Bord na Móna - Source Issue 11 - (Page 7)

CRISIS esponding to the worst harvest in Bord na Móna’s history, we spoke with Chief Financial Officer Michael Barry on how the organisation met this unprecedented challenge to its finance with summer 2012 recorded as one of Ireland’s wettest summers in years. “We had the worst peat harvest in our history last summer,” said Michael. “At 1.2 million tonnes of peat, the harvest came in at 37 per cent of the amount expected for 2012. We needed a harvest of 3.6 million tonnes, so the harvest was down two-thirds.” That harvest had a devastating impact “as peat is still the lifeblood of the company’s principal businesses”. With Feedstock customers, including Edenderry Power, Lough Ree Power, and West Offaly Power, still needing milled peat every day of the year, stock levels are now precariously low. “Even with good summers, it will take us three years, up to 2015, to get stocks back to a comfortable level.” Mitigation plan In the immediate term, the company lost €30 million due to the unprecedented bad harvest and reacted quickly with a plan to recover €24 million of the loss. This plan includes measures aimed at managing current peat stocks, revenue increases and cost control Derrygreenagh Rainfall Trends 1956-2012 MANAGEMENT R BORD NA MÓNA HAS PAID A HEAVY PRICE FOR IRELAND’S POOR SUMMER LAST YEAR. HOWEVER, STAFF ARE DIGGING DEEP TO RECOVER THE IMPACT initiatives, both pay and non-pay. Savings Those measures included cutting discretionary spend and overhead spend, as well as voluntary pay reductions for certain grades of staff within the company. In addition, seasonal employees were not taken on in Feedstock over the past winter. This measure involved an amount of redeployment of fulltime employees within Feedstock. Savings were also made with a short-time working initiative for office-based employees. “Over the next three years, we will do everything in our power to recover stock levels, but we need good summers to do that,” said Michael. “We also have to note that, as we approach 2015, the Public Service Obligation will expire in relation to Edenderry Power, so we will no longer have a subsidy for the electricity we produce. That means we need to become more competitive with regard to our cost base. That will involve significant change in Feedstock and we are already restructuring workshops and stores’ functions there.” Revenue The company has also taken steps to generate additional revenue. “We are promoting additional sales of our products, and this has included selective price increases to generate more revenue where we felt the products could take that,” said Michael. Already, the company is marginally ahead on its target to net additional income and plans are afoot to look at new revenue streams. Staff As with all change in Bord na Móna, this is being done with constant engagement with staff. “People are what make the businesses tick, and our plans require good financial management, good operations management and ongoing engagement with employees.” 3.6m tonnes 1.2m tonnes €30m €24m Peat harvest target 2012 Peat harvest achieved 2012 Financial impact Recovered through mitigation plan INFORMATION S Read Bord na Móna’s annual reports at www.bordnamóna.ie/corporate/ reports/ Bord na Mona Monthly Production 30% 250 25% 200 150 100 50 0 Jan Feb Mar Apr May Jun Jul Months Monthly Average 1958-2012 5-Year Monthly Average 2008-2012 Monthly Average 2012 2012 Aug Sep Oct Nov Dec 15% 20% 10% 5% 0% Apr May Jun Jul Months Bord na Móna Historic Average www.bordnamona.ie Source | 7 Aug Sep Oct RESOURCEFUL Rainfall mm % Target Achieved http://www.bordnamóna.ie/corporate/ http://www.bordnamona.ie

Table of Contents for the Digital Edition of Bord na Móna - Source Issue 11

Bord na Móna - Source Issue 11
Contents
News From
Crisis Management
Midland Power
Clean Energy Future
The Need for Change
The Gathering
Game On
Developments In
Heritage Corner
A Nationwide Spotlight

Bord na Móna - Source Issue 11

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