E.ON Russia expects lower financial results in 2014
MOSCOW. Jan 21 (Interfax) - E.ON Russia could see a downturn in financial results to International Financial Reporting Standards (IFRS) this year, Ulf Backmeyer, the genco's CFO, told reporters.
"We expect results to deteriorate in 2014. We're slumping a little," he said.
The 2014 results will be impacted by constraints on growth for gas prices, the results of competitive capacity offtake in the second price zone in Siberia and change in the main gas supplier to the Surgutskaya GRES-2 power plant.
But financial results are expected to pick up from 2015 after a third generating unit has been commissioned at the Berezovskaya GRES plant, which is being built in line with a capacity supply agreement, which guarantees return on investment.
As for the gas supply contract, Backmeyer said the company had not managed to extend the exceptionally good terms that it had with Surgutneftegas , " but had found an adequate alternative solution [in its contract with Novatek ]."
He said the Surgutskaya GRES-2 and Berezovskaya GRES power plant were making a significant contribution to the company's work thanks to the relatively low cost of their fuel and shirt transport distance.
As for payments to shareholders, Backmeyer said management would not be deciding on the size of dividends in the framework of approved dividend policy this side of April.
"We discuss this issue with our main shareholder and investors each year during the first quarter, and our position will not be ready before April 2014," he said.
The company has said it plans to pay shareholders between 40% and 60% of net profit to IFRS, but that there was a chance dividends will be higher than 60%.
Regarding E.ON's investment in Russia, he said "you can't get by without a certain guarantee for return of investment." But Russia has still not approved a new model for the electricity and capacity market, and investors "don't believe in stability" in these conditions.
Reports have said E.ON Russia planed similar financial results to 2012 last year, in line with management's previous expectations.
E.ON Russia boosted earnings before taxes, depreciation and amortization (EBITDA) to IFRS by 27% in 2012 to 29.1 billion rubles, net profit 25.1% to 18.3 billion rubles and core revenue - 13.5% to 75 billion rubles.
Germany's E.ON owns 83.7% of E.ON Russia.