ESB profits soar to €390m in first six months amid surging prices

Profits at the ESB soared in the six months to the end of June amid surging energy prices. Earnings, including a one-off gain from what it called “exceptional volatility” in global commodity markets, jumped to €390.3 million from €128.4 million a year ago.

The group recorded revenue of almost €3.7 billion, which were up from almost €2.2 billion the year before.

[ Soaring ESB profits to be used to bring down energy costs for families and businesses ]

“The Russian invasion of Ukraine has had, and will continue to have, a significant impact on ESB’s markets and business lines,” the group said. “Wholesale electricity and natural gas prices remain high and volatile and have led to a number of suppliers leaving the markets in Ireland and Britain as well as higher prices for end customers,” it added.

Energy prices in Ireland have been soaring in recent months, with skyrocketing bills for consumers adding fuel to the fire of the cost of living crisis. The ESB-owned utilities supplier Electric Ireland put up its unit prices by 11.35 per cent for electricity and 31.9 per cent for gas last month, less than three months after its last substantial price rise in May. It has announced three price increases so far this year.

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The company recorded a so-called non-cash fair value gain of €161.7 million, up from €20.7 million the year before, driven by surging energy prices on global markets.

“The gain arises as a result of high forward market prices for those commodities relative to contracted prices,” it said. “The fair value gain for the period is presented separately as an exceptional item due to its size and the fact that it does not represent underlying performance during the period.”

Earnings before interest, taxes, depreciation and amortisation amounted to €925 million, which were up from €742 million year on year.

Total comprehensive income for the financial period came to €566.2 million, more than double the year before when it amounted to €259.3 million. Total employee-related costs were up slightly from €256.2 million to €266.5 million.

“Consumer price inflation forecasts have also been revised upwards due to further increases in energy prices along with evidence of upward price pressures for other goods and services,” the group noted.

ESB has a “robust balance sheet” with net assets of €4.6 billion. It said it “continues to deliver strong operating profits” and maintains a “healthy liquidity position” of just under €2.6 billion.

The company said its generation and supply businesses are required to operate separately, so increased profits from ESB’s generation business cannot be used to offset costs incurred by Electric Ireland.

ESB chief financial officer Geraldine Heavey said: “Volatility and high wholesale market prices continue to be a feature of energy markets in 2022.

“In the first six months of 2022, ESB delivered an operating profit before exceptional items of €357 million and capital investment of €532 million.”

Excluding exceptional items, the company reported profits of €248.8 million, up from €167.4 million a year earlier.

ESB Networks’ capital expenditure of €348 million was up €59 million on the year before, mainly due to increased spend on the smart metering programme as well as distribution and transmission network projects.

The roll-out of smart meters in the Republic continued, with more than 850,000 installed by the end of June.

ESB had a 31 per cent share of generation in the all-island market during the period, and a 41 per cent share of electricity supply in the all-island market via Electric Ireland.

ESB Networks owns the distribution and transmission networks in the Republic, while its subsidiary Northern Ireland Electricity Networks owns the distribution and transmission networks north of the Border.