PPC reports losses in Q1 due to exogenous factors

Domestic electricity demand increased by 6.9% in 1Q2017. This increase is mainly attributed to bad weather conditions in the first quarter (especially in January – February) compared to the respective period of 2016. Total electricity demand (including pumping and exports) increased by 9.6%, since, especially in January and to a lesser extent in February, significantly high exports were realised from third parties through interconnections in northern Greece towards Central Europe electricity markets, where prices were more attractive.

PPC’s average retail market share in the Interconnected System, in terms of electricity (GWh) and not in terms of number of clients declined to 87.7% in March 2017 from 92.8% in March 2016, according to LAGIE data. PPC’s average market share, per voltage, was 98.6% in High Voltage, 70.6% in Medium Voltage and 92.1% in Low Voltage compared to 99.7%, 80.7% and 95.8% in March 2016, respectively.

Lignite fired generation in 1Q2017 increased by 19.4% (750 GWh) from 3,862 GWh in 1Q2016 to 4,612 GWh in 1Q2017, while natural gas fired generation increased by 105.3% (1,030 GWh) from 978 GWh in 1Q2016 to 2,008 GWh in 1Q2017.

Group turnover decreased in 1Q2017 by € 43.8 m or 3.1%. Compared to the respective period, revenues in 1Q2017, have been negatively impacted by:

– an expense of € 104.9 m from the new charge of electricity suppliers in order to cover the deficit of the Special Account for Renewables,

– an additional total cost of € 70 m that PPC undertook due to the energy crisis, out of which an amount of € 30 m relates to the aforementioned operation of natural gas fired units burning diesel oil. The amount of € 70 m does not include the cost of using water reserves from the hydro reservoirs in order to address the emergency status on top of the use that would be needed for the normal operation of the electricity system, as well as the additional maintenance cost of the units due to their strain by 50% when operating with diesel oil instead of natural gas.

– € 21.8 m from the sale of electricity in prices which were lower than the System Marginal Price, through NOMEauctions.

On the contrary, revenues were positively affected from the € 58.5 m reduction of bad debt provisions from € 163.3 m in 1Q2016 to € 104.8 m in 1Q2017.

The negative impact from the above mentioned exogenous factors was the main reason for the reduction in the Group’s ΕΒΙΤDΑ by € 221.6 m in 1Q2017 compared to 1Q2016, with the respective margin settling at 9% compared to 24.4%. Excluding this impact, EBITDA in 1Q2017 would be at least € 320.3 m, that is a reduction by only € 24.9 m or 7.2% and the EBITDA margin would be 23.4%.

EBITDAfrom continued operations – excluding IPTO S.A.- amounts to € 81.4 m compared to € 290.5m last year and the respective margin is 6% from 20.8%. Excluding the impact of the abovementioned factors, the Group’s EBITDA from continued operations settles at € 278.1 m, a reduction by only € 12.4 m or 4.3% and the EBITDA margin would be 20.5%.

Based on the above, on a pre-tax level, losses of € 88.1 m were recorded in 1Q2017 compared to profits of € 122.3 m. last year. Correspondingly, net loss amounted to € 67.5 m compared to net income of € 85.6 m.

Group total capex amounted to € 94.2 m compared to € 127.5 m in 1Q2016, while, as a percentage of total turnover it stood at 6.9% compared to 9% in 1Q2016.

Commenting on the key operating and financial results of the period, Mr. Emmanuel Panagiotakis, Public Power Corporation’s Chairman and Chief Executive Officer said:

“In the first quarter of 2017, PPC Group financial results were negatively impacted by exogenous factors which are not in the Company’s control, and in particular they were impacted by the cover of the Special RES account deficit, the negative financial impact from the auctioned quantities of electricity (NOME), and the additional cost borne by PPC due to the energy crisis in December 2016 and January 2017.

Excluding the impact of these factors, the Group would record significant operating profitability close to the level of the respective quarter of 2016.

For the remaining quarters, a rebound of profitability is expected.”