Caruna significantly increased investment in electricity network improvements in 2016
In 2016, Caruna increased its spending on the continued network improvement programme to EUR 238 million, approximately double the Group’s operating profit. These investments aim to improve the reliability of electricity distribution for Caruna’s customers. Depreciations from network assets and financing costs were the main contributors to the loss of EUR 32 million.
Caruna Networks Group (Caruna) net sales for 2016 increased from the previous year to EUR 384 (288 in 2015) million, driven by a combination of customer distribution fees and an increase in customer volumes to 664,000 customers (655,000). Operating profit was EUR 119 (26) million. Depreciations from network assets and financing costs were the main contributors to the loss of EUR 32 (140) million. Net cash flow from operating activities after investments was EUR 174 (166) million negative.
As the Electricity Market Act laid down more stringent targets for the security of supply, Caruna is required to make significant investments to improve the reliability of electricity distribution. Caruna is committed to meeting its statutory targets by 2028 when, in the case of outages caused be adverse weather conditions, the company will be able to restore the power for customers within six hours in urban areas and within 36 hours in rural areas. Caruna’s network improvement programme continued as planned across Finland in 2016.
“The Finnish electricity network mainly consists of overhead lines, installed in the 1960s and 1970s. The technology used in this network has now reached its service life. In addition to achieving our security of supply targets, we are modernising the electricity network over a 40-year period, to meet the needs of a changing society and support the future energy system,” said Caruna’s acting CEO, CFO Jyrki Tammivuori.
In 2016, the Group invested EUR 238 (173) million in the electricity network improvement. In their respective network areas, Caruna Oy invested EUR 224 million and Caruna Espoo Oy EUR 14 million in improving the reliability of electricity distribution. With these projects, additionally ca 30,000 of Caruna's customers now have access to a medium-voltage underground cable network and more reliable electricity distribution.
Caruna’s projects have a significant regional impact. The positive impact on contractor jobs amounted to over 2,000 person years in 2016. The largest individual projects for increasing the reliability of supply took place in Kauhajoki (EUR 2.3 million), and Taivassalo and Vilu area (EUR 2.2 million).
“Professional partners play a significant role in Caruna’s operations. The skills and safety of our employees and contractors are a priority for us. In 2017, we will especially invest in the skills development of our subcontractors,” Mr Tammivuori added.
The financial statements of Caruna Networks Group, Caruna Espoo Oy and Caruna Oy are available on Caruna’s website. Further information on Caruna’s year in 2016 and other topics, such as the regional network improvement projects, will be published in our annual Caruna Report on week 12. The report has been drawn up in accordance with Global Reporting Initiative's (GRI) G4 Guidelines for corporate responsibility reporting.