ALMOST 35,000 new customers and a surge in demand of 7 per cent drove ESB's profits beyond its own expectations in 1996, to £151 million before exceptional restructuring costs. The outcome compares with profits of £83.4 million for 1995.
ESB said yesterday it was "putting a toe in the water" of the telecomunications business, and confirmed that it was in talks with an international player, understood to be British Telecom.
Turnover last year rose by £69 million to £1.95 billion, the company said, while operations cost as a percentage of turnover was down 4 percentage points to 80.8 per cent.
The ESB said it had eliminated completely its foreign currency debt, and reduced the overall burden to £825 million, from £1.3 billion in 1987 and £935 million in 1995.
"Growth in demand for electricity was a significant factor giving greater revenue buoyancy," said Mr Billy McCann, the ESB's chairman. "Growth in demand was very strong, at 6.9 per cent, way ahead of the European average. Clearly this was as a consequence of the impressive performance of the Irish economy.
Demand for electricity increased by 7.4 per cent in the industrial sector, and by 8.4 per cent in the business sector. The domestic load rose by 5.2 per cent, some of which was driven by the connecting of more than 30,000 new homes. Factoring out the new arrivals, it was estimated that average domestic demand grew by 4 per cent roughly.
"You have to go back 40 years to find the same number of new customers, and that was during the rural electrification scheme," said Mr Joe Moran, the ESB's chief executive.
The company promised to spend more than £1 billion over the next five years on supply infrastructure, upgrading and refurbishing the electricity networks across the Republic. The capital would come from internal sources, the firm said, although there would likely be some borrowing.
"This level of investment is essential to ensure that our customers continue to have a reliable and quality electricity supply to meet the needs of industry, agriculture and business," Mr McCann said. "It is an investment essential to the continued, growth of the Irish economy.
The company had diverted a team of 30 to concentrate on the year 2000 "Millennium bug" problem and the introduction of the European Union's single currency, said Mr Joe Maher, the ESB's finance director. The project would cost up to £5 million, he added.
Mr McCann said the ESB would concentrate on its core business - electricity - in Ireland and abroad, and did not see the need to diversify in a major way. But in a reference to the fact that the company owns the secondlargest telecommunications network in the State, he said the company would use its existing assets "where commercial business opportunities apply".
Mr Moran was even more direct, admitting that discussions were already taking place with an international phone company, believed to be British Telecom.
"It's not a secret that we do want to get into that business, and we do want to make money in that business," he said. "We're really just putting our toe in the water."
The company would hope to team up with an experienced telecommunications company to develop its assets, he added.
The ESB said its cost and competitiveness review (CCR) had been concluded, and that this would lead to savings of £60 million a year. Under the CCR, staff numbers are being reduced by 2,000, and there have been significant changes in work practices and reductions in overtime.
In 1995, as part of a restructuring plan, the company took an exception charge of £367 million against profits, turning the profit of £83.4 million into a loss of £284 million. In 1996, the exceptional costs of £18.9 million, the last such charge as part of the restructuring, reduced the £150.8 million profit to £131.9 million.
