Company Results: Green Profits Rise as Last 2010 Results Come into Focus

A round-up of financial results from the worlds leading renewable energy companies.

DONG

Majority Danish-state owned Dong Energy is a leading wind energy player specialising in the offshore market.

As of end of 2010 it had 1035 MW of on and offshore wind power capacity in operation and 1316 MW under construction.

In 2010 it opened its 48 turbine 173 MW Gunfleet Sands offshore wind farm off the coast of the UK. Earlier in the year the company and its partners began constructing the planned 630 MW 175 turbine London Array project, off the east coast of the UK. When commissioned it will be the largest offshore wind farm in the world, its developers say.

Dong’s revenue, EBITDA and operating cash flows for 2010 showed a significant improvement on 2009 figures, being 11%, 59% and 50% up respectively. The company closed the year with revenues of DKK 54.6 billion (US$10.87 billion) an EBITDA of DKK 14.1 billion ($2.81 billion) and a net profit of DKK 4.5 billion some ($8.6 billion).

Cash flows from operating activities came in at DKK 14.2 billion while net investments for the year totalled DKK 8.6 billion ($1.71 billion).

EBITDA in 2010 benefited from earnings from new and expanded activities, cost reductions in generation, higher energy prices, and price hedging, said the company.

Offshore sub-station at Dong’s UK Gunfleet Sands wind farm (Source: Dong)

The new activities, including especially wind farms and oil fields, contributed DKK 1.1 billion ($219.1 million) in 2010, in line with the outlook in its 2009 annual report, said the company.

Both achieved EBITDA and operating cash flows were ‘regarded as highly satisfactory and were significantly higher than expected at the start of the year, with positive development in all business areas’, it added.

‘Our target is thus to double earnings in the period between 2009 and 2015. DONG Energy’s success in 2010 indicates that it is possible both to perform these two major tasks in relation to society and carry on a profitable and robust business,’ said board chairman Fritz Schur speaking as the results were announced.

‘The continued growth in offshore wind power is a significant element in Dong Energy’s transition to become a more sustainable and renewable energy supply [company] with wind energy and biomass replacing coal,’ said the 2010 annual report.

According to its figures, the company’s installed wind and hydro generation capacity has increased by more than 50% since 2008 and is well on the way to reach an internal target of 3000 MW by 2020, it added.

In its outlook the company said there remains extensive scope for development with wind turbines continually increasing in size and stretching into locations farther out to sea.

Vattenfall

Sweden’s Vattenfall reported a full year 4% rise in net sales to SEK 213.5 billion ($35.4 billion) with operating profits for 2010 up 6.9% to SEK 29.85 billion ($4.94 billion). Excluding items affecting comparability, operating profit rose 27.7% to SEK 39.95 billion ($35.4 billion), while profit after tax for the year decreased 2% to SEK 13.19 billion ($35.4 billion).

Excluding items affecting comparability, profit for the year after tax rose 44.4% to SEK 23.19 billion ($3.84 billion). In Q4 its operating profit decreased 12.8% to SEK 4.94 billion ($818.1 million). Excluding items affecting comparability, operating profit for the same quarter were up 6.7% to SEK 9.73 billion ($1.61 billion).

‘I am pleased to report an improved operating profit for 2010, despite large one-off costs,’ said Vattenfall president and CEO Oystein Loseth. ‘We have increased our production volumes and lowered our operating and maintenance expenses, and with our new business-led organisation,’ he added.

Loseth continued: ‘I see great potential for further efficiency improvement. The market outlook for energy companies continues to be challenging, with stronger pressure on margins and weak growth in demand. It is therefore of utmost importance that we increase the company’s efficiency and concentrate our business to areas in which we have competitive advantages and have or could have a strong position.’

Over the course of 2010 the company achieved a number of key milestones including, in the UK, the granting of rights to develop a 7.2 GW offshore wind farm of the southeast coast of East Anglia in partnership with Iberdrola-owned Scottish Power Renewables. Provided that the necessary regulatory approvals are granted construction is expected to begin in 2015 and will be conducted in stages, said the company.

SunPower

California-headquartered SunPower Corporation designs, manufactures and delivers high efficiency, high reliability solar cells, panels and systems.

In its 2010 annual report the company said it had positioned itself for rapid expansion in both its business divisions and in its manufacturing operations. It plans were ‘executed delivered with exceptional results’, it said, closing the year with full year revenues up 46%, non-GAAP earnings per share up 84% on the previous year and with cash and investments totaling more than $900 million, a healthy balance sheet and strong liquidity.

For 2010, the company recorded revenues of $2.21 billion, up from $1.52 billion in 2009 for a net profit of $178.7 million, up from 2009’s $32.52 million in 2009.

CEO Tom Warner said: ‘Our strong Q4 results and performance substantially exceeded our 2010 plan which we updated after our Sunray acquisition closed last spring.’

SunPower’s revenues were boosted by the sale of 44 MW Montalto solar park in Italy (Source: SunPower)

Warner continued with a more detailed company breakdown: ‘For 2010 both our business segments exceed their plans as we recognised 546 MW for the year. In our residential and commercial, or R&C segment, we added approximately 500 dealers to our global dealer network, ending the year with almost 1500 dealers. We also doubled our North American commercial backlog which gives us clear visibility for revenues and margins in that business for 2011. In our utility and power plant, or UPP, division we met all our project commitment and delivered more than 270 MW globally.’

Further, he said: ‘2010 was also a year when the Sunpower team delivered many important innovations. We announced the world’s first 24% conversion efficiency production solar cell as well as the first 20% panel. We launched our Oasis power plant in the US and Europe which will reduce power plant balance-of-system costs by 25% between 2010 and 2011. We also made significant progress on our low-concentration PV system.’

Also during 2010 the company established a joint venture with AU Optronics for the 1.4 GW Fab III facility in Malaysia.

Of the deal Werner said: ‘Our partnership with AUO combines its high volume, world class manufacturing expertise with our world leading solar technology. Working together, Fab III will produce more megawatts faster, at lower cost, with substantially less cash contribution from SunPower. In 2011, with the ramp up of Fab III, we plan to increase our production by more than 50% compared to 2010.’

Meanwhile, in Italy the company also completed a bond issue for the last two phases of its Montalto solar power plant.

The offering totalling approximately €195 million was rated investment-grade by Moodys and, said the CEO, is indicative of SunPower’s bankability and ability to drive diversified financing options for its projects.

Enel Green Power

Its annual report called 2010 a special year for Enel Green Power with its listings on the Milan and Madrid stock exchanges on 4 November, 2010.

The success of the largest European IPO in the last three years — despite the adverse economic climate — demonstrated all of the potential of Enel Green Power, said the report. ‘We have undertaken to develop in our business plan, the results of which are already evident in the financial statements for 2010,’ it said.

In 2010, Enel Green Power increased its revenues and gross operating margin by 20% and 9%, respectively, compared with the previous year on installed capacity totaling 6102 MW, of which 2539 MW (42%) was hydroelectric, 2654 MW (43%) wind, 775 MW (13%) geothermal and 134 MW (2%) from other renewable resources (solar, biomass and cogeneration). Total revenues including commodity risk management amounted to €1.2 billion, a decline of €5 million on 2009 figures. Of the total, €1.134 billion came from the generation and sale of electricity (€1.163 billion in 2009) and €66 million from other revenues (€42 million in 2009).

The decline of €29 million in revenues from the generation and sale of electricity, in the presence of a rise in the volumes generated and sold, reflected the reduction in average prices, partly due to the expiry of the CIP 6/92 incentive mechanism for the sale of electricity from certain hydroelectric plants, said the company.

Gross operating margin came to €846 million, a decline of €32 million compared with end of December, 2009 (€878 million). Operating income for 2010 totaled €532 million (€573 million in 2009), a fall of €41 million essentially attributable to the decrease in the gross operating margin and greater charges for depreciation of generation plants, said Enel.

The 2010 financial year closed with net income of €344 million, up €22 million on the €322 million posted in 2009, benefiting from a decrease of €43 million in net financial expense and €21 million in lower income taxes.

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