Weak sterling hits profits at ESB
Publishing their interim results for the six months to June 2016, ESB has pointed to the weakened, post-Brexit sterling as a primary cause for its operating profit falling €50 million compared to the same period last year.
With activities North and South of the border, the electricity supplier is at risk of taking a hit with unfavourable exchange rates. In this period, ESB recorded an operating profit of €287 million, capital investment of €356 million while dividends of €31 million were paid during the first half of 2016.
While Brexit played an important role in driving down in operating profit, it was negative fair value movements on Northern Ireland inflation linked interest rate swaps that led to a fall in profit after interest and tax. In the current low interest rate environment, ESB saw these profits fall €137 million to €64 million.
ESB has reduced electricity unit prices for its supply business, Electric Ireland, for all residential customers by 6% from June 2016. The company believe this drop, coupled with a further reduction in gas unit prices, that customers could save up to €187 a year compared to 2014 prices. Operating profit at Electric Ireland rose significantly on last year, up €32 million to €57 million.
ESB’s Finance Director, Pat Fenlon, says: “In the face of intensifying competition and lower wholesale electricity prices, these results reflect a strong operating performance across the ESB Group. ESB continues to focus on delivering value and investing in critical long term electricity infrastructure for the benefit of our customers, shareholders and the wider Irish economy, and this is enabled by maintaining a strong financial position.”