Operating profit for 2014 fell to €552m from €684m the previous year with profit after tax falling by almost €300m. The reduction in profits was largely by lower electricity wholesale prices due mainly to lower gas prices which accounted for €113m of the dropoff.
Despite the company’s reduced profitability chief executive Pat Doherty said it continues to deliver value for its range of stakeholders despite the tough trading environment.
“In the face of some challenges in 2014, these results reflect a solid performance across the group. ESB continues to deliver value for its customers, its shareholders, and for the Irish economy while maintaining its financial strength and credit rating,” said Mr Doherty.
Coupled with falling prices was significant storm repairs which had to be carried out in the wake of the unusually poor weather endured by much of the country in the early part of last year. The cost of these repairs was €25m. Essential maintenance and repair work at its Moneypoint coal plant in Co Clare added another €15m to its costs.
The impact of these factors was somewhat offset by cost savings and improvements in other income streams which totalled €20m.
“The performance improvement programme embarked on by ESB in 2010 has delivered significant recurring savings across the business and has helped to offset the impact of lower margins in the generation business,” Mr Doherty added.
Low interest rates in the UK affected €245m of inflation-linked interest rate swaps which led to the greater fall in post-tax profits.
The company’s €400m special dividend programme agreed in 2012 was completed with a €214m payment in January 2015.
During the year, ESB continued to invest in infrastructure projects to the tune of €700m.
Late last year, the energy company reduced its prices for residential customers by 2% resulting in a typical annual saving of €25 per household.
Earlier this month however, the ESRI warned that a redesign of the electricity market here from 2017 to comply with EU rules could lead to higher prices for consumers adding that the market is characterised by one dominant firm, ESB, which it also labelled “the legacy monopolist”.