Tallinna Vesi Gross Profits Up 7.1% in Q2
The capital's water utility posted 7.8 million euros in gross profit in the second quarter of the year, a 7.1 percent increase from the same quarter of 2010, according to its latest financial report.
The newly-published figures show, however, that operating profit was down 4 percent, dropping from 7.2 million to 6.9 million euros over the same period, while profits before taxes dipped 1.3 percent to 5.7 million euros.
In a statement, the company attributed the rise in gross profits to "excellent operational performance and related efficiencies," while blaming the decreases on lower profits from non-related activities and a drop in the value of financial instruments.
Total sales for the quarter were 12.8 million euros, a 2.3 percent increase compared to a year ago.
The profits report comes despite the battle that the 35-percent city-owned company is waging with government authorities over rates. The Competition Authority has blocked the monopoly's proposed 3.5 percent rate hike, a move which the company says violates its privatization agreement.
CEO Ian Plenderleith said that the company’s underlying results are good, but the sales numbers are suffering due from the tariff freeze.
"As the result of the unilateral breach of the fully legal privatization contract by the Estonian authorities, the company has been deprived of earning over 600 thousand euros in 2011 that were contractually agreed in the business plan upon privatization," he said.
The company predicts that its annual rate of return on invested capital this year will be 6.5 percent, up slightly from last year's 6.4 percent.
Steve Roman