Utility Week

UTILITY Week 27th February 2015

Utility Week - authoritative, impartial and essential reading for senior people within utilities, regulators and government

Issue link: https://fhpublishing.uberflip.com/i/468496

Contents of this Issue


Page 14 of 31

UTILITY WEEK | 27Th FEbrUarY - 5Th March 2015 | 15 Finance & Investment Stock watch 405 385 390 395 400 Drax share price, 24 February 8am 9am 10am 430 380 390 400 410 420 Drax share price, 18 - 24 February 18 Feb 19 Feb 20 Feb 23 Feb 24 Feb Drax shares faced a jittery market after its preliminary 2014 financial results on 24 February. The generator performed above expectations despite lower commodities markets but warned that historic lows on the UK power market could pose a greater challenge for 2015. The share price opened 3 per cent lower than its last close, at 389 pence per share, but recovered within hours to 398p by 10.00 GMT. This week Drax beats forecasts but faces challenges Generator reveals earnings in line with 2013 results, but is vulnerable to market weakness Generation giant Drax posted strong preliminary financial results for 2014 despite the historic collapse in global energy commodities markets, but it warned that continued market weakness could hit earnings in the year ahead. Earnings were £229 million, in line with 2013 results and higher than consensus expectations of £219 million. Net profit – at £96 million – also beat expectations com- pared with the £87 million anticipated by analysts. Also, the company's final dividend of 7.2 pence per share was ahead of the Bloomberg forecast of 6.2p. The results were bolstered by sales through Drax's Haven Power retail arm – £1.1 billion compared with £751 million the year before – but chief executive Dorothy Thompson said internal cost efficiencies have helped. "I am pleased that the key activities within our direct control have gone very well indeed," she said. Management said the outlook for 2015 remains chal- lenging because of downward pressure on coal-fired power profits in the commodities markets. Wholesale gas and power prices remain depressed, and the UK's carbon tax is set to rise. The company continues to transition from coal-fired power to biomass generation, saying it is on track and on budget to complete the conversion of three units in line with original cost guidance of £650-700 million. "We are delivering Europe's largest decarbonisation project while producing 8 per cent of the UK's electric- ity," Thompson said. JA EnErGy Centrica profits dip prompts review Centrica's operating profits plunged 35 per cent last year, forcing the company to cut back on investment and shut its older power plants. In its 2014 financial results, the British Gas parent company said the recent fall in oil and gas prices combined with histori- cally mild temperatures resulted in "a very difficult" year for the company, with its total adjusted operating profit plunging 35 per cent year to £1.746 billion from £2.7 billion the year before. "We are cutting investment and costs in response," said Centrica's newly appointed chief executive Iain Conn. "In addi- tion, given the changed external environment we are reviewing the longer term strategy, and will conclude this by the interim results in July." The company's new strategy will be revealed aer the general election in May and the provi- sional findings of the ongoing CMA sector probe. For more, see p16. EnErGy Scottish Power profits soar 40% Profits rose 41 per cent year on year in Scottish Power's generation and supply business for 2014, to €139.1 million from €81.2 million in 2013. The big six supplier won 10,000 new electricity customers in 2014. Profits were down 17 per cent at the company's UK networks business, SP Energy Networks, from €578.6 million to €479.7 million. Profits were also down in UK renewables (net profit €55.9 million in 2014 compared with €130.6 million in 2013), while Ebitda for the same divi- sion was up from €231.8 million in 2013 to €265.2 million. Scottish Power's first offshore windfarm, the 389MW West of Duddon Sands, began commer- cial operation in October 2014. ELEcTrIcITY Windy weather boosts Greencoat UK windfarm investor Greencoat UK Wind has reported strong returns – despite low wholesale market prices – because of windy weather in the first half of 2014. The year-end net asset value (NAV) for 2014 is 105.5 pence per share although annual output from fund-owned projects came in three per cent below budget. Higher than average UK wind speeds in early 2014 waned in the second half, but output remained in line with expecta- tions to deliver NAV at 8.7 per cent total return over the year. "Greencoat has delivered returns at the top-end of its 8-9 per cent fund target," said analysts at RBC Capital. Drax announced earnings of £229m for 2014

Articles in this issue

Archives of this issue

view archives of Utility Week - UTILITY Week 27th February 2015