Alpiq posts loss due to impairment charges

Alpiq Holding Ltd. (Alpiq Group) closed fiscal 2011 with net revenue unchanged. Before impairment, EBITDA, EBIT and Group profit were well below the prior-year levels at CHF 1.1 billion (-23%), CHF 552 million (-43%) and CHF 258 million (-60%) respectively. Charges totalling CHF 1.7 billion due to impairment, special write-downs and provisions led to a loss of CHF 1.3 billion. To strengthen its financial flexibility, the Alpiq Group launched a comprehensive restructuring programme at the end of 2011.

The energy sector's market environment and framework conditions, coupled with the appreciation of the Swiss franc, had a pronounced impact on the Alpiq Group's results for the 2011 financial year. The negative trend identified since the start of 2011 accelerated significantly in the second half-year, leading to year-end results well below the prior-year levels. Before impairment, EBITDA was 23% lower at CHF 1,131 million (prior year: CHF 1,472 million), EBIT 43% lower at CHF 552 million (prior year: CHF 970 million) and profit 60% down at CHF 258 million (prior year: CHF 645 million). At CHF 13,984 million, revenue remained virtually unchanged despite difficult framework conditions (prior year: CHF 14,104 million).

Due to comprehensive impairment charges, extraordinary write-downs and provisions totalling around CHF 1.7 billion, the Alpiq Group ended 2011 with a loss of CHF 1.3 billion. Equity at 31 December 2011 dropped to CHF 6.2 billion or 35% of total assets, while net debt increased to CHF 4.7 billion due to the financing of ongoing projects. As a result, the net debt/EBITDA ratio at the end of 2011 was 4.1.

Sharp drop in results due to strong Swiss franc and low prices

The energy sector, and with it the Alpiq Group, had to contend with sweeping changes and unforeseen events in 2011. This included the ongoing surplus in capacity across Europe, high fuel costs, low prices and spreads, the persistently strong Swiss franc and below-average hydraulicity in Swiss and foreign hydroelectric power stations. The results were hardest hit in the third and fourth quarters, in tandem with the rapid appreciation of the Swiss franc between May and September 2011.

Cost savings of CHF 100 million and important divestments to reduce debt

The Alpiq Group introduced major cost savings to bring this strong negative trend to a halt. And on 3 November 2011 a comprehensive restructuring programme was launched (see Media Release dated 4 November 2011), the main objectives of which are: cost savings of CHF 100 million; concentration on the core business; simplification of the organisation; and a reduction in net debt through divestments in the CHF 1.5 to 2.0 billion range. Contracts governing the sale of the Edipower stake to Delmi for EUR 200 million were signed on 15 February 2012, and the closing is scheduled for the first half of 2012. Despite difficult market conditions, preparations are under way for further divestments such as the sale of the German-based Alpiq Anlagentechnik Group. The aim of the restructuring is to set the Alpiq Group on course for improved results and lower debt.

At the Annual General Meeting on 26 April the Board of Directors will propose to shareholders a dividend of CHF 2 per share.

Outlook

Due to the difficult framework conditions, the Alpiq Group does not expect any improvement in the short term. Moreover, it expects to close 2012 with a further drop in results versus 2011. For the Alpiq Group the priority is on consistent implementation of the current restructuring and cost reduction programme, debt reduction, and adjustments to the changed framework conditions.

Media representatives will receive detailed information at the Annual Press Conference to be held in Zurich on 6 March 2012.