Thursday 23 May 2019

ESB's operating profit tumbles 18pc to €490m

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John Mulligan

John Mulligan

The ESB’s operating profit tumbled 18pc last year to €490m, and the group plunged to a €32m loss after tax after it incurred non-cash write-offs as it slashed the value of its generating assets by €276m.

Its profit after tax before the asset impairment was €209m, while group revenue was flat at €3.26bn.

ESB said it took the "prudent decision" to impair the its generating assets based on the estimated impact on projected revenues from the introduction of the new Integrated Single Electricity Market in May this year, and lower wholesale electricity margins.

"The Integrated Single Electricity Market - a new wholesale electricity market for the Republic of Ireland and Northern Ireland - will introduce a number of fundamental market changes, including an anticipated reduction in revenue for ESB," noted chairman Ellvena Graham.

"This reduction, in addition to other energy margin pressures, has resulted in an exceptional impairment charge for ESB’s generation asset base in 2017," she added.

The fall in operating profit was attributed to higher depreciation costs, a lower energy margin, higher operating, maintenance and employee costs, as well as lower income from investments.

The semi-state company said it invested €867m in energy infrastructure and other investments last year.

Its net debt fell to €4.3bn last year from €4.5bn at the end of 2016.

Chief executive Pat O’Doherty said that in 2017 the ESB "continued to focus on delivering long term value and investing in critical long term electricity infrastructure".

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