In 2019, the company expects to record an increase in operating revenues of 9.3% YoY, a decrease in EBIT of 17% and a decrease in net income of 15%.
As Nuclearelectrica proposed their revenue and cost budget for 2019, we are bringing you some key takes from it. According to the proposed budget, revenues are predicted to increase by 9.3% YoY, amounting to RON 2.4bn. Meanwhile, total revenues are expected to increase by 8.2%.
The level of the revenues is influenced by the provisions of GEO 114/2018 regarding the regulated price of electricity. Therefore, according to the ANRE resolution no. 326/25.02.2019, Nuclearelectrica must sell in 2019 on the regulated market a quantity of electricity of 1,376,963 MWh, at the regulated price of 188.22 RON/MWh (without Tg). This is RON 37 lower than the average weighted price of sale, which the company shall obtain in 2019 on the competition-based market (a price with a high degree of certainty, considering that on the date on which BVC 2019 was drafted, the company had a high percentage of electricity to deliver already contracted).
Therefore, the revenues unachieved due to the application of the provisions of GEO 114/2018 amount to RON 508.6m. Consequently, the percentage of increasing revenues from the budget proposal of 8.2% is distorted by these limitations. The real percentage of increasing the total revenues that could have been considered in the absence of GEO 114/2018 would have been 10.5%.
Operating Revenue (2015 – 2019e) (RON m)
Going further down the P&L, operating expenses are forecast to increase by 17.8%, which would amount to RON 1.9bn. Meanwhile, total expenses are forecast to amount to RON 2bn.
The level of expenses is influenced by the provisions of GEO 114/2018 regarding the increase of the tax payable to ANRE to 0.1% to 2% applicable on the turnover. The increase in the percentage causes additional expenses of RON 404.7m. Consequently, EBIT is expected to decrease by 17%, amounting to RON 445.6m
Besides that, the company estimates an increase in the financial expenses of RON 197.3m.
As a result of everything mentioned above, Nuclearelectrica expects to observe a decrease in net income of 15%, amounting to RON 350m