The operating results in the first quarter of 2016 were the third best in Company history, taking into account core operations (profit before unrealised financial items), in spite of a decrease in earnings compared to the same period last year. Revenues decreased, which can mainly be traced to decreasing aluminium prices and slightly lower electricity sales. The decrease in profit after taxes is mainly due to an increase in unrealised financial expenses, which are calculated items the Company can have limited effect on. Cash generation was good and net debt decreased, in spite of a difficult external environment.
“In light of a difficult environment and uncertainty in foreign markets, it is particularly gratifying that the first quarter of 2016 is the third best in Company history, taking into account profit before unrealised financial items. Operating results reflect the fact that revenues decreased from the same period in the previous year – this is mainly attributable to low aluminium prices.
Power generation has been successful at the beginning of the year – Landsvirkjun’s electricity sales in the first quarter was 3.5 TWh, which is a slight decrease from the same period in 2015.
In the last few years we have focused on decreasing net debt and we are delighted to report that this development continues. Profit before unrealised financial items amounted to USD 37.8 million, a sign of strong core operations and powerful cash generation. This spring, Landsvirkjun and Nordural Grundartangi ehf. reached an agreement on terms to extend the companies’ 161 MW power contract. The agreement is a great milestone in the cooperation between the parties, which now has a successful 20 year history.
Continued low interest rates are another important factor for the operation, but at the beginning of 2016 the Company received the positive news that Landsvirkjun’s credit rating had been upgraded to investment grade. This leads to lower interest expenses, which supports the operation and is a good provision for the future.
Despite a challenging environment in most commodity and energy markets, demand for renewable energy from Landsvirkjun is high from various industries. In order to meet this demand the Company is constructing two new power plants; a geothermal power plant at Theistareykir and an extension of Burfell hydropower plant.”