Alpiq Holding AG, Switzerland’s largest energy producer, plans to cut 450 jobs and expects a “substantial net loss” this year after booking about 1.7 billion francs ($1.9 billion) in provisions and impairments.
The “sweeping measures” are necessary to restore “financial balance and return to growth,” Chairman Hans Schweickardt, the utility’s interim chief executive officer, said today in a statement. Alpiq missed first-half profit forecasts and has lost 49 percent this year in Zurich trading.
The “current difficult situation” will allow the Olten-based energy trader to focus on its main businesses and exploit strengths “once more to the hilt,” the chairman said. The layoffs account for 4 percent of the workforce, and half will be in Switzerland, where Alpiq accounts for about a third of electricity supplies.
Alpiq shares climbed as much as 4.3 percent in Zurich, the most in almost two months, and were up 0.6 percent at 180.20 francs as of 2:23 p.m. local time, valuing the company at almost 5 billion francs.
The utility, fighting a slump in earnings from the cost of the nation’s exit from nuclear power and a strong franc, was formed in 2009 through the merger of two Swiss utilities as the country’s power market opened to competition. Switzerland plans to close its five atomic reactors by 2034. Alpiq operates one, the Goesgen plant in northern Switzerland.
Nuclear energy makes up about 39 percent of the Alpine nation’s electricity needs, and about 56 percent comes from hydropower.
Last month, Alpiq was said to be working with Deutsche Bank AG on the sale of its energy and telecommunication services unit as the utility cuts debt, according to two people with knowledge of the matter. Alpiq Anlagentechnik GmbH, based in Heidelberg, Germany, may attract more than 500 million euros ($689 million), one of the people said.
“Over the past two years, the market environment and revenue drivers of European electricity companies have deteriorated substantially,” Alpiq said in today’s statement. “Exchange-rate factors have accelerated this negative trend in recent months.”
Alpiq “has been hard hit by this situation,” it said, with figures showing 2011 operating results will end “well-below” prior-year figures. Net income dropped 57 percent to 180 million francs in the first nine months of the year as sales slipped by 3 percent to 10.2 billion francs, it said.
The company aims to cut net debt by 1.5 billion francs to 2 billion francs by the end of 2014. It also plans to concentrate on the “profitable core business and increase efficiency by streamlining the organization so as to reduce operating costs by around 100 million francs” by the end of next year, it said.
The asset impairments and provisions will decrease 2011 annual results by about 1.7 billion francs, Alpiq said.
The company will focus on its Swiss business and on “profitable niche markets in Europe,” expanding electricity generation from renewable sources, particularly hydropower, it said.