Write-downs, provisions to weigh on Hafslund's Q3 bottom line

Oct 16, 2012 - Norwegian utility Hafslund ASA (OSL:HAFS) said Tuesday its third-quarter net profit would be dented by NOK 551 million (USD 97m/EUR 74.6m) in extraordinary write-downs and provisions, related to biomass and waste-to-energy units.

Around NOK 271 million in write-downs of production facilities and raw materials and provisions to agreements and disputes are related to the company’s pellets production plant BioWood Norway AS. The unit is suffering from oversupply and low pellet prices and is working below capacity. Hafslund said it was evaluating the plant’s continued operation. In the case of liquidation, the company estimates it will incur between NOK 25 million to NOK 30 million in costs in the fourth quarter of 2012.

The profitability of Hafslund’s waste-to-energy facility Bio-El Fredrikstad has also been affected by falling waste prices in the short and longer term, the company said. It has decided to write down the plant with NOK 240 million in the July-September quarter.

In addition to the above-mentioned items, Hafslund unveiled a NOK-183-million tax provision during the quarter related to a disputed tax case on the disposal of shares in Hatros II AS back in 2007.

Hafslund said it would provide additional details before the official release of its third-quarter financial report on October 25.

(NOK 1 = USD 0.176/EUR 0.135)

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