Uniper Makes Loss, Stays Upbeat over NS2
Uniper, the German energy supplier 47.12%-owned by Finnish utility Fortum, reported a net loss of €521mn ($587mn) in the first nine months of 2018, compared with its 9M 2017 net profit of €782mn.
It said November 13 that the loss was mainly due to a hit of €731mn from the marking to market of commodity derivatives at the balance sheet - caused by higher power prices which will not positively impact profits until after 2018, plus €361mn of impairments on coal-fired plants (see below).
However, unwinding its LNG hedging transactions had a positive impact on adjusted pre-tax earnings (Ebit). Nonetheless these declined by 60% to €386mn in 9M 2018, because of the absence of earnings from Uniper’s divested stake in the Yuzhno-Russkoye gas field in Russia, plus a one-off insurance payment received in 2017 for damage at a Russian power plant.
Uniper also outlined its plans to revive an LNG project at a leading German North Sea port (see separate story).
German NGC hub gas prices – up from €17/MWh at end-Sept 2017 to €25/MWh one year later – had improved margins for its gas storage business. CFO Christoph Delbruck said that, despite storage margins having widened by some €0.30/MWh since the start of winter, it was still very little.
Despite opposition from the US and other criticism, Nord Stream 2 was making continual progress, with 100km laid subsea and pipelay approved in all countries except Denmark. Through end-September 2018, Uniper had provided about €500mn to fund the project. Asked what Uniper might lose if the US imposed sanctions on the project, Delbruck suggested that, in such a case, the project would be completed by Russia and refinanced.
On Nov.12, Reuters reported that current payments to the existing Nord Stream and NS2 that normally go to Gazprom are being diverted to Swiss bailiffs, at the request of Ukraine’s Naftogaz, and cited a Gazprom executive telling Russian news agency TASS that it would contest the injunction allowing the diversion of its proceeds. A Swedish court ruled two months ago that Naftogaz is entitled to recover $2.6bn from Gazprom, overturning its earlier ruling.
Of its 9M 2018 impairments on coal-fired plants of €361mn, Uniper said €270mn was recorded in 1Q 2018 on its German Datteln 4 unit and €91mn in 3Q2018 on its French Provence-4 unit. Delbruck also pleaded for financial incentives from ongoing Germany’s coal commission to replace coal and lignite-fueled plants with new gas-fired capacity, and urged France not to close plants prematurely, and said any early closure of its Dutch Maasvlakte-3 coal-fired plant should be compensated.
Uniper CEO Klaus Schafer remains off work; the company disclosed late July he is being treated for cancer and that this would take several months.