Verbund Narrows Profit Outlook as Low Water Levels Hit Hydropower Output

Austrian power provider Verbund (VI:VERB) has narrowed its full-year profit outlook after reporting a significant drop in first-half earnings, driven by poor hydrological conditions and lower electricity prices.

First-Half Earnings Decline

Verbund announced Thursday that its earnings before interest, taxes, depreciation, and amortization (EBITDA) fell 25% to €1.06 billion for the January-June period, down from €1.41 billion in the same period a year earlier. The company attributed the decline to a combination of weak water supply and falling sales prices for electricity.

The utility's core hydroelectric power generation, which accounted for approximately 85% of its total output last year, decreased by nearly 10%. While output from wind and solar assets rose by 4%, it was not enough to offset the substantial decline in the company's primary power source.

Revised Full-Year Guidance

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Reflecting the challenging first half, Verbund has adjusted its financial forecast for the full year. The company now expects a net profit in the range of €1.0 billion to €1.15 billion.

This represents a tightening and a reduction at the upper end from its previous guidance of €1.0 billion to €1.2 billion. The revision signals that the operational and market headwinds experienced in the first six months are expected to impact the company's full-year performance.

Context for Investors

The results highlight Verbund's significant exposure to environmental factors, particularly water levels for its extensive network of hydroelectric plants. The dual pressure of lower generation volumes and declining market prices for electricity has directly impacted profitability for the company, in which the Austrian state holds a 51% stake.