Public Power Corporation announced on Thursday that its earnings before tax amounted to € 121.4 m in 1Q2011, compared to € 343.6 m in 1Q2010, a decrease of € 222.2 m (-64.7%), while net income amounted to € 93.3 m, versus € 257.5 m respectively, a reduction of € 164.2 m (-63.8%).
Revenues from electricity sales, including exports, decreased by € 121.3 m (-9%), from € 1,353.9 m in 1Q2010, to € 1,232.6 m, as a result of the decrease in the volume of sales by 2.8% (360 GWh), due to the market share loss in the domestic market (share of 93.4% in 1Q2011 from 98.1% in 1Q2010).
Third party suppliers are estimated to have increased their total sales by 615 GWh (from 246 GWh in 1Q2010 to 861 GWh in 1Q2011).
The change in the volume of sales is analyzed as follows :
- reduction of sales to the residential sector by 0.6%.
- reduction of sales to the agricultural sector by 2.4%.
- reduction of sales to the commercial sector by 16.6%,
- reduction of sales to the industrial Medium Voltage & Low Voltage sector by 2.1%.
- increase of sales to the industrial High Voltage sector by 12.1%.
- increase of sales to other sectors by 1.4 %.
- increase of exports by 116 GWh.
The decrease in payroll costs between 1Q2011 and 1Q2010 amounted to € 67.4 m, mainly as a result of the implementation of Laws 3833/2010 and 3845/2010 and personnel retirements outnumbering hirings.
Operating expenses, excluding depreciation, increased by € 80.3 m (+8.3%) from € 968.1 m in 1Q2010 to € 1,048.4 m.
Commenting on the financial results of the period, Arthouros Zervos, Public Power Corporation’s Chairman and Chief Executive Officer said:
“The first quarter results reflect the increase of the energy balance cost and the negative impact from the remaining distortions in the retail market.
Specifically, as the tariff rationalization has not yet been completed in order to fully address the advantages enjoyed by third suppliers who compete on non-equal terms, the increase of competitors’ sales in the retail market, in selected customer categories, contributed to a large extent, to the 9% decline in our revenues from electricity sales, We expect that with the anticipated adjustments of the tariffs in 2012, tariff distortions will be further contained, supporting the development of healthy competition. In parallel, we focus our efforts on reversing the current trend by adopting a new customer-centered sales philosophy as well as new innovative services to the benefit of our customers.
On the other hand, our payroll costs were significantly reduced by 20%, mainly as a result of the implementation of the relevant legislation as well as the net decrease in the number of employees, whereas, we will continue to focus our efforts on further cost cutting, having set additional savings targets for the year in areas like overtime, travel expenses, third party fees, etc.
For the full year, we expect the decline in revenues from electricity sales to be contained to 3.5% - 4% compared to 2010, with turnover marking app. a 2.5% decline. Assuming Brent oil price of $110/bbl and €/$ exchange rate of 1.37, EBITDA margin is estimated to be in the range of 19%-20%, mainly as a result of a worse energy mix and higher energy costs.
2011 is a year in which PPC needs to timely adapt to the new conditions that are shaping up in the Greek electricity market, promoting the creation of a new Group structure, and the implementation of our strategic priorities, in parallel with specific actions for further cost rationalization and enhancement of operational efficiency, given also the current difficult economic environment.”
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