PPC downgraded, seen reporting loss

Public Power Corporation (PPC) is expected today to report its first annual loss since it was listed on the Athens bourse eight years ago, due to high electricity generation costs and expensive power imports. PPC, which has a market capitalization of almost 4 billion euros, is expected to post a net loss of 318.7 million euros in 2008, compared with a profit of 222.3 million euros in the previous year, according to Reuters. Analysts estimate that fuel, energy purchases, carbon emissions, lignite and labor costs will take up 84 percent of revenue in 2008. The profit slump came despite a 14 percent increase in sales to 5.86 billion euros and two tariff hikes. PPC’s electricity generation costs are high because it produces much of its power by burning oil and natural gas. Prices of both soared last year. Shares in PPC have lost 7 percent in the last six months versus a 45 percent retreat on the Athens Exchange’s general index. Meanwhile ratings agency Standard & Poor’s has lowered its long-term corporate credit rating on PPC to BBB- from BBB. The outlook remained stable. «The downgrade reflects uncertainty as to PPC’s ability to limit earnings volatility beyond 2009, which in turn reflects uncertainty as to the group’s capacity to obtain the pass-through in regulated power prices of any increase in fuel prices,» said Standard & Poor’s credit analyst Hugues de la Presle.

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