Abstract
Overview
Introduction
As Europe' s utilities increasingly expand beyond incumbent markets, a broad
comparison of financial performance becomes key to understanding where and how
certain utilities outperform their peers on basic financial measurements such
as profitability. Historic performance, market focus, value chain focus and
even sheer size all must be tested as contributing factors to utility
profitability.
Scope
- A review of financial performance amongst 30 leading utilities across
Europe.
- An analysis of potential driving factors behind profitability.
- An examination of how the financial performance of 30 leading utilities
has changed over time.
- A review of the market focus of the best and worst performing utilities.
Highlights
Counter-intuitively, an accumulation of strong cash flows over time does not
explain profitability levels in 2006. There are as many top performing
utilities which saw cash flow fall from 2002 to 2006, as those which saw their
level of cash flow increase over that period.
On average, the top ten most profitable utilities in 2006 derived 62% of their
revenue from markets that can be described as traditional or incumbent
markets, substantially less than for the most poorly-performing utilities.
Gearing levels amongst utilities do not explain why some utilities are more
profitable. Endesa, for instance, has the highest level of debt-to-equity
amongst the utilities examined, yet it was the seventh most profitable utility
in 2006.
Reasons to Purchase
- Examine the relationship between profitability and different utility
characteristics.
- Understand who Europe' s best performing utilities are, and what
distinguishes them.
- Benchmark leading European utilities and a range of financial metrics
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