MONTREAL — Hydro-Québec succeeded in increasing its net profits in the second quarter of 2018 with the sale of 55 % shares of its subsidiary, TM4 at the american society Dana.
The quarterly results of the corporation, made public Friday, show a net profit of 623 million ($264 million $ more than the $ 359 million $ recorded in the same period in 2017.
However, the sale of the assets of TM4, a subsidiary of Boucherville, which manufactures electric motors, generated a cash inflow of $ 277 million, or an amount greater than the increase of its profits. In other words, without this sale, the net profit would have been in slight decline compared to last year, a fall of $13 million.
In a conference call on Friday, vice-president at Hydro-Québec Jean-Hugues Lafleur, has attributed much of this decline to the rise in interest rates.
“We have a good loan program, so that in them only the interest on the debt securities represent an increase of $ 39 million”, he explained.
A glance at the results shows that the financial expenses rose from $ 615 million $ in the second quarter of 2017 for $ 654 million this year. Since the beginning of 2018, in fact, $ 80 million more than Hydro-Québec has had to pay out in financial fees.
“A problem of the rich”
Electricity sales in Québec remained stable in terms of volume, 37 TWh, but Hydro has received $ 48 million more from its customers. “It takes into account, of course, the tariff increase,” admitted Mr. Lafleur.
Hydro also reports of record exports, with net sales of 8.9 TWh, an increase of 20 % compared to the 7.4 TWh in the second quarter of 2017.
And yet, the profits derived from the export have virtually not moved to 349 million $. The problem is that Hydro has had to contend with substantial price drops on the market. Thus, the average price of a kWh, which was 4.7 cents last year, has dropped to 3.9 cents in 2018.
Jean-Hugues Lafleur noted, however, that the cost of production of the corporation is located approximately 2 cents per kWh and sell at 3.9 cents “is very profitable anyway.”
On the other hand, even if Hydro is rushing to sell during the peak hours where the price is highest, it is argued that the reservoirs of the dams are full. “It ensures that we are able to make maximum use of our lines (of transport) and one benefits from it; we prefer to sell even on the weekends instead of keeping it in our tanks,” said M. Lafleur.
Moreover, Hydro has had to make “some spillage”, he said, adding that “it is certain that we prefer to sell our energy to the dump”.
“There is a limit to (the amount of water) that we can put behind our dams. It is a problem of the rich as it was, it is a beautiful problem to have more water.”
With this second quarter, the corporation shows positive results for the first six months of the year, an increase of $ 365 million of its net profits for a total of 2,267 billion $ compared to 1,902 billion $ in the first half of 2017.
In addition to the sale of TM4, a Hydro-Québec has taken advantage of normal temperatures in the winter of 2017-2018, after a mild winter the previous year, which allowed him to garner an increase of $ 52 million in the first quarter, bringing the total increase of revenue in the quebec market to $ 100 million for the first six months.
The volume of sales increased slightly to 89.9 TWh in the first half of 2018, compared to 89.3 TWh for the same period in the previous year.
Exports, for their part, continued to increase, reaching the record volume of 18.7 TWh, up 7 % compared to 17,5 TWh in the first half of 2017, revenues of $ 835 million $, an increase lower by 2.1 % due to the falling prices on the markets.