Landsvirkjun‘s Financial Statements

18.02.2021Fjármál

Results reflect the global pandemic.

Key figures from the consolidated financial statements

  • Profit before unrealized financial items amounted to USD 138.7 million compared to USD 176.0 million in the previous year and decreases by 21.2% between years.
  • The profit for the year amounted to USD 78.6 million but was USD 114.9 million in the previous year.
  • Operating revenues amounted to USD 453.5 million and decrease by USD 56.1 million (11.0%) from the previous year.
  • Net debt decreases by USD 15.7 between years and was USD 1,675.8 at year end. Interest expenses decrease by USD 11.9 million between years.
  • Cash flow from operating activities amounted to USD 234.1 million, a decrease of 20.9% from the previous year.

Hörður Arnarson, CEO:

‘’Landsvirkjun’s operations and results were inevitably affected by the pandemic during 2020 which had a substantial effect on the economy in Iceland and the rest of the world. Many of our customers reduced their manufacturing output due to decreasing demand and product prices. There was also a large price decrease in energy markets, although that development saw a reversal late in the year. Some of Landsvirkjun’s energy contracts are linked to aluminium price and electricity price on the Nord Pool market.

The year 2021 starts well as prices on aluminium and Nord Pool markets increase between years. There was a positive development earlier this week when Landsvirkjun signed an amendment to its current power purchase agreement with its oldest customer, Rio Tinto Iceland Ltd., which strengthens the operations of the aluminium smelter over the coming years and ensures the predictability of Landsvirkjun’s revenue stream.

Landsvirkjun is a pillar of the Icelandic economy. We have a great responsibility which is why we have worked hard to improve the company’s debt position over the past decade or so. As a result of this work we can now support our customers by offering them a temporary discount on energy prices and take part in the economic recovery by launching various construction, maintenance and research and development projects nationwide.

Profit before unrealized financial items, which is the measure which best reflects the company’s core operations, decreased by 21% between years. The largest effects of this decrease were due to a reduction in energy sales, special terms for our customers and the connection of aluminium- and Nord Pool prices to our energy prices. Operating revenues decreased by 11% and cash flow from operating activities decreased by 21%. However, it was positive to see that we managed to keep reducing net debt at the same time. The company’s operations went well despite this external turbulence. Power station operations were good. Our customers are increasing productions despite the current economic difficulties and Landsvirkjun sees various future opportunities, for example in green hydrogen production, eco-friendly industrial parks and other green innovation like the Orkídea project in southern Iceland, Blámi on the Westfjords and EIMUR in northern Iceland. The future looks bright despite the current difficulties.“