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BKW Energie AG

BKW Inc: Annual Media Conference 2012
Result impacted by special charges and difficult market environment

2 Documents

Bern (ots)

In the challenging economic and regulatory environment of fiscal 2011, the BKW Group generated lower operating profit. At CHF 2,632.8 million, consolidated operating revenue was 5.6% below the prior-year figure. Low market prices coupled with the strong Swiss franc and, above all, special impairment charges and provisions for new fossil-fuelled thermal power plants, led to an operating profit before depreciation, amortisation and impairment (EBITDA) of CHF 138.1 million. Adjusted for the special charges, EBITDA amounted to CHF 417.9 million, corresponding to a year-on-year reduction of 11.8%. The positive contribution made to results by the Swiss supply business was more than offset by market-related reductions in income from trading, lower energy production volumes and special charges. The lower financial result additionally eroded results, leading to a net loss of CHF 66.2 million. Adjusted net profit amounted to CHF 122.8 million, corresponding to a drop of 46.2% versus the prior year.

In 2011 BKW recorded consolidated operating revenue of CHF 2,632.8 million, representing a 5.6% reduction versus the prior-year period (CHF 2,788.1 million). This decline was attributable in particular to lower electricity prices, the strong Swiss franc and the challenging economic climate. Electricity sales generated by the BKW Group in 2011 fell by 7.9% to 20,721GWh (22,507 GWh). Electricity generation also dropped by 687 GWh to 9,865 GWh (10,552 GWh). Due to the dry spring and summer, electricity generated by hydroelectric power plants fell from 3,743 GWh in the prior year to 3,406 GWh. As a result of work to optimise the SUSAN emergency system, Mühleberg nuclear power plant recorded lower availability in 2011. Total production by nuclear power plants (including purchase contracts) amounted to 5,373 GWh (5,921 GWh). The higher volume of electricity produced by new renewable energies (383 GWh compared to 188 GWh) was unable to offset the aforementioned decline in production. Nevertheless, Mühleberg nuclear power plant recorded an impressive production volume of 2,494 GWh, 16.3% less than the prior year (2,980 million kWh).

Result impacted by special charges When preparing the year-end financial statements, BKW tested its production plants for impairment and identified the need for a correction in the amount of CHF - 317.7 million. These special impairment charges and provisions concern the new fossil-fuelled thermal production plants in Wilhelmshaven, Livorno Ferraris and Tamarete. Adjusting for these special charges, EBITDA amounted to CHF 417.9 million and profit before income taxes CHF 150.4 million. The tax income related to the special charges and provisions amounts to CHF 128.7 million, hence the annual result net effect attributable to the special charges is CHF -189 million. Good Swiss energy business - challenging international environment The Energy Switzerland segment grew total operating revenue by 4.9% to CHF 2,262.8 million. While electricity sales in the supply region remained stable, net sales to external customers rose slightly by 2.1% to CHF 1,175.5 million. However, lower proprietary production, higher energy procurement costs and costs of around CHF 14 million which are no longer recoverable due to the suspension of the general licence application for replacement nuclear power plants weighed down operating profit (EBIT), which fell by 31.1% to CHF 160.2 million. Moreover, the 2010 operating profit contained a positive effect from the reversal of a provision of CHF 28.9 million for onerous energy procurement contracts with partner plants. Sales in Switzerland increased slightly by 0.4% from 8,153 GWh to 8,186 GWh.

The Energy International and Trading business segment posted a 6.9% reduction in total operating revenue to CHF 2,072.1 million. Net sales to external customers fell by 15.8% to CHF 1,144.6 million due to market and currency-related factors. The segment generated CHF 20.0 million in income from proprietary energy trading. This represents a year-on-year increase of CHF 21.0 million and can be viewed as positive in view of the difficult market environment. While revenue from international sales rose by 7.4% to CHF 213.6 million thanks to leveraging opportunities on the balance energy market, the volume of sales fell from 1,838 GWh to 1,630 GWh due to economic factors. Adjusted operating income (EBIT) ended the year with a loss of CHF 40.0 million (compared to the positive result of CHF 44.7 million recorded in the prior year). The reduction in adjusted operating income is primarily attributable to low energy prices, the strong Swiss franc, and the narrower spreads for peak and off-peak energy as a result of changed market structures.

Total operating revenue generated by the Networks business segment improved by 4.2% to CHF 685.5 million, of which CHF 182.9 million is attributable to the grid services business, which saw sales to external customers grow by 9.5%. Operating income ended the year at CHF 120 million. The main drivers of this positive result were the service and infrastructure businesses, which have grown steadily and robustly in the face of various challenges. Operating income doubled year-on-year, primarily because the prior-year figure included special charges of CHF 51 million (additional charges and provisions as a result of ElCom decisions).

Lower adjusted operating profit and negative financial result At CHF 232.0 million, adjusted operating profit (EBIT) was CHF 101.5 million below the prior-year figure. Developments on equity markets, coupled with higher financing costs and the strong Swiss franc, reduced the financial result for 2011 by CHF 32.0 million to CHF - 88.3 million. The main influencing factor was the return on shares in the decommissioning and disposal funds which are measured at fair value. Contrary to the gains of CHF 23.1 million recorded in the prior-year period, the state funds recorded a loss of CHF 1.1 million in fiscal 2011. BKW's adjusted net profit fell year-on-year from CHF 228.3 million to CHF 122.8 million, corresponding to a drop of 46.2%. Ongoing expansion of production capacities - further development of the organisational structure In the year under review, the strategic measures and projects necessary for strengthening the BKW Group's market position were consistently pursued. In this connection, several power plant facilities for new renewable energies were acquired abroad. In response to the changed market environment and increasing pressure on costs, BKW also began formulating a Group-wide productivity and cost reduction programme, the aim of which is to uphold BKW's profitable positioning even under difficult market conditions, and to secure the company's competitive capability for the future. Besides enhancing cost efficiency and increasing productivity, Group-wide personnel measures were adopted and are in the process of being carried out. The workforce reduction is necessitated by adjustments to organisational and process structures within the business divisions in order to leverage potential synergies and enhance both productivity and competitiveness. To reduce costs, third-party service procurement and interfaces to subsidiaries have been optimised. The changeover to the holding structure proceeded according to plan in the period under review. Outlook for 2012 BKW expects no change in the challenging market environment in the current financial year, with energy prices remaining low and greater margin pressure on international markets. Coupled with regulatory requirements and a persistently strong Swiss franc, this will also weigh down the operating result for 2012. The full impact of efficiency enhancements generated by cost reduction measures will not yet be felt. Taking all these factors into account and given the ongoing uncertainties, also on financial markets, operating profit before interest, depreciation and impairment (EBITDA) and net profit for the following financial year may deviate significantly from the adjusted figures for 2011. 2012 Annual General Meeting The Board of Directors will propose a dividend of CHF 1.00 per share to the Annual General Meeting on 11 May 2012. The dividend will be paid out on 21 May 2012. The interim results will be presented on 13 September 2012.

The 2011 annual report and financial report can be downloaded from: www.bkw-fmb.ch/annual-report11

www.bkw-fmb.ch/financial-report11

The statements contained in this press release constitute expectations and forward-looking statements. Because these statements are subject to risks and uncertainties, actual future results may differ materially from those expressed or implied by the expectations and statements. This media release is issued in German, French, English and Italian. The German version is authoritative.

Contact:

BKW Inc.
Media Communications
Phone 031 330 51 07

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