The European electricity market continues to undergo a process of
transformation. Reorganising the electricity market involves incorporating
a growing number of new renewable technologies and an increasingly
decentralised generation structure in addition to meeting the new
requirements for power grids and storage capacity. Regulatory intervention
- such as the oversubsidation of new renewable energy sources and an
overallocation of carbon certificates - has resulted in massive market
distortions in recent years, leading to declining electricity wholesale
prices while overall system costs continue to rise. These changes, along
with the increasing digitalisation occurring at all levels of the value
chain, are forcing electricity suppliers to alter their business models to
support new trends.
Thanks to VERBUND's clear strategic approach coupled with consistent
implementation of sustainable restructuring and efficiency improvement in
financial year 2016, the Group has succeeded in continuing to develop its
position as a profitable and sustainable European energy producer and
service provider that is nearly 100% carbon-free. In 2016, 96% of the
electricity generated by VERBUND came from renewable energy sources.
VERBUND significantly reduced debt in 2016 based on the Group's success in
improving free cash flow through a variety of measures. This was also
reflected in the upgrade from "negative" to "stable" in the ratings outlook
for VERBUND AG issued by Standard & Poor's (BBB) and Moody's (Baa2).
The Group's income trend was positive in financial year 2016. EBITDA
increased by 17.5% to EUR1,044.2m and the Group result rose to EUR424.4m,
or 104.3% over the previous year's figure. In both the current and previous
reporting periods, however, earnings were impacted by non-recurring
effects. In 2016, non-recurring income was generated from the settlement of