By Foo Yun Chee
Greece’s monopoly Power utility, the Public Power Corporation announced earlier this week a sharp jump in first-quarter net profits, boosted by higher revenues, increased production at its hydroelectricity plants and a tight leash on operating costs.
Earnings before interest, tax, depreciation and amortization (EBITDA) rose 20.8 percent to 333.9 million euros, with the EBITDA margin improving to 35 percent from 33.3 percent a year earlier. Revenues increased 15 percent to 953.2 million euros. The unaudited results were calculated according to International Accounting Standards (IAS).
Net income amounted to 104.6 million euros, an increase of 52.3 percent. Earnings per share were up 50 percent to 0.45 euros.
“The results were better than market expectations and showed a good picture of the company,” said Alaxandros Boulougouris, energy analyst at P&K Securities. While winter storms wreaked havoc on the country’s roads and agricultural crops, they turned out to be a blessing for PPC, he said.
“Heavy rains boosted PPC’s hydroelectricity production, which comes with almost zero costs. This also insulated the company from the hike in oil prices,” he said. Fuel costs were down 4.1 percent in the first quarter.
PPC’s determination to maintain a tight grip on operating expenditure was reflected in the 12.1 percent cut in operating costs to 619.4 million euros. Personnel costs fell 4.1 percent as retirements reduced the work force by 2.4 percent to 28,500 at the end of the first quarter.
The launch of Tellas, PPC’s telecomunications subsidiary, early this year, resulted in a 9.1 million-euro cost for PPC related to marketing expenditure. Tellas is seen as the biggest threat to dominant operator OTE in the domestic market.
PPC’s cash flow improved 12.8 percent to 291 million euros, after it slashed capital expenditure 20.4 percent to 118 million euros and reduced its debts by 14 percent.
“PPC needs to rationalize its capex as it used to be very excessive in this area in the past,” note market analysts.
A date for a third offering of PPC shares has yet to be determined, Stergios Nezis, chief executive, told a conference call with analysts. Deputy Finance Minister Giorgios Floridis earlier this month said an equity sale is slated for the autumn. (see www.energia.gr report of 21 May 2003).