Press Release - 26.05.2011

PPC’s Consolidated 1Q2011 Financial Results


                                                                                      PRESS RELEASE

Athens, May 26, 2011 


  • EBT in 1Q2011 amounted to € 121.4 m, 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%).
  • Total electricity demand in Greece, increased in 1Q2011 by 300GWh (+2%) to 15,370 GWh vs 15,070 GWh in 1Q2010. Excluding exports and pumping, electricity demand increased by approximately 1% (142 GWh).
  • PPC’s total electricity sales, including exports, decreased by 360GWh (-2.8%) to 12,304 GWh, while the corresponding revenues declined by 9%. 
  • PPC’s electricity sales and revenues in the domestic retail market decreased by 3.8% (477 GWh) and by 9.6% (€ 129.1 m) respectively.
  • Turnover reached € 1,376.1 m, vs € 1,491.2 m in 1Q2010, a reduction of    € 115.1 m (-7.7%). Turnover includes an amount of € 27.7 m reflecting network users’ contributions for connections to the network (1Q2010: € 48.2 m).
  • In 1Q2011, PPC’s electricity generation and imports, covered 72.8% of total demand, while the corresponding percentage in 1Q2010 was 78.7%, a reduction of 673 GWh. The respective percentage in the Interconnected System, being the market segment practically open to competition was 71.6% vs 78% in 1Q2010.
  • Τhird party thermal generation increased by 1,164 GWh, from 758 GWh in 1Q2010 to 1,922 GWh in 1Q2011, an increase of approximately 154%. In 1Q2011, thermal capacity of 444 MW was installed by one independent power producer.
  • PPC imports decreased to 412 GWh from 449 GWh in 1Q2010 (-8.2%).
  • Concerning RES generation, in 1Q2011 PPC RENEWABLES generated 58GWh compared to 71 GWh in 1Q2010, a decrease of 13 GWh, mainly due to reduced hydro generation. RES generation from third parties amounted to 1,023 GWh in 1Q2011, compared to 1,062 GWh in 1Q2010, a decrease of 39 GWh (-3.7%). Pre tax profits of PPC RENEWABLES amounted to € 2.5 m versus € 3.7 m in 1Q2010.
  • Ηydro generation compared to 2010, which was the best year, in hydro terms, of the last decades, decreased by 60% (1,554 GWh), as water inflows in 1Q2011 were 57% lower than those of 1Q2010, whereas electricity generation from lignite, increased by 819 GWh.
  • In 1Q2011, 34.2% of the Company’s total revenues were expensed for liquid fuel, natural gas, energy purchases third parties fossil fuel and CO2 emission rights, marking an increase of 8.7 percentage points compared to the corresponding 1Q2010 figure, which stood at 25.5%.
  • The expenditure for liquid fuel, natural gas and energy purchases increased by € 96.9 m, an increase of 27.5% compared to 1Q2010, mainly driven by the higher expense for energy purchases (€ 61.9 m) and the increase of the Special Consumption Tax on diesel (€ 19.4 m).
  • The total reduction of payroll cost, including capitalized payroll, between the two periods amounts to € 78 m, of which an estimated € 60.9 m relates to the implementation of Laws 3833/2010 and 3845/2010, as the effects of the relevant legislation were booked starting in 2Q2010. 
  • Payroll expense was also reduced due to the net decline in the number of employees on payroll by 858, to 21,509 on 31/3/2011 from 22,367 on 31/3/2010. The net decline in 1Q2011 amounts to 336 employees on payroll. In addition, the reduction in overtime and shifts expense by € 10.5 m, accompanied with a decrease by 9.1% in hours, despite the lower number of  personnel contributed also to the decrease of payroll expense.
  • ΕΒΙΤDΑ amounted to € 327.7 m in 1Q2011 compared to € 523.1 m in 1Q2010, reduced by € 195.4 m (-37.4%). ΕΒΙΤDΑ margin reached 23.8%, compared to 35.1% in 1Q2010. 
  • Cash flow from operating activities decreased by € 96 m, compared to the corresponding figure in 1Q2010.

 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.”

Analysis of Financial Results

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