Revenues and profit improved – the Group has become more efficient and flexible

The Axpo Group posted an operating profit (EBIT) of CHF 329 million and a consolidated net profit of CHF 282 million in the 2011/12 financial year, thereby substantially outstripping the prior-year results (CHF 139 million and CHF 45 million respectively). However, this result was once again strongly influenced by exceptional factors: adjusted for exceptionals, both net profit and EBIT were lower than in the previous year. Total revenues improved to CHF 7346 million (previous year: CHF 6354 million). Axpo restructured the Group in 2012 and enhanced the flexibility of its production and procurement strategy. With this reorganization, Axpo reacted quickly to the changed regulatory and political environment in Switzerland and the challenges posed by the European energy market.

The past financial year was a challenging one, not only for Axpo but for the entire energy sector. The euro crisis and accompanying slowdown in economic growth coupled with the intensification of the prioritized feed-in of subsidized electricity further dampened electricity prices in the European wholesale market. This situation was made worse by the strong Swiss franc. All of these factors certainly tested the mettle of the energy sector. In order to be prepared for present and future challenges, Axpo realigned its operations in the past year.

Adjusted Group structure enhances efficiency and profitability

The trading and production activities were reorganized in order to exploit synergies and improve earnings even in difficult market conditions. In the medium term, EBIT is to be improved to well above CHF 100 million per year. In autumn 2011, Axpo increased its stake in EGL from 91% to 100%. It subsequently merged the business activities of EGL and Axpo AG and bundled its trading expertise in the Axpo Trading & Sales business area. Project planning, construction, operation and maintenance of both the power plant fleet and the grid infrastructure were bundled in the Axpo Assets business area. Among other measures to reduce costs, Axpo cut 110 positions in the reporting year. The employee representatives were involved in the process at any early stage and a social plan was agreed. Although part of the headcount reduction was achieved through early retirements and natural attrition, 60 redundancies nevertheless had to be announced. On average for the year, the number of employees stood at 4368 fulltime equivalents, compared to 4415 in the previous year.

High exceptionals

In spite of the economic chaos in Europe and an ambitious restructuring programme, the Group's operating profit (EBIT) improved from CHF 139 million in the previous year to CHF 329 million, while net profit rose to CHF 282 million (previous year: CHF 45 million). As in the previous financial year, this result was influenced by exceptional factors. While impairment for own power plants and provisions for regulatory effects had a negative impact, the good performance of the nuclear fund in particular contributed to the increase in net profit. However, if the exceptional factors are excluded, both EBIT and net profit are lower than in the previous year.

Total revenues for the Axpo Group amounted to CHF 7346 million (+ 16%) in the 2011/12 financial year. This rise was primarily due to an increase in physical energy trading in Europe and higher prices in Italy. The volume of electricity sold in the traditional supply area of Axpo (incl. CKW) remained more or less unchanged thanks to average weather patterns. At CHF 139 million (previous year: CHF 127 million), the profit earned in international energy trading lifted slightly, mainly because of the expansion of the successful origination business, i.e. products that are specifically geared to the individual needs of wholesale customers.

Procurement costs for energy and grid utilization increased disproportionately to CHF 5094 million (previous year: CHF 4159 million), primarily because more electricity had to be bought from third-party providers in physical trading to cover the increase in sales volumes. This item also includes retroactive costs for electricity supplied by the French nuclear power plants. The value of the federal nuclear fund for the partner plants at Leibstadt and Gösgen increased more than expected, which reduced expenses by CHF 51 million (previous year: CHF 71 million charged to expenses). During the annual impairment review of the production plants and energy procurement rights, future trends in electricity prices and the costs for the procurement portfolio were revalued. This revaluation resulted in valuation adjustments charged to profit and loss of CHF 264 million. Non-energy or grid-related operating expenses remained more or less the same overall, while depreciation declined by CHF 138 million compared to the previous year.

Reduced investment expenditure

Cash flow from operating activities amounted to CHF 749 million, down 13% from the previous year's result of CHF 862 million. Investments in non-current assets totalled CHF 465 million (previous year: CHF 770 million). A tighter investment policy, delays affecting various large-scale projects and difficult approval procedures with respect to new energies combined with a critical evaluation of the profitability of potential investment projects resulted in substantially lower investment expenditure. In the short to medium term, Axpo expects the current uncertainty to translate into below-average investment activity. Most investment funds were routed to the renovation of the Beznau nuclear power plant, the WinBis wind farm in Italy, the building of the new hydropower plant at Rüchlig in Aarau, and the maintenance and expansion of the grid infrastructure. Axpo also carried out share capital increases for the Trans Adriatic Pipeline (TAP) and the geothermal project in Taufkirchen in Germany.

The "Linthal 2015" large-scale project remains on course. The expansion work for the new 1000 megawatt pumped storage plant is proceeding according to schedule, and the project is soundly financed. Among other measures, a 3% bond for CHF 200 million was successfully floated in September – with a term to maturity of 40 years this is currently the longest bond on the Swiss capital market. Due to delays in connecting the wind farm to the grid, the Global Tech I offshore wind power project is expected to be fully operational with an output of 400 MW by the end of 2013. Axpo owns 24.1% of this project.

The Board of Directors will propose a dividend of CHF 2.– per share (previous year: CHF 2.20), which equals CHF 74 million, to the Annual General Meeting.

Energy sales increased through physical trading

The growing economic slowdown in Switzerland and average weather patterns resulted in stagnating demand for electricity. As a result, the volume of electricity sold in the traditional supply area of Axpo (incl. CKW) remained more or less the same at 21 billion kWh. Sales to third-party companies and trading increased by 6% to 53 billion kWh, mainly driven by the increase in physical trading volumes mentioned before. In total, Axpo sold 74 billion kWh of electricity (previous year: 71,2 billion kWh).

At 22,5 billion kWh, the production of electricity from nuclear power was down 2% from the previous year because of lower plant availability and an increase in the time needed for maintenance checks. The hydropower plants on the other hand benefited from above-average precipitation and produced 9,2 billion kWh of electricity or 15% more than in the previous year. At 5,4 billion kWh, electricity production by conventional thermal power plants improved by 16% thanks to the increased use of the gas-fired combined-cycle power plants in Italy to provide system services. The new energy plants increased their production by 20% to 285 million kWh.

Expansion of renewable energies

Axpo is intensifying its focus on the expansion of renewable energies, in particular hydropower and wind. Axpo is the leading producer in renewable energies in Switzerland and aims to cement its position further. The current production of 8.2 billion kWh is to be increased to 13 billion kWh by 2030. During this process, the share of new energies such as wind, solar and biomass should be increased from 1 billion kWh to 5.6 billion kWh. More than half of this expansion will take place abroad where the climatic conditions are better. In Switzerland, Axpo intends to bring geothermal power plants online in four to six years. Possible locations are currently being evaluated.

Even though Axpo will not build any replacement nuclear power plants, nuclear energy from the Swiss and French plants will remain important for the security of supply. Axpo continuously invests in the renovation and reliability of its plants and aims to operate the Beznau and Leibstadt nuclear power plants for as long as it remains safe and profitable. As long as the framework conditions do not allow profitable operations, the construction of gas-fired combined-cycle power plants is not an option for Axpo. Axpo wants to continue its substantial investments in its power plant fleet and grid infrastructure to ensure a secure supply of electricity in the future, but in the short term it expects the current uncertainties to cause a delay in its investment activities. The Group is, however, planning to expand its international trading business, with the main focus falling on the origination business.

Outlook: Axpo remains committed to a sustainable energy future

Axpo expects the Swiss franc to remain strong and electricity prices to remain low. Regulatory and legal uncertainties also remain a big concern, thus hampering investment activity. In addition, the bilateral electricity agreement between Switzerland and the EU is still pending as unresolved institutional matters prevented negotiations between the parties from being finalized in the reporting year as announced. Together with other representatives of the Swiss electricity sector, Axpo supports a speedy conclusion of the negotiations in the form of a slimmed-down and autonomous energy trading agreement between Switzerland and the EU.

Like the Federal Council, Axpo is striving to achieve a sustainable energy future and is highly aware of the fact that in the current climate this energy future must be planned without the replacement nuclear power plants originally envisaged. Axpo is therefore constructively involved in efforts to realign the energy policy. In return for this commitment, it expects a realistic and translatable bill from the Federal Council and Parliament that will ensure planning and legal certainty. However, Axpo rejects important sections of the draft bill concerning the new energy strategy that has now been put forward for consultation, in particular because the targets cannot be met with the measures that are planned, and conflicts of aims have not been addressed sufficiently. For Axpo, a secure, competitive supply of energy supported by the population takes top priority. Axpo especially also advocates the complete opening of the market. Axpo shares the opinion that the Swiss people must be involved in all decisions from an early stage in view of the massive and far-reaching consequences for the national economy, and that all aspects of the consequences of decisions and measures must be disclosed fully and honestly.

Axpo is solidly financed, which gives it sufficient leeway to master the challenges of the difficult years to come. On the road to the new energy future Axpo will have to accept risks but will at all times act responsibly in a spirit of entrepreneurship, with the long-term objective of securing a reliable supply of electricity at the lowest possible prices.

Axpo is the first energy company to achieve a Level A+ GRI rating

Axpo received a Level A+ rating from the Global Reporting Initiative (GRI) for its sustainability reporting. According to the GRI, Axpo for the first time discloses its performance in all sustainability dimensions at the highest transparency level, and not only for the topics where it performs well. This comprehensive report demonstrates Axpo's understanding of sustainability as a core aspect of the long-term outlook of its business model. Sustainability plays an important role in all business issues. A culture of openness, transparency and the willingness to engage in dialogue is needed to reach this level. Level A+ is the highest rating allocated by the GRI. Axpo is the only energy supplier in Switzerland to have reached this level.

Axpo Group key data

Total assets in CHF million

18 684

17 742

+ 5,3%

Revenues in CHF million

7 346

6 354

+ 15,6%

EBIT in CHF million



+ 136,7%

EBIT as % of revenues



Net profit in CHF million



+ 526,7%

Free cash flow in CHF million



+ 208,7%

Equity in CHF million

7 970

7 600

+ 4,9%

Equity ratio (in %)



Net investments in CHF million



- 39,6%

Number of employees (full-time equivalents)

 4 368

4 415

- 1,1%

More Information

Axpo Holding AG | Corporate Communications
Media Hotline 0800 44 11 00 (Switzerland)
+41 56 200 41 10 (International)


Parkstrasse 23
CH-5401 Baden
Phone: +41 56 200 37 77

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