Annual Report 2021

Chairman's statement

Increased Dividend Payments to the People of Iceland

Jónas Þór Guðmundsson, Chairman of the board
Jónas Þór Guðmundsson, Chairman of the board

A definite breakthrough in Landsvirkjun‘s operations occurred when the debt ratio became comparable to the indicators used at the sister companies in the Nordic countries. This means that it is no longer necessary to place main emphasis on reducing the debt, thus, creating more flexibility to pay higher dividends to the owner of Landsvirkjun, the people of Iceland.

This milestone is worth celebrating, especially when considering the uncertainty in the operational environment at the beginning of the pandemic in 2020. The operations took a very favourable turn in 2021. Earnings before financial items, which is our frame of reference for the operations performance, increased by 64% year on year. Operating income increased by 23% year on year, and has never been higher.

The improved performance can be traced to vastly improved operational environment for Landsvirkjun and its large industrial end-users. Average prices in the wholesale market for households and smaller companies remained unchanged from 2020, but average prices to large industrial end-users increased by 55%. The price increase is primarily based on favourable external conditions in aluminium- and energy markets and renegotiated agreements with most of the companies. The large industrial end-users now pay prices comparable to that in the countries we like to compare ourselves with. Thus, Landsvirkjun’s improved performance is wholly due to increased revenues from large industrial end-users.

Although economic advantage is important, it is only one factor in sustainable development. Climate- and environmental issues are also important, and finally Landsvirkjun’s operations must benefit the community. Apropos, in 2021 Landsvirkjun established a new Community and Environment Division and commenced work on a new Community Policy. Landsvirkjun is part of the community, and every endeavour is made to ensure that the Company’s operations are in harmony with stakeholders.