Iceland's Landsvirkjun grows profit in 2015 despite aluminium price decline

Landsvirkjun, the Iceland-based power producer, saw its net profit grow by 7.4 per cent year on year in 2015 to USD 84.2 million (EUR 76m), even though the prices of aluminium have been falling since the last couple of quarters. Operating revenue was USD 421.5 million, down by 3.8 per cent compared to the previous year. The results are remarkable because aluminium manufacturing has always been a mainstay for power producers in the country.

The state-owned company, which operates hydropower, geothermal and wind power plants, sold 13.9 TWh, a record for it. To meet demand, it is building a new geothermal power plant at Theistareykir and plans to start construction of an expansion of Burfell hydro power plant this spring.

“Despite a challenging environment in most commodity and energy markets, demand for energy from Landsvirkjun is high from various industries,” said CEO Hordur Arnarson.

The company explained that the lower price of aluminium has negative effects on the operating results, because power and aluminium prices are linked. Profit before unrealised financial items declined by 11.1 per cent to USD 130.6 million. Earnings before interest, tax, depreciation and amortisation (EBITDA) stood at USD 321.5 million, which compares to USD 332.2 million in 2014.

Landsvirkjun also noted that it has reduced net debt by USD 205 million from the previous year, so it stood at USD 1.98 billion at end-2015.

(USD 1 = EUR 0.904)