Dutch energy firm Nuon has reported financial results, excluding incidental items, for the third quarter of 2006 that were stable compared to last year despite pressure on the company's gross margin.
Nuon’s net turnover for Q3 2006 increased to E1 billion, up slightly from E999 million in 2005. The increase in the electricity and gas turnover was caused by an increase in supplied volumes and by price increases implemented in January and August 2006 following higher costs of raw materials.
Net turnover for the first three quarters of 2006 increased to E4.2 billion, from E3.6 billion in 2005. Excluding incidental items, the increase amounted to 21%, rising from E3.3 billion in Q3 2005 to E4 million in 2006. This increase was visible across all product groups and, in the case of electricity and gas, was largely driven by the increase in the prices of gas and electricity, in combination with an increase in the supplied volume.
Operating profit for the first three quarters of 2006 increased to E813 million, up from E742 million in 2005.
Profit after taxation for Q3 2006 amounted to E219 million, up from E148 million last year. Excluding incidental items, however, profit after taxation remained virtually unchanged, at E97 million compared to the 2005 figure of E96 million).
Profit after taxation for the first three quarters amounted to E773 million, up from E473 million. Excluding incidental items, profit after taxation for the first three quarters of 2006 increased 63% to E443 million.
The results were realized despite a lower gross margin, which was due to increased purchase prices of gas, electricity and raw materials for the generation of electricity. Gross margin excluding incidental items, expressed as a percentage of net turnover, decreased from 53% in the third quarter of 2005 to 46% in 2006.
Profit for the third quarter was positively influenced by incidental items totaling E122 million after taxation. Operating profit benefited from a positive E9 million movement in the ‘fair value’ of energy commodity contracts (oil, gas, coal, electricity and CO2 emission rights).
In addition, results include expenses of E17 million relating to the development of the new Magnum power station at Eemshaven and to sufferance tax levied by certain municipalities.
Finally, a provision of E128 million was released in the third quarter in favor of the result from discontinued operations. This concerned a provision for possible obligations in relation to non-market-based costs resulting from the sale of a participating interest in the former electricity producer Epon.
Despite a decrease in the gross margin in the third quarter, the financial results are good. This is important, because these results will enable us to invest in a sustainable and affordable energy supply, commented Ludo van Halderen, chairman of Nuon’s management board.
The number of Nuon electricity and gas customers in the Dutch consumer market remained virtually unchanged in the third quarter of 2006. In the business market in the Netherlands, both market share and supplied volume of electricity increased compared to last year. The market share in gas decreased slightly, while the supplied volume increased.
Conditions in the Belgian market remained difficult due to strong competition, which resulted in pressure on the gross margin, while in Germany, where Nuon is building a position in the consumer market, the number of customers increased as a result of customer acquisition activities.