Bogdan Tudorache

The COVID-19 pandemic affects Electrica on two levels – through lower electricity demand and negative impact of the measures adopted by the Government – in the context in which the company had a lower net result last year than the previous year, shows a Tradeville analysis on the company’s financial results.

Thus, on one hand, the demand for electricity has decreased by about 5% in Europe, amid massive business closures. Electrica is therefore in a position to maintain its activity at normal standards in a market with poor demand.

On the other hand, some of the measures recently adopted by the Government affect the revenues and cash flow of electricity and natural gas suppliers. According to the military ordinance no. 4/2020, companies in the energy sector will no longer be able to increase tariffs for electricity or natural gas above the levels from the date of issuance of the ordinance, but only to reduce them according to demand and supply.
“Another change is that utility bills will be delayed for small and medium-sized businesses, which will have negative effects on the company’s cash flow, as the Group’s management warns,” said Tradeville.

Electrica’s profit decreased by 10.3% last year, despite the double-digit increase in revenues (+11.9% compared to 2018), determined by revenues from the distribution and supply of electricity, as well as from the supply of natural gas, which increased by 481%. The decrease in the net result was visible in all 4 quarters, each time being recorded lower figures compared to similar periods in 2018. A significant impact on the financial result in 2019 had financial expenses, which doubled compared to previous year.

In March 2020, Electrica proposed dividends with a yield of 7.3%, at the closing price of 6.04.2020, from the result recorded in 2019. The allocation rate is of 100% of the profit and will be voted within the general shareholders’ meeting of April 29.