1
Sales increased by 34.9 % to € 2,878.2 million and the operating result improved disproportionately by 53.0 % to € 806.5 million. The group result rose by 43.5 % to € 501.1 million and we see this as the basis for a strong dividend increase. All of the group’s subsidiaries improved their results, some quite significantly. In addition to being the best year in the history of Verbund, fiscal 2006 brought a number of qualitative changes which we would like to address individually. These changes are the fruit of the restructuring work we carried out over many years. We now know that the hard work was well worthwhile. The completion of the restructuring measures last year was a prerequisite for the successes we achieved this year.
»Our successful internationalization strategy has allowed us to become one of the most profitable energy utilities in Europe.«
We would like to thank all our employees and executives for making this possible. Were it not for their commitment, the initiative they showed and their responsible corporate actions, we would now not be able to present the positive results. Nor would be able to refer to Verbund’s excellent competitiveness – not only in Austria but also on the basis of a European comparison. Today, Verbund is one of the most profitable energy utilities in Europe.
2.5 billion €
Investments until 2011
Due to the growth barriers in the Austrian market, our strategy over the last years has focused on foreign markets. In previous annual reports, we reported on the success of our trading activities as well as on our shareholdings, above all in Italy. In fiscal 2006, we managed to expand our foreign business even further. With shareholdings in France and Greece, we now benefit from the liberalization of the European market and the continuing scarcity of generation resources. Verbund has developed to become a popular partner for local energy utilities that require economic and innovative generation and supply concepts.
Due to the years of experience Verbund has gathered in these markets through its trading business and owing to the fact that the company has always been involved in procurement and sales, the risks associated with this business are, to a very large extent, foreseeable.
»We believe that the fourfold increase in the number of end customers in Austria confirms the Verbund strategy of producing and selling economically efficient, clean electricity.«
We are equally pleased with our success in the Austrian market which has been achieved in the face of fierce competition with other Austrian supply companies and foreign energy groups. In this context, we refer, in particular, to the increase in sales to domestic industrial enterprises. We are the only Austrian supplier that can offer such enterprises a comprehensive group package for all locations in Europe. In addition, we managed to significantly improve our position in the Austrian end customer market. We see the fourfold increase in the number of customers as confirmation of our strategy of producing and selling economically efficient, clean electricity.
+34.2 %
Market capitalization increased
The development of the energy prices, which are now at more or less the same level as before deregulation, does, of course, contribute to the good earnings situation. Account should, however, be taken of the fact that the oil and gas markets were largely responsible for the price level while ten years ago, the market and margins were determined by other prices for primary energy. For this reason, we can conclude that the current success and Verbund’s competitiveness is not a windfall but rather the result of hard restructuring work over many years which has created the efficiency and flexibility that allows us to be competitive in the Western European market and in the transition countries.
»Verbund is well prepared for the future. We are confident that the key ratios will improve once again in 2007, even if the challenges will be enormous.«
The dominant issue in our sector in 2006 was the recent wave of planned M&A activities and mergers between the major European players. Gas Natural wants to merge with Endesa, then e.on also makes a bid for Endesa. GDF and Suez want to merge following a takeover attempt by the Italian ENEL and then Iberdrola puts in a bid for Scottish Power. Parallel to this, there are takeover rumors concerning the second largest German supplier RWE. This is motivated by the growth potential that is created through economies of scale and the desire to enhance negotiating power vis à vis Europe’s powerful primary energy suppliers.
A consolidation of the highly fragmented electricity sector in Austria would also be advantageous. Cost benefits and bundled growth would strengthen the position of the Austrian electricity industry in an expanding Europe in a sustainable manner.
>66 %
Share of sales in foreign markets
Verbund is well positioned for the future. In the coming year, we expect that the key ratios will once again improve significantly. The challenges, however, will be enormous. Tasks already lined up for the Verbund Group include securing the supply of primary energy, expanding generation, enhancing the grid capacities, strengthening our participation in the European market through trade and shareholdings and, last but not least, further enhancing end customer business in Austria. We are confident that Verbund can continue to transform its strengths into market success in the future.
| Dipl.-Ing. Hans Haider | Dr. Michael Pistauer | Dr. Johann Sereinig |
