Viridian profits rise 70%

Viridian, which yesterday reported a 70 per cent rise in pretax profits, has warned that consumers are facing a "substantial" electricity price increase later this year in the Republic.

The company, which operates the Huntstown power station in north Dublin, reported a 17 per cent increase in turnover for the financial year to March 31st, up to £976 million (€1.4 billion) from £835 million.

Pretax profits rose to £129 million from £76.3 million. Of its £976 million turnover, approximately one-third came from the Republic. The company does not give specific profit figures for the Republic, where it serves corporate customers, but the subsidiary that contains the Huntstown plant, Viridian Power and Energy, reported pretax profits of £24.1 million, down from £25 million.

Chief executive Dr Patrick Haren said he expected the regulator in the South to sanction a "substantial" price increase later this year for the ESB. "It's really a reflection of what's happening on commodity markets more generally," said Dr Haren.

He said Bord Gáis has already signalled a rise of 30-40 per cent and this was also related to increases internationally in oil and gas. He declined to say how much the regulator might sanction for the ESB.

Dr Haren said Energia, the sales arm of Viridian, was experiencing pressure on operating margins because of rises in oil and gas prices. Despite this, there was strong growth in customer numbers in the Republic, up to 18,600 from 11,500 in the same period in 2005.

Dr Haren said it would be "tremendous" if the dispute over the Corrib gas field could be resolved. He said Viridian would have an interest in buying the gas for either of its two power stations. He said he expected a second Huntstown plant to come into operation in autumn 2007. Asked whether this extra capacity would prompt the company to enter the domestic market, he replied: "That is a few years away yet."

Viridian has been the subject of takeover reports over the last few months in Dublin and London, but Dr Haren said this was not the company's focus. "It has all been in the realm of speculation. We don't worry about it too much, we just get on with the job."

The results were broadly in line with market expectations, although the earnings per share performance was a little bit ahead of what many Dublin analysts were predicting. The company is also adding to its revenue by selling gas directly to customers and this produced revenues of £11 million in the year under review.