Croatia: HEP recorded lower profit in H1 2019

, SEE Energy News

According to unrevised financial statements, Croatian state-owned power utility HEP recorded consolidated net profit of 116 million euros in the first half of 2019, a decrease by 42.3 million euros compared to the same period the year before.

Compared to the same period last year, the first half 2019 was characterized by unfavorable hydrology accounting for 28.2 % in the structure of electricity sources. Hydro generation amounted to 2,929 GWh, which was by 1,496 GWh less than in the first half 2018.

Total electricity demand of the Croatian customers amounted to 8,034 GWh, which was by 39 GWh (0.5 %) less compared to the demand in the same period the year before along with 22 GWh less billed electricity to business customers and 17 GWh less to household customers. Total sales by HEP Group suppliers increased by 211 GWh or 3 % compared to the same period in 2018, accounting for 91.3 % market share in the first six months 2019 compared to 88.2 % in the same period 2018. HEP Opskrba increased its sales by 190 GWh (4.8 %), of which 173 GWh more was sold to business customers. HEP Elektra, which supplies households within the universal service and business customers within the guaranteed service, increased its sales by 21 GWh overall, of which 22 GWh less was sold to households and 43 GWh more to business customers.

Due to unfavorable hydrology, electricity procurement on the market and thermal power plant generation increased by 1,167 GWh (37.8 %) and 310 GWh (23 %) respectively, which resulted in increased operating costs. A total of 4,258 GWh was procured off-system, of which 956 GWh was purchased from incentivized renewable sources and cogeneration, and 3,302 GWh from imports, traders and producers in Croatia. Thermal power plant generation accounted for 1,659 GWh of produced electricity. NPP Krsko supplied 1,504 GWh, which accounted for 14.5 % of available electricity of HEP Group.

Operating income was 1,06 billion euros, an increase by 36.7 million euros (3.6 %) compared to the same period the year before. Income from the sale of electricity increased by 60.8 million euros as a result of HEP’s increased share in the sale to business customers along with a rise of the average selling price to business customers of HEP Opskrba and HEP Elektra and due to increased sale abroad at higher prices of exported electricity. Income from the sale of heat energy and wholesale gas increased by 0.8 million and 2.1 million euros, respectively. Income from the sale of gas to gas customers decreased by 39.5 million euros as a result of supplying gas to a domestic industry customer in the previous year due to which the cost of gas procurement also decreased. All other operating income increased by 12.5 million euros.

In the first half 2019, operating expenses amounted to 919 million euros, an increase by 83.7 million euros (10 %). As a result of the higher production of thermal power plants and a bigger consumption of gas, coal and wood biomass along with a higher price of gas, the cost of electricity and heat production increased by 21 million euros compared to the same period the year before. The cost of electricity procurement rose by 77.4 million euros as a result of bigger imported volumes at a higher price of imported electricity. At the same time, the purchased volumes of incentivized electricity reduced due to a reduced percentage of mandatory purchase as of 1 January 2019. All other operating expenses rose by 11.4 million euros.

Investments were carried out in the amount of 117 million euros, including replacements, reconstructions, revitalizations of existing energy facilities, the construction and construction preparation of new energy facilities, and customer connections. As of 20 June 2019, net debt of HEP Group amounted to 103.5 million euros, a decrease by 23.5 million euros compared to early 2019 as a result of increased cash volume and made payments, which led to a decrease of the total loan and bond-related debt by 12.3 million euros.