Public Power Corp SA, Greece’s biggest electricity producer, posted an 86 percent drop in first-half profit on higher provisions, fuel costs, and gas and energy purchases.
Net income declined to 18.3 million euros ($23 million) from 128.8 millions euros in the same period a year earlier, the company, known as PPC, said in an Athens bourse filing today.
The cost of liquid fuel, natural gas and energy purchases rose to 1.51 billion euros, or 52 percent of total revenue, from 987 million euros a year earlier, PPC said in the statement. Sales increased 8.4 percent to 2.94 billion euros.
“Apart from the increase in the energy cost, the deterioration of the financial environment in Greece and the lack of liquidity in the market put additional pressure on profitability and working capital, with provisions negatively impacting financial results,” Chief Executive Officer Arthouros Zervos said in the statement.
Provisions, including those booked for overdue receivables from the state, more than doubled to 142.4 million euros from 53.8 million euros. Net debt rose to 4.78 billion euros from 4.3 billion euros at the end of the first half in 2011.
Zervos said the margin for earnings before interest, taxes, depreciation and amortization for 2012 is forecast to be between 16 percent and 16.5 percent, based on the total annual sales of 6.1 billion euros and taking into account the “rising trend of provisions due to the prolonged recession.” Sales in 2011 stood at 5.5 billion euros.
Falling wages and pensions in Greece, which are linked to terms agreed in exchange for bailout funds from the European Union and International Monetary Fund, have caused an increase in unpaid power bills. Prime Minister Antonis Samaras said today that an 11.5 billion-euro package of budget cuts for 2013 and 2014 will be the last of its kind because Greek society can no longer take such austerity measures. The economy will contract for a fifth year in 2012.
PPc’s payroll expenses at PPC were down 93.3 million euros, or 14.7 percent, in the first half of the year, the company said.