PPC sees 2005 profits decline and blames fuel costs, energy imports and low electricity rates

Public Power Corporation’s (PPC) net profit dropped by more than half in 2005 to lag analysts’ forecasts, and Greece’s dominant power producer blamed fuel costs, energy imports and low state-controlled tariffs. The utility, 51 percent state-owned, said yesterday net profit fell 54 percent to 135.7 million euros, missing the lowest forecast of 147 million euros in a Reuters poll of 12 analysts. The average forecast was 166.6 million. PPC, which has a 90 percent share in the Greek electricity market, said surging oil and natural gas prices were the main factor denting net income. Fuel costs rose about 34.2 percent to 985 million euros and energy purchases by 30.9 percent to 240 million euros, it said. Sales rose 4.8 percent to 4.3 billion euros, despite a sales decrease of 0.6 percent. Low tariffs granted by the Greek government also weighed on results, PPC said. The State granted PPC an average 3.4 percent rate increase from September 1, 2005. «These tariff adjustments did not cover even partially the negative impact of the sharp rise in fuel prices,» PPC said. Analysts said PPC appeared to be putting pressure on the government to allow price rises linked to its fuel costs. The utility also faced environmental costs related to the purchase of carbon dioxide emission rights but analysts said these were much lower than expected, at 12.6 million euros. PPC said it was looking to expand to Southeastern Europe, as pressure in a liberalized energy market at home mounted. «Investment priorities are targeted towards Southeastern Europe, through the acquisition of units either directly or in concert with international firms,» PPC stated. (Reuters)