BKW AG BKW successfully positioned in growth markets
2018 business figures for BKW AG
Bern, 19 March 2019
Despite negative electricity price effects, BKW recorded another very strong operating result in 2018. The key factors in this result were the further development of the Services business, the ongoing expansion of renewable energies and the consistent cost management. Revenue rose by 7% to CHF 2,675 million. At CHF 417 million, the reported operating profit (EBIT) was 10% higher than the previous year's highly positive result. The comparable net profit increased by 11% to CHF 239 million.
in CHF millions | 2017 | 2018 | |
Revenue | 2,503 | 2,675 | +7% |
Reported operating profit (EBIT) | 379 | 417 | |
Comparable operating profit (EBIT) | 368 | 364 | -1% |
Reported net profit | 271 | 203 | |
Comparable net profit | 215 | 239 | +11% |
Despite continued negative effects from electricity prices (CHF -80 million), the operating profit (EBIT) - without the one-off, non-cash effect from the change in the BKW pension fund benefit plan - was just 1% below the previous year's comparable figure, reaching CHF 364 million. The reported net profit was CHF 203 million. This was influenced by the negative performance of the Decommissioning and Waste Disposal Funds, which had achieved excellent returns the previous year. The funds have achieved an average actual yield of well over 2% over the long term. The comparable net profit, adjusted for projected returns from the funds and the one-off effect from the pension fund, amounted to CHF 239 million, 11% more than the previous year.
BKW saw growth in the infrastructure and energy services business once again in 2018. As at the close of 2018 it employed a staff of 7,300 (incl. around 600 apprentices). This means that employee numbers have more than doubled since 2014. BKW invested a total of CHF 485 million. Of this, two thirds went to growth areas and one third into maintenance and replacement of infrastructures, primarily the grid.
BKW offers its shareholders a high, stable dividend. Like last year, the Board of Directors will propose a dividend of CHF 1.80 per share to the General Meeting.
Profitable growth in the Services business
BKW is developing leading energy and infrastructure services. More than two-thirds of the staff now work in the Services business. With CHF 881 million (+20%), Services already contribute over 30% of revenue and thereby increased the EBIT margin to 7% despite acquisition and integration costs. With a significant rise in EBIT of 26%, the Services business is continuing its profitable growth.
The BKW Group is an international network of over 100 companies which is excellently positioned in rapidly growing markets. With its approach of "locally anchored - internationally connected", it offers its customers broad-based skills for forward-looking solutions in the energy and infrastructure area. The Group expects a further boost to growth from the digitalisation of infrastructure. This will transform the way buildings and infrastructure are planned, constructed, used and managed. There is also growing demand for solutions that make urban residential areas intelligent and climate-friendly. Soon three quarters of residents will live in urban regions, which will lead to new challenges for energy efficiency in buildings and forced expansion of energy, water, telecoms and transport infrastructure. The company network of the BKW Group is making a fundamental contribution to sustainable solutions.
Major investments in the energy future
The Grid business reported a slight year-on-year drop in total operating revenue (-4%) to CHF 555 million. The grid remains a stable anchor for BKW. At the same time, the electricity grid is the key to the energy future. In 2018, BKW invested over CHF 120 million in its grid infrastructure. By making the grid intelligent, it is making a major contribution to the restructuring of energy systems and enabling integration of new decentralised renewable energies.
Successful realignment of the Energy business
The Energy business managed to largely compensate for the decline in electricity prices (CHF -80 million). Contributing to this result were trading, qualified sales services with customised electricity products, consistent cost management and increased production of new renewable energies. Overall the EBIT contribution of the Energy business fell by just CHF 16 million.
BKW is aligning its Energy business for the future. It relies on a geographically and technologically diversified complex of power plants throughout Europe. Major investments in new renewable energies are paying off, with production increasing by 10% in this area. The wind farms in France which were connected to the grid in late 2017 made a particularly strong contribution to this result.
The realignment of the Energy business also includes the decommissioning of the Mühleberg Nuclear Power Plant. BKW's largest project achieved a major milestone in 2018 - the official decommissioning order has been received, is legally binding and the decommissioning process is complete. This paves the way for the first decommissioning of a power reactor in Switzerland. The planning and financing of BKW's largest current project is also on track. On 20 December 2019, the Mühleberg Nuclear Power Plant will be taken off the grid to then be safely and efficiently decommissioned.
Outlook
In 2019, the results for the Energy business will be affected by lower electricity prices for the last time. Historically low electricity prices, which continue to impact BKW, will have a significant, negative influence on the results once again in 2019. As in previous years, BKW intends to compensate a large part of this negative influence by successfully managing its energy position and continuing its policy of consistent cost management. It expects stable development in its Grid business with a continued robust contribution to the operating profit. The rapid expansion of the Services business will continue in the 2019 financial year, and BKW expects its contribution to the operating profit to increase further.
For the 2019 financial year, BKW once again expects a comparable operating profit in the range of CHF 320-340 million.
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