Weak sterling hits ESB's profits

The State-owned electricity company has published its 2016 results...

Weak sterling hits ESB's profits

Picture by: Brian Lawless / PA Archive/Press Association Images

ESB Group has revealed it suffered a 37% fall in pretax profits last year, as revenues were hit by price reductions and reduced volumes.

Pretax profits came in at €194 million, down from the €307m taken in 2015.

Operating profits also took a near-€40m tumble to €597m – principally due to the fall in the value of sterling-denominated earnings, as ESB has significant power generation and distribution operations in Northern Ireland as well as the Republic. Revenue dropped €117m to €3.2 billion for the year.

A dividend of €116m has been declared, which will go to the Exchequer and bring overall dividend payments close to €1.5bn over the last decade. This was down from €214m in 2015. 

Another dividend of sorts for consumers saw the unit price of electricity fall by 6% in the middle of the year, though some commentators said it could have fallen more sharply given global oil and gas price trends.    

ESB invested €897m in energy infrastructure during 2016. Some €100m of this went on renewable energy projects.

Group finance director Pat Fenlon stated:

"ESB continues to focus on delivering value and investing in critical long term electricity infrastructure for the benefit of our customers, shareholders and the wider Irish economy, and this is enabled by maintaining a strong financial position.

"The future Integrated Single Electricity Market (I-SEM) due to go live in May 2018 presents a degree of uncertainty and will alter how our businesses, in particular G&WM and Electric Ireland, earn revenues and manage risks. An I-SEM project has been established to ensure ESB is ready to respond to these changes.

"The full consequences of Brexit are likely to emerge over the next number of years. While this creates uncertainty, we will continue with prudent financial management of our UK assets, which are matched with GPB funding. We will continue to monitor the impacts from Brexit and other world-wide socio-political events and take prudent financial management actions, as appropriate, so as to protect ESB’s financial strength.

"ESB is well positioned to respond to performance delivery challenges. Such challenges include increased volatility and downward pressure on wholesale energy margins, negotiation and delivery of the regulatory frameworks for our two networks businesses that preserve financial strength and appropriately responding to increasing retail competition."