August 14 (SeeNews) - Romanian power supplier and distributor Electrica [BSE:EL] said on Monday its consolidated net profit fell 98% to 8 million lei ($2.05 million/1.74 million euro) in the first half of 2017 from 336 million lei in the year-ago period mainly due to higher prices at which it buys electricity.
Electrica's first-half operating revenue fell 2.8% on the year to 2.76 billion lei, the company said in an unaudited consolidated financial report filed with the Bucharest Stock Exchange, BVB.
Expenses for the purchase of energy increased by 15% to 1.53 billion lei in the six month period ending June 30, mainly as a result of a 78% jump of prices on the day ahead market and around 38% increase on the balancing market in the first quarter of 2017 compared to the first quarter of 2016, the report showed.
"The financial results for the first half of 2017 are impacted, as anticipated, by the effects of the major imbalances on the energy market, as a consequence of the results recorded in Q1 2017," Electrica general manager Catalin Stancu said.
To offset this negative impact the company's management team proceeds with cost reduction and operational improvement programmes, the optimisation of the support structures, voluntary leave programs and customer portfolio review, based on a revised strategy, the official added.
The company's operating profit shrank by 96% on the year to 18 million lei in the six months through June, while operating expenses rose 12.5% to 2.74 billion lei.
Investments in the distribution network increased by 40% to 259 million lei in the six month period ending June, the report further showed.
During the first half of the year, Electrica distributed to approximately 3.69 million users 9 TWh of electricity, representing an increase of 4% compared to the same period of the last year.
With approximately 10,000 of employees, the company is providing services to over 1.6 million customers.
In July, Electrica [BSE:EL] signed a 752 million lei memorandum of understanding for the buyout of minority stakes in four of its subsidiaries from investment fund Fondul Proprietatea [BSE:FP].
Blue chip Electrica, in which the state owns 48.8%, is simultaneously listed on the Bucharest Stock Exchange and the London Stock Exchange.
Its shares were changing hands 3.22% down at 13.24 lei by 1207 CET on the BVB on Monday.
(1 euro=4.5780 lei)