July 10 (Bloomberg) -- Verbund AG shares plunged after Austria’s biggest utility cut its full-year profit forecast by more than 50 percent because of low water supplies curbing hydropower generation and falling electricity prices.
The stock dropped as much as 4.9 percent, the biggest decline in almost three months, and traded down 2.9 percent at 14.36 euros at 10:54 a.m. in Vienna. Verbund cut its net income forecast by 53 percent, to 150 million euros ($204 million).
“The adjustment of the earnings forecast is the result of a non-functioning pan-European electricity market characterized by massive regulatory intervention,” the company said in a statement. Water supplies “significantly below the long-term average” also contributed to the cut, according to Verbund.
The company has already begun to cut costs and close costly thermal power plants. Verbund exited Turkey in a 1.5 billion-euro asset swap with Germany’s EON SE. The utility wants to focus on central Europe and boost hydropower resources, which already provide about 65 percent of the electricity it sells.
Verbund also cut its forecast for earnings before interest, tax, depreciation and amortization to 690 million euros from 850 million euros. Costs attributed to closing gas-fired power plants in Austria and France reduced Ebitda by 118 million euros, the company said.
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