The successful overcoming of difficult times and the discharge from insolvency in June this year confirm Hidroelectrica as an aspirational model for other state-owned companies but not only for them. What is the key to this successful restructuring?
After four years of profound transformation, of cost optimization, of increasing the efficient use of revenues, Hidroelectrica has become the most profitable company from Romania. It is an aspirational model for other companies also, as it managed to achieve stellar performances during this period. At the time Hidroelectrica entered insolvency, it was the most indebted company in Romania, and there it is today a model company of the Romanian economy! Therefore, in 2016, Hidroelectrica was awarded the 1-st place in the “Top 100 the most profitable companies in Romania”. This spectacular transition from the most indebted to the most profitable company in Romania meant lots of team work and strategic measures.
What are the main lessons learnt following such a restructuring process entailed by the insolvency procedure, which tranformed Hidroelectrica into a milestone of the National Energy System, a profitable company, with real ambitions of also becoming a regional leader in this sector?
On the first hand, Hidroelectrica’s insolvency proved that companies where the State is a stakeholder can become veritable economic growth engines and pillars of social stability, provided that they have an honest, assumed, and visionary management. Hidroelectrica also learnt the lesson of transparency, in the sense that during these almost four years it has become one of the most transparent companies in Romania as well, an essential condition for both its future stock exchange listing and for its sustainable development. And not the least, the measures implemented throughout the insolvency period, focusing on cost optimization, revenue maximization, re-defining production flows and processes and implementing professional management, have set the premises for Hidroelectrica to obtain exceptional financial results materialized into unmatched high profits.
What are the profit figures foreshadowed for the end of this year? What about the turnover?
The company’s gross profit in 2016 will amount to LEI 1,500 million at a turnover of about LEI 3,400 million.
As a result of cost cutting measures and optimizing activities and flows, how much did the gross profit margin increase in 2016 compared to the previous year?
The gross profit margin will grow from 34% in 2015 to around 44% in 2016.
What are Hidroelectrica’s liquidities now at the end of this year and how did they progress compared to 2015?
We estimate that by the end of the month of December 2016 the liquidities will have reached the amount of about LEI 1.5 billion compared to LEI 1.1 billion in December 2015. Such growth is due to the significant operating revenues and to the loan reimbursements carried out. In July this year, Hidroelectrica distributed its shareholders dividends worth LEI 675 million, related to the profit registered in 2015.
What volume of energy did Hidroelectrica produce during the first 9 months of this year and what figures are expected for the financial review of the year 2016?
During the first 9 months of the year, Hidroelectrica produced 13.3 TWh and, due to a hydraulicity that exceeded the initial forecasts for the month of November for both the Danube and for the interior rivers, the output will surpass 17 TWh by the end of the year.
What can you tell us about the Stock Exchange listing? Do the initial estimates confirm the registered results?
The preparations to list the company on the Stock Exchange are undergoing, all the necessary actions being gradually carried out in collaboration with the selected underwriting syndicate.
Most probably such listing will take place after the situation of the 17 investment projects with multi-purpose functions is clarified in order to be able to obtain the best price per share, Hidroelectrica’s listing being expected to be the greatest privatization ever carried out in Romania.
Through the stock exchange listing, Hidroelectrica aims to consolidate its position in the Romanian energy market, the observance of the already implemented corporate governance rules representing a key factor in insuring the company’s responsible, ethical, and transparent functioning. This is the way that the company will increase as well the trustworthiness of its shareholders, potential investors, business partners, and of all the other interested parties.
How was the year 2016 in terms of the natural factors such as the level of lakes, which have a huge impact upon the process of electricity production?
Overall, the year 2016 was an average year from a hydrological point of view, Hidroelectrica managing to judiciously use the water reserves from lakes.
In what concerns the production profile, Hidroelectrica focused on significantly raising the quality of energy, in the sense that good prices are obtained when you produce as much as required and when required. That is why the high serviceability of energy equipment is the key to the company’s economic growth, but high serviceability means complete knowledge of and focused preoccupation with the way all energy equipment works and is repaired.
What revenues did Hidroelectrica register from the sale of small hydropower plants this year and what is the strategy for 2017 in this sense?
Following that the renewable energy support scheme comes to an end on 31 December 2016, this date being the deadline for the small hydropower plants to have been refurbished and to have started producing electricity, the small hydropower plant Lopatari was sold for an adjudication price of LEI 2,502,717 during the outcry auction organized in May 2016. The company’s strategy is to further continue the process of selling the small hydropower plants, and the time to start a new process will be decided according to the energy market conditions.
What is Hidroelectrica’s strategic vision on developing and modernizing its generation capacities and on raising economic efficiency in the future?
The strategic priorities are analyzed and updated permanently so that Hidroelectrica can live up to the increasingly complex challenges that the energy sector is facing. We are currently focusing on investments to complete the profitable projects for new capacities (a budget of LEI 715 million is allocated for the period of 2016-2019) and to keep existent generation assets viable through upgrades and modernizations. Thus, for 2016-2021, the budget allocated for upgrade/ modernization works totals LEI 2.5 billion.
The maintenance budget for 2016-2021 totals LEI 350 million. In the coming years, we aim to become an important regional player on energy markets while keeping our “100% Green Company” identity. In this sense, we are analyzing several options to boost our presence on new markets and also to strategically diversify our portfolio.