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MVM profits fall two-thirds to HUF 20bn in 2010

The state-owned Hungarian Electricity Works (MVM) had consolidated after-tax profit of HUF 20 billion in 2010, about one-third of the HUF 60.8 billion in 2009, deputy-CFO Gyorgy Kobor said at a press conference on Thursday.

Revenue slipped by HUF 20 billion to HUF 560 billion, Kobor said. He attributed the fall in revenue to lower electricity prices and the drop in profit to narrowing margins. MVM also paid HUF 6.5 billion for a crisis tax levied on energy companies, he added.
This year, MVM expects revenue to rise slightly and profits to stay flat, he said.
MVM is working on a new strategy which is expected to be completed by the end of the year, said MVM chairman Csaba Faragó, without revealing any details of the plan.
CEO Csaba Baji said the most important task for MVM's management, appointed last summer, was to raise revenue and profits.
Reviewing the business results of MVM's most important units, Baji said Paksi Atomeromű, Hungary's sole nuclear power plant, had after-tax profit of HUF 19 billion on revenue of HUF 167 billion in 2010. Transmission system operator Mavir had profit of HUF 6 billion on revenue of HUF 123.5 billion, trade company MVM Trade had profit of HUF 6 billion on revenue of HUF 320 billion and services unit OVIT had profit of HUF 500 million on revenue of HUF 47 billion.
MVM wants to strengthen the company's position on the domestic market, but it is also looking into the introduction of new activities, such as gas trade, Baji said. MVM Partner already has a gas trading permit and the company is considering whether taking up the activity to supply the MVM groups annual demand for 1.5 billion-2 billion of gas would be worth it, he added.
MVM wants to become a regional company and is learning about markets in Poland, Serbia, Croatia and Romania, Faragó said. MVM would first establish wholesalers in the countries with the aim of gaining experience on their markets, he added.
Faragó declined to comment on any possible expansion in Ukraine.
If the regulatory environment becomes more predictable, MVM could start renewable energy investments, in areas such as wind power, geothermal energy and biomass energy, Faragó said.
MVM deputy-CEO in charge of production Sándor Nagy said the National Development Ministry was expected to complete by the end of March a document on preparations for the expansion of the Paks nuclear power plant to be submitted to the government, but the document would not contain financing for the project. Five parties, including one from Korea, have said they want to be suppliers to the project, he added.  Nagy expects five bids to be submitted for the expansion in 2012.
Test operation has started at Bakonyi Erőmű's new plant and it is expected to go online in March, Nagy said. The peaking power plant, which will supply electricity to the network when demand is high, is being built by MVM and Euroinvest, owned by the construction magnate Sándor Demján.
 Baji said MVM was not in talks with Surgutneftegas on buying the Russian oil and gas company's 21.1% stake in Hungarian peer MOL. (Econews)