Atel Group in the first six months of 1998

In the first six months of 1998, the European electricity market was again marked by an oversupply of electricity. Electricity power consumption in UCPTE's West European interconnected grid rose slightly by 0.5 % compared to 1997, and in Switzerland, consumption rose by 1.5 % within the same period. By contrast, production of electrical energy remained at the prior year's level. In the first half-year of 1998, the Atel Group's electricity sales by volume totalled 12,967 million kWh, representing a 16 % rise over the prior year period. This increase was attributable mainly to short-term commercial activities, and together with low-cost procurement, Atel almost managed to compensate for the pressure on margins.

The Atel Group's consolidated net turnover rose to CHF 895 million, CHF 92 million up compared to the prior year. This 11 % rise was attributable to operating growth (+CHF 33 million and the inclusion of the Kummler+Matter Group (+CHF 59 million). At CHF 88 million, the Atel Group's earnings on ordinary activities for the first half of 1998 were slightly below the prior year's level but in line with expectations. Including extraordinary income of CHF 3 million, Group profit amounted to CHF 91 million. Cash flow was 2.1 % above the prior year's figure at CHF 295 million. Fixed asset investments amounted to CHF 143 million in the first six months of 1998 (prior year: CHF 126 million).

In the second half of the year, the Atel Group anticipates little change in the operating environment. The sustained pressure on prices and margins will continue in national and international electricity trading business as well as in the engineering and electrical installations sector. The Atel Group expects operating profit for the full 1998 financial year to be in line with the prior year's figure (CHF 172 million).

In connection with the planned market opening, negotiations are now taking place about existing contracts. The results thereof will influence the mid-term development of the Atel Group's profits.

Aare-Tessin Ltd. for Electricity