Results of Reykjavík Energy’s (Orkuveita Reykjavíkur; OR) interim financial statements for the first half of 2021 are very good. Operating expenses compared to the same period in 2020 have decreased by over 7% and increased income, partly due to higher aluminium prices, explain the good outcome. Reykjavík Energy CEO Bjarni Bjarnason says that the Group’s sound operations and favourable calculated financial items explain this, but the total result of OR’s profit for the period amounted to ISK 8.8 billion.
The OR Group’s consolidated interim financial statements for the first six months of 2021 were approved by the company’s Board of Directors today. In addition to the parent company, the group includes Veitur Utilities, ON Power, Reykjavík Fibre Network, and Carbfix.
Lower operating costs
Looking at OR’s operations, salaries expenses have decreased slightly from the previous year and other operating expenses fell by more than a quarter year-on-year. The cumulated reduction in operating expenses from the first six months of 2020 to the same period in 2021 amounted to ISK 733 million or 7.4%. Revenue from all segments increased and EBIT for the period amounted to ISK 10.2 billion, compared to ISK 8.1 billion in the first six months of 2020.
More than ISK 11 billion fluctuations due to aluminium prices
Early in the COVID-19 pandemic, aluminium prices fell sharply, but OR’s electricity sales are in part in long-term contracts linked to aluminium prices. A lower estimate of the value of these agreements adversely affected the calculated results in the first half of 2020. In the current year, conversely, aluminium prices have risen considerably. In the first six months of 2020, the value of these long-term PPAs was estimated to have decreased by ISK 5.7 billion, but in this year’s income statement the value is estimated to have increased by ISK 5.5 billion. The variation between years in this calculated number of the financial statements therefore amounts to ISK 11.2 billion.
Looking at cash flow–actual funds in the interim financial statements as opposed to the calculated ones–the effects of lower operating costs and increased revenue from the service segments are clear. Cash from the operations of OR and its subsidiaries amounted to ISK 14.6 billion in the first half of the year, compared to ISK 12.5 billion for the same period in 2020. The Group's liquidity now amounts to ISK 46 billion and has never been stronger. Now, during the peak construction period of the year, when Veitur Utilities’ resilience investments due to the coronavirus epidemic are ongoing, as well as traditional investments and maintenance, this fund is steadily reduced.
Bjarni Bjarnason, CEO:
Reykjavík Energy’s finances have rarely been in better shape. Our solid control over operating costs is a major factor, as is the economic upswing after the blow due to the epidemic. Without the calculated figures in this statement, the operation would have returned a profit of more than ISK 4 billion, and I think that is a satisfactory result for a company of this size.
We are constantly improving customer service. Upgrading all energy meters in homes and companies gives people new tools to keep an eye on their respective energy consumption, and the number of homes we connect to fibre optics is constantly increasing.
The latest data from scientists on climate change show us that our projects to support energy shift in Iceland are urgent and necessary. Therefore, it is important they run as smoothly as possible without setback. We also have high hopes that the Carbfix technology developed for carbon dioxide sequestration will spread rapidly around the world.
Key financial figures
The key figures for the OR Group’s finances are published on Orkuveita Reykjavíkur’s website, together with the financial targets that are being pursued.
The URL is or.is/en/finance/key-financial-figures/