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Robust investments at Reykjavík Energy Group


Extensive construction projects with considerable investments leave their mark on Reykjavík Energy’s (Orkuveita Reykjavíkur; OR) consolidated interim accounts for Q1 2023. Investments amounted to ISK 4.7 billion during the period, an increase of 6% compared to Q1 2022 and of 24% compared to Q1 2021. Investments are significant for all the companies within the group. They are, in addition to the parent company, Veitur Utilities, ON Power, Reykjavík Fibre Network, and Carbfix. Today, OR’s Board of Directors approved the interim financial statements for Q1 2023

Growing operations

The OR Group's revenues for Q1 grew from the previous year, but so did operating expenses. Increased expenses are mostly due to increased purchase of electricity for resale and increased tariff for transmission of electricity. The rapid growth of the innovative company Carbfix is also reflected in the statements. These factors together with the decline in income from the sale of electricity to energy intensive industry due to the decrease of aluminium prices, means that EBIT and EBITDA were lower in the first three months of the current year than in the same period of 2022. Profit in Q1 2023 was ISK 2.3 billion. As often before, the development of aluminium prices has a considerable effect on the calculated result for the period. Profit is thus lower than last year but working capital from operations is comparable to Q1 2022.

Extensive investments

The most extensive investments projects within the Orkuveita Reykjavíkur group originate from the subsidiary Veitur Utilities. The construction of a new sewage pumping station in Reykjavík is a large project, as is the ongoing renovation of the long hot-water main in West Iceland. Furthermore, installation of smart energy meters in the entire utility service area is ongoing.

In ON Power’s power plant operations, the capacity of carbon capture and sequestration is being expanded, preparations for the doubling of the Hverahlíð steam-main are under way, and the operating control systems at Nesjavellir is being upgraded. Reykjavík Fibre Network is extending its backhaul network and upgrading equipment and software. Carbfix's largest project is the development of the Coda Terminal carbon sequestration facility at Hafnarfjörður, as well as the scaling of Carbfix operation. Most of the parent company's investments are in the Group’s collective IT systems and the reconstruction of OR Group’s headquarters at Bæjarháls.

Successful funding

A significant part of investments is financed through operating profit, and the Group's equity ratio strengthened slightly during Q1 2023. Reykjavík Energy’s issuance of green bonds has been successful to date. In 2023, their sale has raised ISK 7.5 billion in two auctions, in March and May. The amount has been used for new investments and repayment of older loans. Furthermore, OR has initiated discussions with supranational lenders regarding financing of various projects over the next years.  Investors seem to have confidence in the Group and yields are comparable to those of Municipality Credit Iceland. Preparations are underway for the issuance of new share capital in Reykjavík Fibre Network, which has been authorized to be sold to new co-owners of the company. The corresponding process at Carbfix is more advanced.


Mr. Benedikt K. Magnússon


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