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Transelectrica 2Q 2011 - Low maintenance costs boost profit above estimates

The power grid operator Transelectrica (TEL) delivered surprisingly positive 2Q 2011 results, especially in the light of the preliminary figures reported with the revised 2011 budget, due to lower maintenance and financial costs.

Transportation revenues close to our estimate: The turnover came in at RON 590.8 mn, 9% above our estimate and 3% above consensus, mainly on higher than estimated pass-through revenues. Quantities transported reached 13.3 TWh, some 1.4% lower than our estimate while interconnection revenues stood close to our forecast.

Maintenance costs came in lower than expected: On the costs side, materials expenses (incl. grid losses) came in slightly below our forecast and salaries exceeded our estimate by 11%. However third parties expenses, where the bulk is represented by maintenance expenses, stood at RON 54 mn, almost half our forecast. Furthermore, the company recorded RON 4.6 mn gains from the revaluation of the current assets (probably receivables). As a result, the operating profit reached RON 47.2 mn, significantly better compared with our anticipated loss of RON 19 mn and above consensus estimated loss of RON 55 mn.

The company recorded financial losses of RON 27.5 mn, below our estimate of RON 47 mn, on lower than estimated interest expenses and FX losses. The net profit for 2Q reached RON 17.7 mn, up from our estimated loss of RON 65.8 mn and consensus estimate for a loss of RON 84.6 mn.

Over 1H 2011 Transelectrica reported a net profit of RON 178.6 mn, compared with a loss of RON 58 mn over 1H 2010. The result is surprising given the RON 10 mn preliminary 1H profit published mid-June with the revised budget, where materials and third parties expenses were estimated significantly higher.

Outlook and recommendation: We see the news as positive and we will revise our estimates but we can not exclude an increase in maintenance costs over 2H 2011 which would erase part of the profit. For the moment we keep our 'hold' recommendation and place the RON 25 target price under review.

Sursa: http://www.rciro.ro

Tags: profit estimated expenses estimate above costs transelectrica maintenance

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