Stock exchange release 23 October 2019 at 10:15 a.m. EET
Fingrid Group ? Management?s Review 1 January - 30 September: Profit down as expected due to lower transmission grid fees
Fingrid follows a six-month reporting period as referred to in the Securities Markets Act and publishes management?s reviews for the first three and nine months of the year; the Management?s Reviews contain key information illustrating the company?s financial and other development.
The information presented in the Management?s Review relates to the Fingrid Group?s performance in January-September 2019 and the corresponding period of 2018, unless otherwise indicated. The figures presented here have been drawn up in accordance with International Financial Reporting Standards (IFRS). The Management?s Review is not an interim report in accordance with the IAS 34 standard. The figures are unaudited.
CEO Jukka Ruusunen: ?Finland?s main grid operates reliably ? price differences in the Nordic electricity market raises discussion?
Fingrid?s financial development during the reporting period has proceeded according to plan. Grid service income and cross-border transmission income were clearly lower compared to the previous year, due to the lowering of grid service fees at the beginning of the year. In accordance with the previous earnings guidance, Fingrid Group?s profit for the 2019 financial period, excluding changes in the fair value of derivatives and before taxes, is expected to decrease significantly from the previous year?s level. The company?s excellent cost-effectiveness and moderate investment rate also give us the opportunity to keep grid transmission fees at the current level also next year.
The main grid has operated reliably during the year, with no major disturbances. Major differences in area prices between Finland and other Nordic countries generated plenty of discussion during the summer. In some weeks, the wholesale price of electricity was twice as high in Finland as in Sweden. Fingrid?s cross-border connections have been reliable, but their capacity has not been sufficient to meet market needs and balance price differences. The price differences are mainly due to different generation mix between the Nordic countries. Maintenance work on cross-border connections carried out in September also resulted in major price differences between Finland and Sweden.
Fingrid?s largest ongoing investment project within Finland is the transmission line between Petäjävesi and Oulu, called the Forest Line. The project increases transmission capacity between northern and southern Finland and helps maintain Finland as a single electricity market bidding area. Power line work on the Forest Line will start in autumn 2019, and the entire power line will be completed by autumn 2022. A third AC connection between Finland and Sweden which is important for the Nordic electricity market is proceeding as planned, in co-operation with Sweden?s TSO. The cross-border transmission connection is due for completion in 2025.
Since 2018, Fingrid Datahub Oy has been building a centralised information exchange system for electricity retail markets which was expected to be commissioned in April 2021. In September, Fingrid Datahub Oy, Finland?s Ministry of Economic Affairs and Employment and the Energy Authority announced that the introduction of datahub will be postponed to early 2022. The go-live date had to be postponed after it became evident that some retailers and distribution system operators would not be able to meet the original deadline for datahub?s commissioning. Datahub requires a simultaneous go-live from all market operators.
According to a Pan-European benchmark study by European regulatory authorities, Fingrid is still one of the most cost-efficient transmission system operators (TSO) in Europe. The study included 17 TSOs, and it took into account the scale of operations and operating environment. Fingrid will continue to target more effective and smoother solutions in order to secure high productivity and moderate grid fees also in the future.
|Profit before taxes||76.6||160.2||-52.2||229.0|
|Profit for the period||61.2||127.5||-52.0||183.2|
|Capital expenditure, gross||90.0||64.1||40.5||92.7|
|Net cash flow from operations**||82.8||160.9||-48.6||203.9|
|Interest-bearing net debt||1,058.9||1,008.3||5.0||974.3|
|Balance sheet total||2,118.2||2,064.2||2.6||2,109.9|
|Equity ratio %||31.3||34.8||36.6|
|* Operating profit excluding the change in the fair value of derivatives|
|** Net cash flow from operations, after capital expenditure|
Main business events
Events after the review period
On 2 October, 2019, Fingrid Oyj announced that it would keep grid service fees for 2020 at the current, 2019, level. Fingrid?s operations have a solid foundation and thus grid service fees are expected to remain very moderate also in the future.
On 17 October 2019, Fingrid and the Nordic Investment Bank (NIB) signed a EUR 100 million loan agreement concerning the reinforcing and development of Finland?s transmission grid.
The company has not changed its earnings guidance from what is stated in the January?June interim report of 23 July 2019.
Jukka Ruusunen, President & CEO
+358 30 395 5140 or +358 40 593 8428
Jan Montell, Chief Financial Officer
+358 30 395 5213 or +358 40 592 4419
Fingrid is Finland?s transmission system operator. We secure reliable electricity for our customers and society and we shape the clean, market-oriented electricity system of the future.
Fingrid delivers. Responsibly.
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