Atel once more posts excellent results
In 2007 the Atel Group once more posted excellent results and substantially enhanced corporate value, achieving record figures in terms of revenue and operating result. Consolidated net revenue for the Atel Group rose by 18.7 percent to around CHF 13.5 billion. At CHF 1,005 million, earnings before interest and tax (EBIT) were 31.5 percent higher and at CHF 778 million Group profit was 28.8 percent higher than the previous year's figures adjusted for exceptional effects. Taking into account the exceptional effects, Group profit was 10.9 percent below the 2006 figure. The number of employees rose by 6.7 percent to 9,034 full time positions. Atel CEO Giovanni Leonardi believes that Atel has succeeded "in performing well in line with its strategy as a production-based electricity trader, thereby continuing its long and successful track record."
Energy business: Market opportunities exploited
The energy business recorded higher physical energy sales and consolidated revenue. The results have far exceeded expectations, with Atel growing energy sales by 11.4 percent year-on-year to 129 TWh. Thanks to robust growth, the Energy segment generated revenue of CHF 11.5 billion from sales (+18.4 percent), and earnings before interest and tax (EBIT) of CHF 919 million: an increase of 28 percent excluding last year's exceptional effects. This encouraging increase was also boosted by strong expansion in trading and sales activities across all European markets, in particular those in Italy, France, Scandinavia and Southern/Eastern Europe. The high availability and skilful deployment of power plants at stable production costs also made a respectable contribution to profit. "Our power plants in Eastern Europe stand out on account of their high availability and excellent quality and cost management," commented Reinhold Frank, Head of Northern/Eastern Europe. Positive business performance was also driven by higher market prices in various European countries. Around 30 percent of revenue is generated in the Southern/Western Europe market, 18 percent in Central/Eastern Europe, 12 percent in Northern Europe, and 6 percent in Switzerland. 34 percent is attributable to Europe-wide trading activities. In addition to physical trading, the Atel Group handled financial futures contracts in standard products amounting to 220 TWh of electricity (+9 percent) worth CHF 15.9 billion (+16 percent) in 2007. The profit, including the valuation of positions open on the balance sheet date, amounted to CHF 63 million (2006: CHF 59 million).
Energy Services: Favourable winds thanks to economic upswing
The Energy Services segment posted a marked rise in revenue and profit year-on-year, due to the favourable economic situation in its priority markets of Germany, Switzerland and Italy, coupled with the professionalism of its project management. "The reorganisation and focusing program implemented in recent years is bearing fruit," commented Kurt Baumgartner, CFO of the Atel Group. Atel Installationstechnik Ltd (AIT, Zurich) and the GAH Group (GAH, Heidelberg), members of the Energy Services segment, posted a 20.5 percent increase in revenue to CHF 1,959 million and a 52 percent rise in EBIT from CHF 56 million to CHF 85 million. The growth was primarily organic, specifically due to numerous large orders won in the course of the year, particularly for industrial and power plant projects. The contract for installation of railway technology in the Gotthard base tunnel deserves special mention. Won by the Transtec Gotthard consortium led by AIT, the contract has an order volume of around CHF 1.7 billion. With an unchanged scope of consolidation and in local currency, the segment achieved organic revenue growth of around 15 percent.
EBIT: Operating performance largely offsets exceptional effects recorded in 2006
Consolidated operating profit (EBIT) rose yet again year-on-year to CHF 1,005 million. Excluding the exceptional earnings of CHF 332 million recorded in 2006, EBIT for the Atel Group in 2007 was CHF 241 million or 31.5 percent higher on a like-for-like basis. Strong trading and sales performance, stable production, optimised power plant deployment and the contributions of the Energy Services segment positively impacted the operating result.
Higher Group profit and stronger balance sheet
Excluding the exceptional effects which impacted the 2006 results, Group profit is 28.8 percent or CHF 174 million higher than the comparable 2006 figure. The reported Group profit of CHF 778 million is CHF 95 million or 10.9 percent below the prior-year figure. Instead of a dividend payout, the Board of Directors will propose to the Annual General Meeting a capital reduction of CHF 218 million in the form of a reduction in the nominal value from CHF 20 to CHF 10 per share.
Thanks to the excellent result and prudent investments, the key balance sheet figures have further improved. The equity ratio increased from 33 percent at the end of 2006 to 39 percent as at 31 December 2007, with ratio of net debt to equity dropping from 30 percent to 20 percent. Despite a substantial reduction in financial liabilities, liquidity on the balance sheet date stood at more than CHF 1 billion. Total assets are 68 percent covered by long-term financing.
Outlook for 2008
The Atel Group expects to see a further rise in sales and revenue in the current financial year. Barring any extraordinary events, the Group expects to close 2008 with an operating result on a par with 2007. Business performance in the first few weeks of 2008 indicates that this is a challenging target.
Electricity shortages in Switzerland: Atel supports the Federal Council's energy policy
Atel supports the Federal Council's energy policy aimed at closing the gap between electricity demand and supply. The use of small hydroelectric power stations and wind power will play a key role in Atel's drive to promote renewable energies. Over the next few years Atel aims to invest several hundred million Swiss francs in small hydroelectric power stations and wind farms. With the two companies AIT and GAH in the Energy Services segment, Atel is also ideally placed to tackle energy efficiency. In Switzerland alone, some 2,500 experts are working on modern technologies for energy and building management and services.
Atel CEO Giovanni Leonardi firmly believes that "electricity supplies will only be able to meet demand with the aid of large power plants". To tackle the looming shortage of electricity, he is convinced that the country needs both new power lines and energy-saving measures, both hydro power expansion and energy efficiency initiatives. Finally, efforts to promote renewable energies are just as necessary as new large-scale power plants.
New nuclear power plant: Framework permit application by end of 2008
In addition to measures to enhance energy efficiency and promote the production of electricity from renewable energies, Switzerland requires two to three new nuclear power plants in order to ensure a secure supply of electricity in future without any dependency on imports. Atel is convinced that nuclear power must continue to be part of any future Swiss electricity mix. The company is aiming to obtain broad-based support for future nuclear power plants and, with this in mind, forged ahead in 2007 with a preliminary study for a project in the region of Niederamt/Gösgen, canton Solothurn. Atel is intending to submit a framework permit application before the year is out.
Atel Holding Ltd
Note: The 2008 Annual General Meeting will be held in the Stadthalle, Olten, on 24 April 2008.