Letter to shareholders
Letter to shareholders
Ladies and Gentlemen
The first half of 2022 was dominated by massive price increases on the energy markets. The situation was exacerbated further by Russia’s war of aggression with Ukraine. Prices on the electricity and gas markets were also subject to extreme volatility. Against the backdrop of this energy market turmoil, the Repower Group recorded a solid operating result, generating EBIT of CHF 50 million (prior year CHF 60 million) in the first half of 2022.
Repower Switzerland made an important contribution to earnings with EBIT of CHF 40 million (prior year CHF 21 million). In the first six months, high energy prices had a positive influence on our trading results in Switzerland. At Repower we sell large parts of the electricity generated by our own power plants in advance on the basis of a hedging strategy. This means that the effect of changes in price on results is delayed.
A decline in EBIT in Italy to CHF 15 million (prior year CHF 41 million) was largely offset by positive trading results in Switzerland. Here Repower is benefiting from broad diversification in terms of geographic markets and fields of business. The decline in Italy was due in particular to weaker earnings on the balancing energy market. There was a considerable drop in demand for balancing energy from the Teverola combined cycle gas turbine plant, and the corresponding margin fell by CHF 29 million. Please see the comments on the financial results for more detailed explanations of the semi-annual financial statements.
In the first six months the volume of electricity generated by the hydropower plants in Switzerland came in around 30 per cent lower than the previous year. The main reasons were below-average amounts of precipitation and the sparse snow melt, added to the fact that the successful overhaul of the Campocologno power plant and the ongoing renovation of Robbia power plant led to a reduction in the amount of electricity generated. Meanwhile, electricity production from wind and solar plants in Italy increased by five percent versus the previous year.
Repower interest EVUlution AG received a good response in the marketplace. In the course of a successful financing round, City of Zurich utility Elektrizitätswerk der Stadt Zürich (ewz) was acquired as a new joint shareholder, with EVUlution AG taking over the operations of smart grid solutions AG, an ewz subsidiary. This has created a strong partnership for the development of further innovative grid management solutions.
We expect the unprecedented market upheaval to continue or even increase in the next few months. This means that managing the market, counterparty and liquidity risks will remain the main challenge in the second half of the year as well. Extremely high energy prices and price volatility could have a considerable impact on results.
We’d like to thank everyone involved for their untiring efforts. It is they who make Repower’s success possible in the first place. We would also like to thank our partners for their trusting cooperation. Our heartfelt thanks also go to you, our shareholders, for the trust you place in us and your loyalty to our company.
Dr Monika Krüsi
Chair of the board of directors