Lower electricity revenues in Switzerland saw Axpo's first half earnings plunge 54% as the country's hydro power stations continued to chalk up losses, the utility said Monday.
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The entire energy industry "remains in a challenging environment" and Axpo would only benefit from the price recovery on the international electricity market after a time lag, as it fixed some of its sales prices three years in advance, it said.
This meant that the "ultra-low" power prices of 2015/16 would remain a burden on Axpo's earnings for this and next year, even though prices had recovered since 2016.
Earnings for the six months to end-March were down 54% from CHF 424 million ($430 million) for 2016/17 to CHF 196 million for 2017/18, on revenue down 15% from CHF 2.99 billion to CHF 2.538 billion.
Current forward prices from 2020 indicated continuing recovery, with Axpo saying it had signed contracts for 40% of production for 2020 and 2021, without saying at what price.
It was still too early, however, to say whether the period of rising electricity prices would last, it said.
Meanwhile Swiss hydro remained under particular pressure from cheaper continental power. According to the Swiss Federal Office of Energy, the industry made a net loss of CHF 311 million in 2016.
"Even if the market premium, which will apply until 2022, is set to reduce this amount to around CHF 200 million per year, there is a lack of funds available to invest in expanding hydro power," it said.
According to Switzerland's September 2016 Energy Act, operators of hydro plants over 10 MW are entitled to a market premium if they have to sell electricity sub-cost. The support is limited to five years. In total the premium amounts to around CHF 110 million per year, with investment contributions of around CHF 60 million per year.
On a more positive note, the return of both units at the Beznau 1 nuclear plant in late March was helping restore the company's profitability, although over two years' of investigations into the integrity of steel in the reactor pressure vessel cost CHF 80 million, Axpo said.