HEP Group Reports Net Profit of 762.3 Million Kuna

HEP Group achieved a consolidated net profit of 762.3 million kuna in the first half of this year, a significant improvement compared to the same period last year when the group reported a loss of 320 million kuna, according to the consolidated financial report of HEP Group published on the Zagreb Stock Exchange.

HEP also published an unconsolidated report for the parent company, Hrvatska elektroprivreda (HEP), which recorded a net profit of 971 million kuna in the first six months, while in the same period last year, the net profit amounted to 97.8 million kuna.

In explaining the results of HEP Group, two key factors for the good business performance in the first half of the year are cited: last year’s increase in regulated prices of electricity and thermal energy, which boosted sales revenue in the first half of this year, and excellent hydrology that significantly reduced production and procurement costs of electricity.

Namely, as they state, extremely favorable hydrological conditions with high water inflows, which have lasted since the last quarter of last year, enabled record electricity production in hydroelectric power plants. A production of 5.1 TWh (terawatt-hours, or billion kilowatt-hours) was achieved, which is 3.3 TWh more than in the extremely dry first half of last year, and there was a reduction in production in thermal power plants and electricity imports.

HEP Group’s business revenues in the first half amounted to 7.7 billion kuna, which is nearly 1.1 billion kuna, or 16 percent more than in the same period last year.

At the same time, revenues from electricity sales amounted to 6.6 billion kuna, an increase of 725.1 million kuna, or 13.1 percent, which HEP explains by the approved increase in electricity prices for regulated activities from May 1, 2012, and the export of surplus electricity produced in hydroelectric power plants.

Revenues from thermal energy sales also increased by 117.5 million kuna due to the approved increase in heating prices from December 13 of last year, and revenues from gas sales rose by 20.6 million kuna as the price for distribution was changed and a fixed monthly fee was introduced from May 1, 2012, according to HEP management.

HEP Group’s operating costs amounted to 6.35 billion kuna, reduced by 473 million kuna, or 6.9 percent compared to the first half of last year.

HEP notes that due to the reduction in electricity production in thermal power plants and lower electricity imports, as well as lower prices of coal and electricity, costs of energy fuel and electricity procurement were reduced by 32.5 percent, amounting to 2.5 billion kuna.

As stated, liquidity was satisfactory, and all obligations to suppliers were settled on time. The total indebtedness as of June 30 of this year amounted to 5.7 billion kuna, reduced by 9 percent compared to the beginning of the year, as all short-term loans were repaid, HEP emphasizes.

According to published data, HEP Group’s investments in the first half amounted to 739.4 million kuna, which was invested in replacements, reconstructions, revitalizations of existing energy facilities, construction and preparation for the construction of new energy facilities, and connecting consumers.