ESB posts record profits of €267m despite rising fuel and staff costs

THE ESB has posted record after-tax profits of €267 million despite rising fuel and staff costs.

Profits were 6.6% higher than in 2003 and turnover for the year was up by €147 million at €2.48 billion, according to the ESB's annual report for 2004, which was officially published yesterday.

The bulk of profits were generated by the ESB's networks division, contributing €254 million to pre-tax profits of €314 million.

The rise in profits came as both staff and fuel costs the company's biggest expenses rose by €14 million and €74 million respectively.

The company will pay a dividend to the Government of €77.4 million, a €10.3 million jump on the pay out last year.

The company's interest bill rose by €32 million to €84 million as a result of increased borrowing to fund the upgrading of the electricity network.

It spent 700 million on new power stations and upgrading power lines in 2004 and has spent €4.3 billion since 2003.

This rise in capital expenditure has left the ESB with €2.3 billion in debt and this will rise further in the coming years.

Even with the profits increase, ESB chairman Tadhg O'Donoghue said the company was looking to generate a higher return on its investment than the 6.6% recorded last year.

ESB chief executive Padraig McManus added: "I made the comment a number of years ago that the ESB needed to get to a profit level of €300 million within five years and we are one target. The performance this year will be somewhat similar to 2004 and hopefully a bit better."

The annual report also shows that some 300 workers left the company in the year, with the workforce falling to 9,289. With total staff costs coming to €666 million for the year, the average salary of an ESB worker was €71,000 last year.

Mr McManus saw his pay fall last year, down €11,661 on the previous year. He was paid a total of €406,032 in 2004, with his bonus cut by €25,000 to €48,224.

Mr O'Donoghue received €66,346 in fees. The other board members received €12,697 each in fees for the year.

The ESB's market share fell further from 69% to just over 64% and with the entire electricity market including households open to competition, this is likely to decline further. However, domestic users have yet to be offered a rival to the ESB.

The ESB also confirmed that it was seeking another price rise from the Commission for Energy Regulation (CER).

It is believed to be looking to hike bills by around 10% to cope with the soaring cost of fuel.

"We will do everything possible to keep that cost down to the bone," Mr O'Donoghue said.

If the CER grants the increase, it will be the fourth in four years and add around €70 to the average annual household electricity bill.