of Lower Angara (600-1200 MW) and Trans-Siberian (516-1000 MW) HPPs will be completed in cooperation with Chinese partners.
OAO EuroSibEnegro General Director Eugene Fedorov: Despite the relative decrease in performance, the financial results of the first half of 2011 confirm the appropriateness of the Group strategy in the conditions of tightening market regulations. I am sure that all our investment projects, including those related to reliability growth of the power supply of the country, and strategies of moving the Group’s business to the East will be implemented.
Press service of ОАО EuroSibEnergo
20 September, 2011
September 20, 2011