State in line for €35m dividend as profit at ESB reaches €60m

Energy group hit by reduction in value of some electricity generating plants

ESB profits were hit by a reduction in the value of its electricity generating plants. Photograph: Eric Luke

ESB profits were hit by a reduction in the value of its electricity generating plants. Photograph: Eric Luke

 

State-owned energy group ESB earned a €60 million profit last year, the company said on Thursday.

The group, which generates electricity and sells it and natural gas to 1.25 million businesses and consumers, pledged to pay a €35 million dividend to the State from its profits.

ESB said that operating profits for the year were €455 million but once-off costs left the figure at €60 million, against a €31 million loss in 2017.

The exceptional charges included a €140 million reduction in the value of two gas-fired power plants, Aghada in Cork and Dublin Bay Power.

Pat Fenlon, the group’s chief financial officer, explained that this reflected a fall in the plants’ profitability.

This resulted from changes to the electricity market and an increased contribution from renewables, which cut both prices and demand for the generators’ output.

“Increased renewables had a dampening effect on prices and also took volume from the plants, so we had lower running and lower profit spreads,” Mr Fenlon said.

The State enterprise invested €1.2 billion during the year on generating plants and its network, allowing it to take on electricity from more diverse sources.

Mr Fenlon described the performance as satisfactory. “ESB continued to focus on delivering long-term value and investing in critical long-term electricity infrastructure for the benefit of our customers, shareholders and the wider economy,” he said.

The €35 million dividend will bring the total payout to the State over the past 10 years to €1.4 billion.

ESB’s revenues rose 6 per cent to €3.43 billion last year from €3.23 billion in 2017, its accounts show.

Mr Fenlon noted that the biggest share of the €1.2 billion it invested during the year went to ESB’s electricity distribution networks in both the Republic and the North.

“That was upgrading the networks and particularly on the smart metering programme,” he added.

ESB also bought significant stakes in wind farms in Irish and British wind farms, including taking full control of Castlepook in Co Cork, from its original partner in the development, State forestry company, Coillte.

Total debt rose 12 per cent to €9.7 billion from €8.6 billion. Long-term bank debt and bonds totalling €4.5 billion accounted for almost half the ESB’s liabilities. Net debt was €4.9 billion.

The group borrowed €500 million and £300 million in two separate bond sales last year.

Overall, the amount the ESB owed to bond holders on December 31st grew to €2.6 billion from €2.3 billion 12 months earlier, reflecting last year’s increased borrowing and the fact that it repaid some existing debt.