Comments on the financial results

In the first half of 2024, Repower recorded very good group earnings and improved its equity ratio, despite sharp declines in energy prices and a challenging market environment.

Total earnings

The Repower Group had a successful first six months of 2024, recording a group profit of CHF 78 million compared with CHF 181 million the prior year.

Earnings before interest and taxes (EBIT) were a very good CHF 97 million. While this is less than the historic high of CHF 220 million the previous year, it demonstrates the company’s sustainable positioning in an environment of volatile electricity prices. Repower profited from earlier hedging operations. The Repower Group’s equity ratio is 47 per cent (end of prior year: 43 per cent).

Market environment

The energy markets continued to trend downwards in the first quarter of 2024 and by the end of the first half were in a phase of consolidation. The decline in electricity prices was the result of a combination of lower demand and higher production of renewable energy. The average baseload spot price for the German market on the EPEX Spot exchange, for example, was EUR 70 per MWh in the first six months, compared with EUR 104 in the prior-year comparison period.

Development of sales and gross energy margin

The lower level of prices eroded net sales from goods and services from CHF 1,736 million to CHF 1,211 million. The same applied to energy procured, which declined from CHF 1,379 million to CHF 981 million. The gross energy margin, which Repower defines as the difference between net revenue from energy business and energy procurement, fell from CHF 346 million to CHF 211 million. Gross energy margin relative to net revenues from energy business also declined from 20 per cent to 18 per cent.

Market Switzerland segment

In the Market Switzerland segment the gross energy margin relative to net revenues fell from 29 per cent to 27 per cent and is now running at CHF 148 million (prior year CHF 293 million). The volume of electricity generated was above average, and to a large extent Repower was able to sell the energy from its own power plants at prices hedged in previous years. Despite the higher volumes generated, concession-related charges declined by CHF 4 million, primarily because of lower market-price-dependent remuneration in the form of monetarily compensated free energy. Thanks to the very good trading result, the Market Switzerland segment posted EBIT of CHF 88 million (prior year CHF 228 million).

Market Italy segment

In the first half of 2024, Repower Italia S.p.A. acquired an additional 40 per cent of the shares in Erreci S.r.l. and Erreci Impianti S.r.l. This brings its interest to 70 per cent and gives it control of the two companies, which for organisational purposes are managed in the Market Italy segment. Their 42 employees are predominantly involved in developing solar installations, from procuring the requisite materials and services to building the installation itself, and in reselling energy. The acquisition of the companies’ core business generates cross-selling opportunities, greater customer loyalty and synergies.

Thanks to a positive development in sales, including trading, in the Market Italy segment, the gross energy margin increased by CHF 8 million, up from CHF 55 million to CHF 63 million. Gross energy margin relative to net revenues from energy business thus increased from 6 per cent to 10 per cent. Repower systematically adopts good credit management practices, allowing a CHF 5 million reduction in losses from outstanding receivables versus the first half of 2023. EBIT for the Market Italy segment came to CHF 16 million (prior year around CHF 0 million).

“Other segments and activities” segment

The Other segments and activities segment saw costs remain at the same level. EBIT came to CHF –7 million (prior year CHF –8 million).

Net financial income

Thanks to a year-on-year increase in income from fixed-term deposits, financial income improved to CHF –2 million (prior year CHF –7 million).

Earnings before tax

Earnings before tax came to CHF 95 million, CHF 118 million under the prior year level. Income taxes fell CHF 33 million to CHF 17 million, which translates into an increase in the group’s effective tax rate from 15 per cent to 17 per cent.

Asset situation

Repower’s balance sheet total declined from CHF 2,642 million on 31 December 2023 to CHF 2,475 million. The balance sheet item positive replacement values declined by CHF 156 million.

In the first half of 2024, Repower recorded group earnings of CHF 78 million and distributed dividends totalling CHF 60 million. As the euro has strengthened, assets and profits held in euros have appreciated in Swiss franc terms, resulting in an increase of CHF 8 million in translation differences in the consolidated statement of changes in equity. The acquisition of additional shares in Erreci S.r.l. and Erreci Impianti S.r.l. has led to a CHF 3 million increase in consolidated equity. Repower’s equity now comes to CHF 1,170 million, corresponding to a strong equity ratio of 47 per cent (versus 43 per cent at 31 December 2023).

Liquidity situation

In the first half of 2024, Repower was again able to generate high cash flow from operating activities. Cash flow from operating activities came to CHF 175 million (prior year CHF 206 million).

Cash flow from investing activities came to CHF –43 million (prior year CHF –97 million). This year’s cash outflow is due in particular to investments in tangible assets and fixed-term deposits and the acquisition of the two Erreci companies in the first six months. Fixed-term deposits once again yielded interest, leading to an increase in interest received to CHF 7 million (prior year CHF 2 million).

Cash flow from financing activities came to CHF –117 million (prior year CHF –30 million), significantly higher than the prior year. In the first six months of 2024 there was net reduction in financial liabilities of around CHF 50 million, of which CHF 26 million was attributable to the Market Italy segment and CHF 24 million to the Market Switzerland segment. Repower AG shareholders were paid record-high dividends of CHF 59 million (prior year CHF 37 million).

Cash and cash equivalents declined by CHF 23 million versus the end of the prior year and at the end of the first half of 2024 came to CHF 384 million. Net debt now comes to CHF 170 million (versus CHF 103 million at the end of the prior year).

Outlook

There is a high degree of uncertainty around the development of wholesale electricity prices. Initially, however, prices are likely to remain at a similar level. The electricity market remains volatile. Geopolitical tensions such as the wars in Ukraine and the Middle East may continue to influence the prices of fossil fuels and thus also the price of electricity. Reduced industrial demand for energy may lead to a short-term drop in prices. Record-high summer temperatures and a cold winter, on the other hand, could lead to an increase in demand for electricity and higher prices.

The market remains challenging. A lack of precipitation or a good hydrological situation can be crucial to the performance of a company like Repower that is heavily invested in hydropower. In light of these developments, Repower is monitoring the situation closely and continually taking appropriate measures to seize opportunities and minimise risks.

Repower is in a solid financial position and has a strong focus on sustainability. This strategy will help the company to navigate the current economic uncertainty and assure its future success. Repower has comprehensive technical expertise and the ability to respond flexibly to changes in the market. This gives it a solid foundation for overcoming challenges in the short term and operating successfully in the long term.