Press release
(Oslo, 15 May 2003) Statkraft Group reported gross pre-tax income of NOK 2,668 million in the first quarter of 2003. After tax, net income was NOK 1,700 million. This was NOK 1,236 million and NOK 773 million respectively higher than in the first quarter of 2002. The improvement in the result is in part due to the high power prices so far this year, but also reflects the fact that the 2002 result was relatively weak at the beginning of the year.
"The levels of Statkraft's water reservoirs were somewhat lower than normal at the beginning of the year, but nevertheless higher than the levels of most other power producers. We attach much important to managing water resources in a proper manner. This resulted in production being slightly lower than normal in the first quarter, but the high electricity prices have contributed to a strong financial result", says Bård Mikkelsen, President and Chief Executive Officer.
Market conditions and the result
The high market prices for electric power at the beginning of the first quarter must be seen in conjunction with the concern for the resource situation that followed the extremely dry autumn we experienced last year. Little precipitation in that period meant that water reservoir levels were low at the beginning of 2003 and in January the average price was NOK 0.524 per kWh. This has gradually fallen during the quarter, in line with water situation forecasts being brighter, and the average price in March was NOK 0.31 per kWh. Since then the price has fallen further, to about NOK 0.25 per kWh.
Compared to the first quarter of last year, electricity consumption declined in the first quarter of this year. This is mainly due the higher prices. Nordic power production was also lower than last year as a result of the resource situation, and 5.8 TWh was imported to the Nordic area. Imported power accounted for approximately 5 per cent of consumption.
Statkraft Group produced 11.9 TWh in the first quarter of 2003. This is 1.8 TWh lower than in the same period last year. Nevertheless, revenues rose as a result of the high prices and in all power production and power sales generated good earnings. Industrial contracts at publicly determined prices account for a good half of production in the period. Statkraft Group's gross operating revenues amounted to NOK 4,321 million compared to NOK 2,779 million in the first quarter of 2002. The parent company, Statkraft SF, increased its operating revenue by NOK 1,237 million to NOK 2,973 million, while the subsidiaries recorded an increase of NOK 305 million to NOK 1,348 million.
Operating income in the first quarter was NOK 2,846 million, compared to NOK 1,453 million in the first quarter of 2002. Statkraft SF contributed a good 75 per cent of the operating income, or NOK 2,202 million. Compared to the first quarter of last year, Statkraft SF's operating income rose by NOK 1,141 million. The subsidiaries' total operating income rose by NOK 252 million to reach NOK 644 million.
The share of the results of associated companies rose by NOK 70 million to NOK 427 million. This increase is a result of Statkraft having acquired 45.5 per cent of the shares in Agder Energi, and increasing its stakes in BKK and Sydkraft. E-CO Vannkraft and Hedmark Energi are not included, as they are no longer considered to be associated companies. Net financial costs rose by NOK 277 million as a result of the acquisitions and totalled NOK 605 million in the first quarter of 2003.
Prospects
Assuming that inflow and market conditions for the remainder of the year are about what they are in a normal year, Statkraft expects that the result of its ordinary operations will be about the same as in 2001 and 2002. However, the power market is volatile and the development in the resource situation and prices will be decisive for earnings. Therefore, there is considerable uncertainty surrounding the development in the financial results.
Statkraft is Norway's largest producer of electric power. The company's own production capacity is a good 42 TWh p.a., or about 1/3 of the country's total hydropower production. Statkraft has a staff of about 2,400, including the subsidiaries Skagerak Energi, Trondheim Energiverk and Statkraft Grøner. The company is Norway's largest land-based taxpayer. Statkraft has ownership interests in the following Norwegian energy companies: BKK, Agder Energi and Fjordkraft. In terms of size the Statkraft Alliance is the third largest in the Nordic production market and the second largest in the Norwegian consumer market.
Enclosure: Income Statement and Balance Sheet for the first quarter of 2003.
