Once again it was growth in the energy business (trading and distribution) and positive financial earnings that were responsible for the encouraging result in fiscal 2004. Atel substantially increased its sales in the Italian market – in terms of both volume and value – with the start-up of the Edipower Tolling Agreement. But all Atel's other energy markets contributed to its positive performance. The Energy Services business significantly improved its operating performance, even though the market environment remained difficult. Atel used 2004 to consolidate the strong growth of the last few years both financially and organisationally, resulting in a reinforced capital base and reduced debt. This achieved a further increase in enterprise value. At the beginning of 2005 the Atel Group made various organisational changes, all of which were designed to align its structure still more closely with the market and to lay the foundations for continued development.
Atel's success can be attributed to an advantageous combination of distribution and trading activities, with its own power stations in various countries and a significant electricity grid in Switzerland. This enables the company to operate in all European markets and offer its customers tailored products.
Consolidated sales rise to CHF 7.0 billion The Atel Group's consolidated net sales rose by 32 per cent in 2004 to CHF 7.0 billion. Consolidated earnings before interest, tax, depreciation and amortisation (EBITDA) rose from CHF 616 million to 673 million. Operating profit (EBIT) increased by some 20 per cent over the previous year's figure to CHF 431 million. Atel posted group profits of CHF 339 million in 2004, a rise of CHF 67 million – 25 per cent – over the previous year. Net capital investment totalled CHF 92 million. The Board of Directors is proposing to increase the dividend from CHF 22 to 24 per registered share.
Energy business: success in all regions In the Energy segment the Atel Group generated net sales of CHF 5.5 billion in 2004, 44 per cent more than the previous year. Operating profit (EBIT) in the same period grew by 18 per cent to CHF 433 million. Much of this substantial rise was due to the fact that Atel marketed energy supplies from Edipower stations in Italy for the first time, but growth in trading and sales contributions by all other regions also helped to achieve this encouraging result. Once again Southern Europe was the strongest region, accounting for 36 per cent of sales in the Energy segment. Trading accounted for a quarter of total sales, the Central and Eastern Europe region for 24 per cent. Switzerland contributed 10 per cent and the Northern Europe region 5 per cent. The Atel Group's energy sales volume soared in 2004. The total of 93.3 billion kWh (= 93.3 TWh) in the physical electricity business was 36 per cent ahead of the previous year, while trading transactions with standard products totalled 109 billion kWh in volume and CHF 5.0 billion in value. As in previous years, Atel is reporting trading profits under net sales.
The importance of power stations Atel's own power stations are a major component of this commercial success. Last year Atel commissioned two gas-fired combined power stations in Novara and Vercelli in northern Italy with a joint output of 150 MW. The process of converting the Edipower stations in Italy into modern gas-fired combined power plants and expanding them was completed faster than expected, and they now give Atel generating capacity of around 1600 MW. The availability level achieved by Atel's power stations in the Czech Republic and Hungary in 2004 was outstanding, exceeding expectations. Hydro power stations in Switzerland suffered from below-average river flows, which cut electricity generation by around 10 per cent compared with the previous year. The two Swiss nuclear power stations in which Atel has holdings, at Leibstadt and Gösgen, had anniversaries last year, respectively celebrating 20 and 25 years' operation. They each achieved very high annual production in 2004, making an important contribution to the continuity of supply.
Energy Services segment: increased profits Though the state of the construction industry remained poor, the Energy Services segment posted stable results. Measures initiated some two years ago have largely stabilised costs and perceptibly improved productivity. The GAH Group in Heidelberg and the Atel Installationstechnik Group in Zurich generated joint net sales of CHF 1.4 billion, equivalent to a decline of 7.6 per cent. This was due to changes in consolidation and a decline in the number of employees from 7,038 to 6,858. Consolidated operating profit (EBIT) increased to CHF 21 million from the previous year's figure of CHF 16 million.
Outlook for 2005 In 2005, subject to unforeseen events, Atel expects the Group as a whole to achieve a slight sales increase in terms of both volume and value, operating results maintaining 2004 levels, higher capital investment and a continued improvement in balance-sheet structures.
Aare-Tessin Ltd. for Electricity Corporate Communications
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