EVN AG: Business development in the first half of 2023/24

EQS-News: EVN AG / Key word(s): Half Year Results
EVN AG: Business development in the first half of 2023/24

29.05.2024 / 07:30 CET/CEST
The issuer is solely responsible for the content of this announcement.

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Highlights

  * Sound operating business development based on Strategy 2030 and
    diversified business model

* Continuing high volatility on the energy markets

* Very good wind and water flows for electricity generation

* Installed photovoltaic capacity doubles to approximately 80 MWp

  * Two wind parks currently under construction:
    Sigless-Pöttelsdorf (8.4 MW; repowering), Paasdorf (22.2 MW)

  * Drinking water supplies: Completion of the natural filter plant in
    Obersulz

  * Investments in first half 2023/24 of about EUR 259mn for the
    transformation of the energy system

* Conclusion of EUR 500m green credit line as strategic liquidity reserve

  * External ratings confirmed: Moody's (A1, outlook: stable); Scope Rating
    (A+, outlook: stable)

Energy sector environment

The first half of the 2023/24 financial year was again influenced by very
mild temperatures: For example, March 2024 was by far the warmest March in
Austria since the start of recording. The heating degree total - which
defines the temperature-related demand for energy - in all three EVN core
markets was clearly below the long-term average and, in each case, also
below the comparable prior year period.

Water flows were very positive during the reporting period. The respective
generation coefficients in Austria, North Macedonia and Germany were all
clearly above the long-term average. Wind flows in Austria also exceeded the
long-term average and were substantially higher year-on-year. In Bulgaria,
wind flows were lower than the previous year. The prices for primary energy
carriers and CO2 emission certificates as well as the market prices for base
load and peak load electricity continued to decline as a result of the
weaker economy. The feed-in of renewable energies has become a major
influencing factor for the development of electricity prices and the prices
for CO emission certificates.

Revenue, EBITDA, EBIT and Group net result below previous year

Revenue recorded by the EVN Group declined by 17.7% to EUR 1,805.1m in the
first half of 2023/24. This negative development resulted primarily from the
downward trend in wholesale prices for electricity and natural gas in all
three core markets as well as the resulting effects from the valuation of
hedges. Other contributing factors included the reduced use of the Theiss
power plant for network stabilisation, volume and price effects from natural
gas network sales volumes as well as the lower network tariffs in Bulgaria
which offset the overcompensation for the added costs of network loss
coverage in the previous year in accordance with the regulation methodology.
The international project business also reported a decrease in revenue due
to the largely completed wastewater treatment plant in Kuwait. The decline
in revenue was offset in part by an increase in renewable production and
higher network tariffs for electricity in Lower Austria.

In line with the development of sales volumes and revenue, the cost of
energy purchases from third parties and primary energy expenses fell by
24.1% year-on-year to EUR 777.3m. This reduction resulted chiefly from the
decline in wholesale prices in South East Europe and lower primary energy
costs for electricity and heat generation. The cost of materials and
services fell by 20.8% to EUR 258.9m consistent with the development of
revenue in the international project business.

Personnel expenses, in contrast, rose by 16.8% year-on-year to EUR 225.7m.
The primary reasons were adjustments required by collective bargaining
agreements and an increase in the workforce to 7,496 (previous year: 7,185
employees).

Other operating expenses were 12.6% higher at EUR 113.5m. An impairment loss
of EUR 22.5m was recognised to a receivable from the wastewater treatment
plant project in Budva, Montenegro in the first quarter of 2023/24. It was
based on a judgement issued by the Geneva Court of Arbitration in January
2024 which confirmed payments totalling EUR 41.9m received by WTE in
previous years but did not recognise any further claims. In contrast, the
energy crisis levy on the surplus proceeds from electricity generation was
lower than the previous year due to the decline in market prices and the
adjustment of the deductible amount for the 2024 calendar year.

The share of results from equity accounted investees with operational nature
is still influenced by developments at the energy supply company EVN KG,
which reported a negative contribution of EUR -128.5m in the first half of
2023/24 (previous year: EUR -223.1m). The negative valuation of hedges as of
the closing date was lower in period comparison, and provisions recognised
for contractual supply obligations were utilised. However, intensified
competition and the resulting downward trend in natural gas tariffs led to
an impairment of natural gas reserves purchased in the past to protect
supply security. The challenging framework conditions - above all,
intensified competition, energy savings by customers and increasing feed-in
from customers' own photovoltaic systems - had an additional negative
influence on electricity and natural gas network sales and made the planning
of sales volumes more difficult. In addition, higher year-on-year
contributions were received from the equity accounted investees Burgenland
Energie and Verbund Innkraftwerke. RAG, in contrast, recorded a decline but
in comparison with an above-average prior year. In total, the share of
results from equity accounted investees with operational nature amounted to
EUR -42.9m (previous year: EUR -143.3m).

Based on these developments, EBITDA recorded by the EVN Group declined by
2.9% year-on-year to EUR 453.0m in the first half of 2023/24. The higher
pace of investments led to an increase of 5.3% in scheduled depreciation and
amortisation to EUR 171.3m. In total, EBIT was 7.3% below the previous year
at EUR 281.6m.

Financial results totalled EUR -25.1m (previous year: EUR -27.5m). This
improvement reflected the better performance of the R138 fund and partly
offset the increase in interest expense. In addition, foreign exchange
developments had a stronger influence on financial results in the previous
year. The result before income tax was 7.2% lower at EUR 256.5m. After the
deduction of EUR 33.5m in income tax expense (previous year: EUR 35.2m) and
the earnings attributable to non-controlling interests, Group net result for
the period equalled EUR 199.3m. That represents a year-on-year decline of
8.3%.

Solid balance sheet structure

EVN has a solid and stable capital structure which provides a sound
foundation for the realisation of the extensive investment programme of EUR
700 to 900m annually. These investments will continue to focus on the
network infrastructure, renewable generation and drinking water supplies;
three-fourths of them in Lower Austria. Net debt totalled EUR 1,357.6m as of
31 March 2024 (30 September 2024: EUR 1,364.3m). In April and May 2024 both
external ratings of EVN were confirmed by the rating agencies Moody's (A1,
outlook stable) and Scope Ratings (A+, outlook stable).

The syndicated credit line of EUR 400m of EVN was refinanced prematurely at
the end of April and replaced by a new syndicated sustainability-linked
credit facility of EUR 500m.

Energy. Water. Life. - Developments in the energy and environmental services
business

Energy business

EVN's electricity generation rose by 13.8 % year-on-year to 1,791 GWh in the
first six months of 2023/24. Above-average wind and water flows combined
with capacity expansion supported a 31,0 % increase in renewable generation
to 1.485 GWh. Reduced use of the Theiss power plant for network
stabilisation by the Austrian transmission network operator led to a decline
in thermal generation by 30.4 % to 306 GWh. The share of renewable
generation, in total, improved to 82.9 % (previous year: 72.0 %).

In addition to the commissioning of two wind parks in November 2023, the
commissioning of a large-scale photovoltaic plant in Dürnrohr (23.5 MWp)
took also place in the reporting period. Two further wind parks are under
construction: Sigless-Pöttelsdorf (8.4 MW; repowering) and Paasdorf (22.2
MW). Furthermore, preparations for construction of additional wind power and
photovoltaic projects were started.

Environmental and water business

The focal point of investments in drinking water supplies remains on the
planning and construction of transport and connecting pipelines to further
improve and protect supply security. Construction on the second section as
well as preparations for the third section are proceeding as planned for the
60 km transport pipeline from Krems to Zwettl which will provide long-term
protection for water supplies in the Waldviertel and Weinviertel regions. In
the reporting period the natural filter plant in Obersulz was completed and
construction of a further plant in Reisenberg in the Industrieviertel is in
preparation.

In the international project business, WTE Wassertechnik was working on the
planning and construction of nine projects for wastewater treatment,
drinking water treatment and thermal sewage sludge utilisation in Germany,
Poland, Romania, North Macedonia, Bahrain and Kuwait as of 31 March 2024. In
the reporting period the wastewater plant in Kuwait was completed and a
successful test run took place; about two-thirds of the wastewater treatment
infrastructure was finalised.

Confirmation of the outlook and dividend policy for the 2023/24 financial
year

EVN expects Group net result within a range of EUR 420 to 460m for the
current 2023/24 financial year under the assumption of a stable regulatory
and energy policy environment. This outlook includes the Verbund dividend of
EUR 182m received by EVN in May 2024, i.e. during the third quarter of the
2023/24 financial year. The dividend should equal at least EUR 0.82 per
share in the future, whereby EVN wants its shareholders to appropriately
participate in any additional earnings growth. A payout ratio equalling 40%
of Group net result, adjusted for extraordinary effects, is targeted for the
mid-term.

The Letter to Shareholders on the first half of 2023/24 is available under
www.investor.evn.at.


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29.05.2024 CET/CEST This Corporate News was distributed by EQS Group AG.
www.eqs.com

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   Language:       English
   Company:        EVN AG
                   EVN Platz
                   2344 Maria Enzersdorf
                   Austria
   Phone:          +43-2236-200-12294
   E-mail:         info@evn.at
   Internet:       www.evn.at
   ISIN:           AT0000741053
   WKN:            074105
   Indices:        ATX
   Listed:         Vienna Stock Exchange (Official Market)
   EQS News ID:    1912853

End of News EQS News Service
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1912853 29.05.2024 CET/CEST