Hidroelectrica brags about record results in 2014: 1.2 bn lei profit for Romania's largest electricity producer

Hidroelectrica has posted a turnover of 3.4 billion lei in 2014, the highest ever, likewise the related profit, the electricity producer's obtaining a gross profit of 1.2 billion lei (net profit of 967 million lei). The state-owned enterprise increased its revenues by 10.5 percent compared to the previous year, while it boosted its profit by 33 percent year-on-year.

These record results were achieved in the context of a lower electricity production, 18.4 TWh, compared to the record years 2005 (20.1 TWh) and 2010 (19.8 TWh), yet, the production cost was the lowest in the last five years – 108 lei/MWh.

“If we excluded the impact of the “pole” tax, about 8 lei/MWh, and the tax on the water used of 21 lei/MWh, the cost of the megawatt produced by Hidroelectrica in 2014 would be only 79 lei, which is by far the lowest cost ever recorded by the company”, is stated by a press release.

Between June 2012 and December 2014, Hidroelectrica has reduced its outstanding debts by 82 percent, from 4.3 billion lei to 775 million lei, whilst it has managed to improve its net cash flow from a negative level of 763 million lei to +489 million lei.

“Hidroelectrica's insolvency has overturned the eternal paradigm of the state as a bad manager. State-owned companies can also generate returns, performance, profit and trust provided they are managed by professionals. When the State will understand that it has to entrust the management of its companies to competent, moral and capable professionals, not to those recommended by their political affiliation, then the State will become a good administrator. Then, the state-owned companies will not generate only losses, unemployment, bankruptcy or damaging privatizations, but they will turn into real economic growth engines and pillars of social stability”, commented Remus Borza, the judicial administrator of Hidroelectrica.

He further emphasized that the other energy producers in Romania should follow Hidorelectrica's example and reorganize their operations to reduce costs and implement refurbishment projects, otherwise the State will not be able to sustain the businesses and save them for keeping them competitive on the market.

Hidroelectrica is insolvent again after the decision of the Bucharest Court of Appeal in February 2014 which admitted the appeals of some energy traders against the termination of the bilateral contracts through which they had access to underpriced electricity. In 2013, the first year after coming out of insolvency, the company reported a net profit of 719 million lei following a loss of 508 million euro in the previous year.

2014's net profit margin of 35 percent positions Hidroelectrica as the most performing company across Europe in terms of financial results, overpassing traditional competitors such as Finland's Fortum and Verbund from Austria.