Warm 2011 reduces gas sales and profits at Nuon

Warm 2011 reduces gas sales and profits at Nuon

Energy company N.V. Nuon Energy reported a net profit of EUR 299 million in the 2011 financial year, excluding incidental items, compared to EUR 342 million in 2010. The gross margin dropped by 11% to EUR 1,336 million as a result of more difficult market conditions, warmer weather, and the sale of the company’s North Sea gas fields. Operating costs in 2011 were EUR 810 million, nearly the same as the previous year. Implementation of the Vattenfall strategy resulted in the sale of Nuon Belgium and the North Sea gas fields. Construction of three new, efficient gas-fired power plants and the Zuidlob wind farm, among other things, increased total investments to over 1 billion euros.

Huib Morelisse, Nuon CEO, commented on the figures: “Our investments in more efficient power plants and renewable energy reached a record level of EUR 1.1 billion in 2011. We expect to put our three new gas plants and the second largest onshore wind farm in the Netherlands into operation soon. The implementation of the strategy of our parent company Vattenfall -aiming at higher efficiency, lower CO2 emissions and focus on core activities- is in full swing. For example, we successfully sold the gas fields in the North Sea and our subsidiary Nuon Belgium with book profits.”
Stable customer base

Nuon’s customer base remained stable in 2011, with 2.3 million electricity contracts and 1.9 million gas contracts. In 2011 Nuon was the first energy supplier to receive the Customer Operations Performance Center certificate. COPC is a world known authority on customer service. Customer satisfaction increased again this year.

Nuon’s energy-related services continued to grow. The number of residential insulation jobs rose sharply from 8,975 in 2010 to 12,629 in 2011. The number of HR boilers sold also increased from 17,648 in 2010 to 19,935 in 2011.

Investing in the energy of the future
Nuon’s investments in 2011 amounted to EUR 1,098 million, representing a 14% increase compared to EUR 959 million in 2010. Along with investments in existing generating capacity and district heating networks, Nuon invested in new, efficient gas-fired power plants in Amsterdam (435 MW), Diemen (435 MW plus thermal energy) and Eemshaven (1,311 MW). These plants can supply power to 3.5 million households.

The “first fires”, or initial testing of the power plants before they are put on the grid, are planned for 2012. The other investments involve a heat transport line under the IJmeer from Diemen to Almere and expansion of the gas storage facility in Epe (Germany). This raises the total natural gas storage capacity in Epe to 280 million m3.

Construction of a nine-kilometre heat transport line from the power plant in Diemen to Nuon’s district heating network in Almere commenced in May 2011 and reached Almere in November 2011. Nuon aims to start delivering heat to 11,000 households and companies in Almere over the heat transport line in May 2012.

In late 2011 Nuon started construction of the Zuidlob wind farm, with a rated capacity of 122 MW. The wind farm will be operational in 2013 and will supply electricity to approximately 88,000 households. Implementation of previously announced land-based wind power projects is proceeding according to plan.The existing wind turbines generated 29% more power in 2011 (526 GWh in 2011 compared to 409 GWh in 2010) than in 2010. This resulted from more wind in the Netherlands compared to 2010 and more effective maintenance and management of the wind turbines.

Nuon’s unique “Sun Island” in Almere” celebrated its first anniversary in June 2011 whilst exceeding energy generation expectations by 10%. That is enough heat for an extra 100,000 hot showers.

Financial position and cash flow
The free cash flow in 2011 was EUR 348 million negative. Cash flows from regular operations (EUR 607 million) and the proceeds from the sale of the North Sea gas fields (EUR 298 million) were lower than the long-term investments in more efficient and cleaner energy provision. The EUR 214 million proceeds from the sale of Nuon Belgium were received in January 2012.

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