Bord Gáis results better than expected despite 9% profit dip
Bord Gáis has announced a better then expected reduction in pre-tax profits of €103m to the year ended 2003.
This is a 9% reduction on the 2002 figure, which the company blamed on increased depreciation and interest charges.
However, the figure was still ahead of expectations, due to a strong operating performance and to competitive financing rates achieved for the company's €1.4bn infrastructure programme.
During the year, the company said it had fully integrated its new pipeline to the West and Interconnector 2 (IC2) into the national network and extended its reach into Northern Ireland.
Commenting on the figures, Bord Gáis Chairman, Ed O'Connell said today: "Revenue growth continued, up 7% on 2002, as did customer numbers, up 9% to 456,646.
"Despite a near doubling in the company's transmission network in recent years and considerable market opening costs, operational efficiencies and performance remained strong.
"2003 saw considerable investment in new systems and procedures by Bord Gáis, ahead of full market opening in 2005. With over 85% of the natural gas market, by volume, already open to competition, Bord Gáis' diversification strategy into the emerging competitive market for electricity supply is now well underway, with a 17% market share realised in 2003.
"Over 85% of Ireland's natural gas requirements are now imported via two sub-sea interconnectors with Scotland, underlying the vital importance of this infrastructure in ensuring security of gas supplies. IC2 allows for considerable expansion in demand over the coming decades; for extension of the network on an all-island basis and for new gas-fired power generation," O'Connell added.
The company defended its price structure and said residential gas prices were 28% below the European Union average while prices to small businesses were 10% below the EU average.
Chief Executive, Gerry Walsh said: "Following the tariff change approved by the CER in February 2003, the first in 20 years, Irish gas prices to residential and to small business customers remained 28% and 10% below the EU average respectively.
"The combination of low prices, an extended network and a buoyant new housing sector saw Bord Gáis add 38,448 new customers during the year.
"The electricity market continues to deregulate and will be fully open to competition by February 2005. Continued development of our electricity business represents a key strategic intent for Bord Gáis and will be used to mitigate gas customer attrition resulting from the liberalisation of the Irish gas market.
Going forward, Walsh added: "Bord Gáis' key focus is on managing and adapting to the significant changes in our current gas business. Critical issues such as tariffs, licence conditions, the market opening programme, competitive processes and cost incentive regimes are being set down for the first time by the CER.
Indeed, the establishment by the CER of new transmission tariffs for the four-year period to October 2007 provides greater certainty for the entire market.
"Natural gas prices in Ireland remained the third lowest in the EU. Residential gas prices remained 28% below the EU average with gas prices to SME's 10% below the EU average," Walsh concluded.
