Results for the Quarter ended 31 March 2002
(London - 21 May 2002) International Power today announces its financial results for the three-month period ended 31 March 2002 and also reports on key developments in 2002.
"I am pleased to report an increase in earnings per share of 31% from Q1 of 2001. These strong results, which reflect the benefits of our geographically balanced portfolio and our focus on efficient asset management, were achieved despite the continuing challenges we face in some of our markets," said Sir Neville Simms, Chairman of International Power.
Financial Highlights
- PBIT up 32% to £107 million from £81 million in Q1 2001
- Earnings per share up 31% to 4.6p from 3.5p in Q1 2001
- Operating cash flow of £106 million up from £49 million in Q1 2001
- Balance sheet strength - Gearing 59%; Debt Capitalisation 37%
North America
Operating profit increased by 158% to £31 million from £12 million in Q1 2001 reflecting 845 MW of additional capacity in commercial operation this year, together with compensation receivable from Alstom (the prime contractor) for lost income relating to the late commissioning and performance recovery of our US CCGT construction programme.
Alstom continues to make progress with the GT24 performance recovery program and 8 of the 14 GT24 units have now successfully completed the first phase on time.
Progress continues on the US construction programme, with another 1,375 MW scheduled to enter commercial operation for the 2002 summer peak.
Our other assets in the region, namely Oyster Creek, Hartwell and Milford are all delivering sound operational and financial performance.
We continue to pursue our two development opportunities in New York. The Brookhaven project on Long Island is progressing well, whilst the environmental review of the Ramapo project has identified wildlife habitat concerns around the proposed site, which have slowed progress. We are working towards securing long-term power sale contracts for both projects.
In general, the US wholesale electricity markets remain weak. However, in Texas summer peak spark spreads have shown some recovery since the beginning of the year. In addition, prices in north Texas are higher than in the south due to transmission constraints and we have contracted forward to take advantage of this differential. In New England, we are substantially hedged for the remainder of 2002.
Europe and Middle East
Operating profit decreased by 15% to £41 million from £48 million in Q1 2001. This was principally driven by the sale of our interest in UFG in July 2001, partially offset by the acquisition of Rugeley. Profit after interest and tax increased marginally in the region.
In the UK, output from our 500 MW gas fired Deeside plant was fully contracted through to 31 March 2002. On 1 April, as a consequence of uneconomic wholesale electricity prices, we mothballed half the capacity at Deeside. The remaining capacity has been sold forward for the summer.
Assets under longer term offtake agreements, namely Rugeley, Pego and Unimar, achieved high levels of availability and continue to deliver solid financial performance. In addition, EOP delivered good financial results, which were attributable to high output and a continuing focus on cost control.
In Abu Dhabi, construction work on the Shuweihat project has commenced. The Al Kamil plant that is under construction in Oman has entered the commissioning phase. Full commercial operation at this plant is now expected to commence in Q3 2002.
In Italy, our greenfield development programme continues with the submission of seven projects for approval under the new permitting process. We are working towards commencing construction on the first of these projects in the first half of 2003.
Australia
Hazelwood, Pelican Point and Synergen all performed well during the quarter, delivering an increase in operating profit of 16% to £29 million from £25 million in Q1 2001. As a result of our forward contracting position in Victoria and South Australia, our profitability increased despite relatively lower pool prices resulting from a very mild summer.
Our proposed SEA Gas pipeline project with Origin Energy to develop a 680km gas pipeline between Victoria and South Australia crossed a significant milestone recently with the signing of a 10-year gas supply contract with BHP Billiton. We expect the project to reach financial close shortly.
Rest of the World
Operating profit increased to £13 million from £3 million in Q1 2001. This increase is principally at Hub Power Company (HUBCO) reflecting the implementation of the settlement agreement. In terms of cash flow, we received £7 million from HUBCO in January as a final dividend for 2001, and a further £12 million in April as an interim dividend for the financial year ending 30 June 2002.
Kot Addu Power Company (KAPCO), Water and Power Development Authority (WAPDA) and International Power signed the settlement agreement on 20 April, confirming the resolution of this longstanding dispute. This agreement should enable dividends to be paid, commencing in the first half of this year.
In Malaysia, the Malakoff plant expansion at Lumut is on track, with 430 MW now operating in open cycle mode. Output generated from this new capacity is being sold to Tenaga Nasional Berhad (TNB) under a long-term power purchase agreement. An additional 210 MW (to bring the total expansion to 640 MW) is expected to be in operation by Q2 2003, at which time the full capacity will be in combined cycle mode.
In March, we completed our exit from Kazakhstan by selling our 50% interest in Karaganda. This sale is in line with our strategy to either resolve or exit from non-performing investments that are outside our core regions.
Outlook
While wholesale electricity prices in some merchant markets remain depressed, signs of some recovery in key markets like Texas are encouraging, particularly when coupled with the pricing differential in the region. Given our geographic spread and the mix of contracted and merchant plant, we remain confident of meeting our overall targets in 2002.
Furthermore, conditions in our industry continue to create opportunities for growth through additions to our portfolio, which should allow us to deliver additional shareholder value in the future.
For further information:
Media contact: Aarti Singhal
(Europe) +44 207-320-8681
Investor contact: Grant Jones
(Europe) +44 207-320-8619
Media & Investor contact: Paul Parshley
(United States) +1 508-922-3124
Notes to editors
International Power plc is a leading independent electricity generating company with over 9,100 MW (net) in operation, 2,015 MW (net) under construction and approximately 6,000 MW (net) in advanced development. Among the countries where International Power has operating facilities are Australia, the United States, the United Kingdom, the Czech Republic, Portugal, Turkey, Malaysia, Pakistan, and Thailand. International Power was created from the demerger of National Power, and its shares began trading independently on the London Stock Exchange and as ADRs on the New York Stock Exchange on 2 October 2000. The ticker symbol on both stock exchanges is "IPR".
Full announcement including financials in PDF format.