ZAGREB, 6 Oct, 2021 - Standard&Poor’s (S&P) ratings agency has upgraded the credit rating of Croatia's state-owned energy producer Hrvatska Elektroprivreda (HEP) from BB+ to BBB-, so that now it is the same as the sovereign credit rating.

It is the first time since 2009 that HEP's credit rating has been restored to investment grade, the company said in a statement on Wednesday.

S&P said in its report that the upgrade reflects HEP’s success regarding robust credit metrics in volatile hydrological conditions and commodity prices.

This is a result of HEP’s gradual evolution towards a market-oriented company with a more flexible cost structure. In comparison to what was previously captured in the rating, HEP shows it is able to more effectively and more robustly manage its exposure to commodity prices and lower implicit volatility. A very good track record proves the company is committed to maintaining financial strength, the report says.

S&P "has recognised our continued efforts to improve risk management and our overall financial position in the challenging circumstances of the coronavirus pandemic," the chairman of HEP's management board, Frane Barbarić, said.

He recalled that, thanks to the good business results in 2020, HEP paid a portion of its profit, notably HRK 840.6 million, into the state budget in September. The company has continued to operate successfully, generating a consolidated net profit of HRK 1.25 billion in the first half of 2021, which is 291 million more than in the first half of 2020.

For more about business in Croatia, follow TCN's dedicated page.

ZAGREB, 1 Sept, 2021 - The HEP national electricity provider paid HRK 840.6 million of last year's annual profit, into the state budget, HEP said on Wednesday following a decision by its general assembly on the distribution of its 2020 profit.

The decision on this contribution to the budget was made based on a government decision on the amount, method and deadline for state-owned companies, who are obliged to pay 60% of their 2020 profit after tax into the state budget.

HEP said in a press release that despite the unfavourable business circumstances in 2020, it had generated a profit amounting to HRK 1.4 billion. Based on the assembly's decision, which was held at the end of August, HRK 70 million will be set aside as legal reserves, while HEP will retain HRK 490.3 million of its profit and as mentioned earlier, HRK 840.6 million will go to the state budget.

HEP noted some of its investments during 2021, highlighting the Kosinj hydroelectric project which the government declared a strategic investment project n July. Together with the Senj 2 project, these are the two largest investment projects for HEP since Croatia's independence. The Senj 2 project is valued at HRK 3.4 billion and will produce 412 megawatts (MW) of electricity into the grid.

(€1 = HRK 7.5) 

For more on business, follow TCN's dedicated page.

For more about Croatia, CLICK HERE.