Good profit but increased investment costs


A profit of five billion ISK was made on the activities of the Reykjavík Energy Group (Orkuveita Reykjavíkur; OR) in the first six months of the year. Various inflationary effects can be seen in OR’s consolidated interim financial statements, which the board approved today. Within the group are, in addition to the parent company; Veitur Utilities, ON Power, Reykjavík Fiber Network and Carbfix.

Revenues for most of the group’s business units increased year on year. Aluminum prices remained at a higher long-term level and increased revenues from the sale of electricity to heavy industry, and in the general market, the use of electricity and cold water increased, but hot water use decreased slightly year over year. Revenue from new residential connections declined in line with Veitur Utilities’ lower rate for service.

First semester events

The severe weather that took place at the end of February caused damage, particularly to power lines and various electrical equipment in the operations of utilities and power plants. At that time, the reservoirs of hydroelectric power stations in Iceland were very low and the price of electricity purchased for resale in the public market temporarily increased. ON Power topped the Icelandic Customer Satisfaction Scale in February for the third consecutive year. In May, Reykjavík Fiber Network’s Green Bonds were listed on the Icelandic Nasdaq Main Market and mid-year the company’s agreement with the Ministry of Foreign Affairs was announced regarding the RFN’s use of two of the eight fiber optic cables in the so-called NATO Cable, which circles Iceland.

Around the same time, a grant of ISK 16 billion from the European Union Innovation Fund to Carbfix was announced for the development of the CCS center Terminal Coda near Straumsvik.

A lengthy court case regarding the settlement of foreign exchange contracts from 2008 ended in the first half of the year, with OR being forced to pay bankrupt Glitnir Bank about three billion ISK. The settlement was expensed in 2021 but executed in February 2022, reducing operating cash flow in the first six months of the year.

Inflationary effects

Various inflationary effects can be seen in the increase in operating costs during the first half of the year. The increase in inflation leads to higher investment costs, then the increase in imported inputs and contractor costs increased maintenance costs and led to higher investments.

The operating profit (EBIT) of the group in the first six months of the year increases by ISK 1 billion compared to the same period in 2021. However, the increase in investment costs and the evolution of aluminum price figures lead to a drop in the company’s profit of ISK 3.8 billion. year-on-year, to 5 billion.

Bjarni Bjarnason, CEO

These are somewhat unusual times in operations. There’s a lot of investment, especially in utility systems, and there’s a lot of pressure to continue with it, especially given the focus by municipalities and the state on increasing the supply of residential accommodation. For this reason, the contractor market is tight and the lowest bids to work with us are sometimes tens of percent higher than budgets. At the same time, interest rates have risen very sharply, which should, all other things being equal, discourage us from investing.

At Reykjavík Energy, we will continue to participate in the necessary development. Although it is certainly more expensive today than before, our finances are solid. This is why we have the resources to support strong housing development and an energy transition in transport, but the climate crisis is leading nowhere.


Mr. Benedikt Kjartan Magnússon
+ 354 516 6100

  • OR Q2 2022 Interim Financial Statements


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