ESB profit down almost 18% despite revenue increase

Operating profit at the ESB fell 17.8 per cent during the first six months of 2018 compared with the same period last year, its interim results show.

The State-owned utility, which published its results for the six months to June 2018 on Friday, recorded an operating profit of €244 million compared with €297 million during the first six months of 2017.

However, revenue was up 4.6 per cent to €1.8 billion compared with €1.7 billion over the same period. Profit after interest and tax was down 18.5 per cent from €173 million to €141 million.

The utility said the reduction in profit was primarily due to lower operating profit from its electricity-generation business, which came on the back of lower electricity-generation margins and lower operating profit in Electric Ireland due to higher wholesale energy costs.

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The ESB delivers electricity to 3.1 million customers. The six months to the end of June saw capital investment of €499 million in long-term electricity infrastructure.

ESB group finance director Pat Fenlon said it was a "satisfactory performance in challenging market conditions".

ESB has approved an interim dividend of €30 million in respect of 2018. Total dividends paid to the exchequer over the past decade amount to almost €1.4 billion.

Five main divisions

The group is organised in five main divisions, which are managed separately. ESB Networks recorded an operating profit of €181 million, which is in line with 2017.

Profit at Electric Ireland of €18 million was down €28 million due to “higher energy costs and lower customer numbers”.

Generation and Wholesale Markets recorded profit of €44 million, which is down €43 million as a result of lower wholesale electricity market spreads in the UK, as well as higher operating costs.

Meanwhile, Northern Ireland Electricity Networks (NIE Networks) enjoyed an operating profit of €35 million, which is up €16 million.

Other segments include innovation, corporate centre and the business service centre which provide services to the business segments above. This segment, which includes most of the financing costs of the group, reported an operating loss of €34 million.

That represents a €2 million improvement on 2017, largely due to lower write-downs on financial asset investments.

On Brexit, the utility said the full consequences “will only emerge over the next number of years”.

“While this creates uncertainty, ESB will continue with prudent financial management of its UK assets, which are matched with sterling funding,” it said.

“ESB will continue to monitor the impacts from Brexit and other worldwide socio-political events and take prudent financial management actions, as appropriate, so as to protect ESB’s financial strength.”

In terms of outlook, the ESB said its “stable business profile and its solid financial position ensures it is well positioned to meet the challenges that lie ahead”.

Furthermore, it said it was well equipped to “support its strategic ambition to lead the transition to reliable, affordable, low-carbon energy for the benefit of its customers”.