Hidroelectrica SA has some bold plans for the coming years, as the state-owned hydropower company returned from the brink of bankruptcy to become one of the most profitable companies in Romania. The company has plans to invest over EUR 500 million into modernisation in the next five years.
The president of the Board of Directors of Hidroaelectrica SA Ovidiu Agliceru reminded that the company had endured the grueling period of insolvency, being the most indebted company in Romania. Since exiting the insolvency in June, it went on to become the most profitable company in the country, said Agliceru in an interview with Nine O’Clock, adding that it took “four years of profound transformation, of cost optimization, of increasing the efficient use of revenues.”
He went on to say that example from Hidroelectrica shows that companies where a state is a stakeholder “can become veritable economic growth engines and pillars of social stability” if they have honest and capable managers with vision. The transformative period also turned the company into a transparent one, while cost optimisation, maximization of revenue, and re-defining production flows and processes yielded with “unmatched high profits,” reminded Agliceru.
From debts to investments
The company is expected to end the year with a gross profit of RON 1.5 billion (EUR 330 million), and turnover of RON 3.4 billion (EUR 748 million). “The gross profit margin will grow from 34% in 2015 to around 44% in 2016,” announced Agliceru.
For comparison, the company reported gross profit of RON 141 million (EUR 31 million) in October, which is a jump of 85% compared to the same month in 2015. While the turnover was virtually the same as last year, sales this October grew by 26% compared to the same month in 2015.
The production of electricity was of 1.3 terawatt-hours (TWh) in October, while it amounted to at 14.4 TWh in ten-month period ending in October, up from 13.7 TWh in the same period of 2015. The total annual production is expected to surpass 17 TWh by the year’s end, as the hydrological situation is suitable – although average – for hydropower plants both on Danube, other rivers and the lakes across the country.
Meanwhile, Hidroelectrica is still preparing for the initial public offer (IPO) and the government-owned utility will be listed only after non-core assets are divested. Part of the process includes selling smaller plants, like hydropower plant Lopatari, which was sold in May.
Hidroelectrica is currently focusing on those investments which would enable it to complete profitable projects. A budget of RON 715 million (EUR 158 million) has been allocated for the period 2016-2019. The company, however, has more ambitious plans for the period 2016-2021: the budget for upgrade of its capacities is set to reach a sum of RON 2.5 billion (EUR 500 million).
“In the coming years, we aim to become an important regional player on energy markets while keeping our ‘100% Green Company’ identity. In this sense, we are analyzing several options to boost our presence on new markets and also to strategically diversify our portfolio,” said Ovidiu Agliceru.