Landsvirkjun’s energy production in the year 2013 was successful. The sold volume amounted to 13,186 GWh in the year, which is a record high in the Company’s history. This year, construction work on Budarhals Hydropower Station was for the most part concluded and the new power station will result in increased production capacity for the Company in 2014.

Good return from core operation

Revenue increased between years due to the increased sale of electric power and increased transmission income. However, the world market price of aluminium decreased during the year. The return from core operation, profit before unrealised financial items, has increased in the last few years and 2013 was the most profitable year in the Company’s history. Despite these results, there was a loss on the Company's operation after tax.  The loss can be traced to the decrease in world market aluminium prices, reflected in the significant decrease in the carrying amount of embedded derivatives, on which the Company can have a limited effect.

Cash flow from operations amounted to USD 258.5 million, which is the second highest in the Group's history. Investments increased from the previous year but due to good cash flow the Company continued to decrease debt and improve its financial standing. 

Landsvirkjun has in the past years been systematically working on reducing its exposure to risk. Its main financial risks are related to aluminium prices, interest rates and foreign exchange rates against the USD. 

Operating outlook

Landsvirkjun will continue to place an emphasis on decreasing leverage and work on improving efficiency and decreasing risk exposure in the Company’s operation.  Landsvirkjun's results will for the most part be subject to the development in aluminium prices, interest rates and foreign exchange rates. The Company’s income is partly linked to aluminium prices and changes in worldwide market aluminium prices therefore continue to have an effect on Landsvirkjun's future income. Currently, the price of aluminium is low and there is uncertainty with regard to its development in the next months.  The majority of the Company’s loans are on floating interest rates and continued low interest rates are therefore important for operations.

The last water year (which is from the 1^st of October to the 30^th of September each year) was unfavourable due to the lack of precipitation and cold weather in the highlands. Subsequently, Landsvirkjun’s reservoirs did not fill last autumn and the inflow to the reservoirs was well below average. Landsvirkjun therefore made an announcement on reduced residual energy. Pending reductions are in full accordance with electricity power contracts and are assumed to amount to up to 2% of estimated electric power sales in the year 2014. However, the situation could change rapidly and reductions would then be cancelled.

Budarhals Hydropower Station was formally launched and taken into full operation in March 2014. Landsvirkjun's next potential power station projects are located in North-East Iceland but their progression is contingent upon power sales agreements and the relevant authorisation.