ESB swings from profit to loss due to impact of Covid-19
State-owned company hit with an exceptional impairment charge on British plant
The company said the reduction in operating profits has been driven primarily by the impact of Covid-19.
State-owned ESB slipped into the red during the first six months of the year due to the impact of the Covid-19 pandemic and an exceptional impairment charge in Britain, the company’s interim report shows.
ESB delivered an operating profit before exceptional items of €249 million, which represented a decrease of €45 million on 2019. Revenue was down to €1.8 billion from €1.9 billion.
The company said the reduction in operating profits has been driven primarily by the impact of Covid-19 on its operations as revenue was reduced due to lower demand, while restrictions on capital programmes led to higher net payroll costs being charged.
Overall, the ESB recorded a loss of €66 million for the financial period as compared with a profit of €131.8 million the year before. This was primarily due to an exceptional impairment charge of f €177 million on its Carrington gas fired power plant in Manchester.
It said thermal energy margins have fallen in the period to June 2020 as increased renewable generation on the system and reduced demand due to Covid-19 reduced margins.
The company had net debt of almost €5 billion at the end of June as compared with €5.2 billion at the same time last year. Its total assets were worth €13.7 billion as against €14.2 billion.
ESB Networks expenditure of €269 million was up €40 million “mainly due to increased spend on smart metering non-network and transmission network projects”.
In terms of outlook, it said electricity demand in Ireland fell by about 15 per cent at the height of the lockdown restrictions brought about by the response to Covid-19.
However, demand has recovered since the start of July and is now back in line with or slightly above 2019 comparative levels.
“ESB continues to deliver operating profits (before exceptional items) and maintains a strong liquidity position of €1.6 billion,” it said.
“This means ESB is financially well positioned to meet the challenges that lie ahead and to deliver our strategic ambition to lead the transition to reliable, affordable low-carbon energy for the benefit of our customers.”
ESB chief financial officer Pat Fenlon said: “In the context of an extremely challenging operating environment brought about by the global Covid-19 pandemic, ESB delivered a satisfactory set of financial results.
“As an essential service provider, we remain focused on successfully ensuring the supply of electricity throughout this pandemic, while safeguarding our employees, contractors, customers and the communities in which we serve.
“While electricity demand in Ireland fell by about 15 per cent at the height of the lockdown restrictions brought about by the response to Covid-19, we have seen demand recover and since July is in line with 2019 comparative levels.
“ESB remains well positioned to meet the challenges that lie ahead and to deliver on our strategic ambition to lead the transition to reliable, affordable low-carbon energy for the benefit of our customers.”