TenneT reports 27% jump in profit

German North Sea cable delays fail to dent H1 financials

Headline-grabbing delays to the construction of offshore cables in the German North Sea have had no impact on the financial performance of heavily-criticised transmission system operator (TSO), TenneT. Indeed, the company has reported strong increases in both revenue and operating profit for the first half (H1) of 2012.

In addition to its onshore activities, TenneT has 10 offshore grid connections under development in the German North Sea, but is experiencing what it refers to as "delays on the supplier side". Others argue that it is TenneT that is the source of the delays, due to its lack of capital.

TenneT’s financial stability risks being undermined if it were forced to pay damages for failing to fulfil its legal obligations on the timing of cable completion. In addition, its certification as a German TSO is under review.

Fortunately for the beleaguered TSO, the German government has published a draft law this week that should reduce TenneT’s risk exposure "to insurable levels."

Once liability issues are resolved, TenneT expects to finalise a deal with Mitsubishi, which would see the Japanese company take equity stakes in the BorWin 1 and BorWin 2 cable projects. Mitsubishi also intends to buy into the HelWin2 and DolWin2 cable connections. The Japanese industrial giant is also in talks with Danish turbine giant, Vestas, about collaboration widely thought to centre on offshore wind turbine technology.

Owned by the Dutch government, TenneT has reported increased revenues and earnings in both Germany and the Netherlands for H1. Its underlying results in Germany saw revenue increase 28%, to €506.4m, and operating profit increase 27%, to €97.2m.

TenneT's business at home in the Netherlands is smaller. Here, revenue on an underlying basis was up 23% to €299m, and operating profit up 24% to €76.1m.

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