Sydkraft Announces Interim Report January - September 2001.
MALMO, Sweden--(BUSINESS WIRE)--Nov. 16, 2001
-- Earnings amounted to SEK 5.0 billion -- Excluding capital gains and nonrecurring items, earnings improved by 13% -- Increased hydro and nuclear energy production -- SAKAB and Sydkraft EcoPlus - aggressive waste-handling initiative -- Sydkraft delisted from the Stockholm Exchange on September 28
Comments by group CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board.
Earnings for the first nine months of the year were significantly better than in the corresponding period of 2000. Profit after net financial items amounted to slightly more than SEK SEK
In currencies, this is the abbreviation for the Swedish Krona.
The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. 5 billion. The sale of the shareholdings in E.ON E.ON Energy On (German energy company) AG and Hamburgische Electricitats-Werke (HEW) during the second quarter created a capital gain totaling SEK 2.9 billion. Excluding capital gains and pension refunds from Alecta during 2000, profit after net financial items rose by 13%.
Discussions about electricity prices in Sweden are continuing. During the past year, prices on the Nord Pool Nord Pool, the Nordic Power Exchange, is the world's only multinational exchange for trading electric power. Nord Pool was established in 1993, and is owned by the two national grid companies, Statnett in Norway (50%) and Svenska Kraftnät in Sweden (50%). electricity exchange have increased due to decreased precipitation precipitation, in chemistry
precipitation, in chemistry, a process in which a solid is separated from a suspension, sol, or solution. In a suspension such as sand in water the solid spontaneously precipitates (settles out) on standing. , primarily in Norway, lower reservoir water levels in Norway and the increasing use of electricity. The value of the Swedish krona Noun 1. Swedish krona - the basic unit of money in Sweden
Swedish monetary unit - monetary unit in Sweden
ore - a monetary subunit in Denmark and Norway and Sweden; 100 ore equal 1 krona against the Norwegian currency has decreased by slightly more than 10% during the year. Prices on the Nord Pool exchange are set in Norwegian kroner. Prices have now returned to the same level that applied at the beginning of deregulation Deregulation
The reduction or elimination of government power in a particular industry, usually enacted to create more competition within the industry.
Traditional areas that have been deregulated are the telephone and airline industries. .
In connection with electricity prices, the Swedish electrical output situation should also be mentioned. Should the winter be cold, we may, in the worst scenario, suffer a shortage of electricity, since the electrical balance in southern Sweden is stretched, to say the least. There is still production that can be utilized, but this requires that the industry, in collaboration with Svenska Kraftnat establish a short- term joint financing solution. In the longer-term, I feel it will be necessary to solve the problem by establishing a market for the buying and selling of power output.
In the longer term, new investment will be necessary in the Swedish energy sector and we are convinced that the most suitable fuel form is natural gas. First, however, electricity prices must achieve long-term stability The long-term stability of an oscillator, the degree of uniformity of frequency over time, when the frequency is measured under identical environmental conditions, such as supply voltage, load, and temperature. at a level of approximately SEK 0.25 per kWh. However, it will not be possible to bring such production on line within the next few years.
Our operations in the Nordic countries and Poland are being extended. Our involvement in southern Norway is developing according to according to
1. As stated or indicated by; on the authority of: according to historians.
2. In keeping with: according to instructions.
3. plan and we are participating actively in the ongoing structural transformation there. In both Denmark and Poland, we are conducting ongoing discussions regarding the acquisition of heat operations. In Denmark we also intend to collaborate with the two Danish companies This is a list of major companies based in Denmark. Please note that the list is highly incomplete and does not have thousands of companies of different sizes. Links should only point to the Wikipedia article, and not to a web page URL. , EnergiE2 and DONG in investing more than SEK 400 M in ocean-based windpower plants, south of Lolland.
The Franfurt-based German trading company, Acton Energy, which we own equally with ABB n. 1. Among weavers, yarn for the warp. Hence,
Noun 1. ABB - an urban hit squad and guerrilla group of the Communist Party in the Philippines; formed in the 1980s , has recently obtained the necessary permits for its operations. The company will manage energy portfolios for both municipal energy companies and industrial customers.
Our goal is for Sydkraft to have the strongest brand in the industry. Two new important components in this process are our operations in the recycling recycling, the process of recovering and reusing waste products—from household use, manufacturing, agriculture, and business—and thereby reducing their burden on the environment. of materials and energy, and water supply. Our acquisition of the water supply network in the city of Norrkoping has aroused a certain amount of attention in Sweden because this represents the first privatization privatization: see nationalization.
Transfer of government services or assets to the private sector. State-owned assets may be sold to private owners, or statutory restrictions on competition between privately and publicly owned of water supply in the country. The recycling of materials and energy is important because the amount of waste is increasing while it must, in the long-term be radically decreased. Through our subsidiaries, Sydkraft SAKAB and Sydkraft EcoPlus, we intend to become the natural choice for customers in solving their waste-handling problems.
Sydkraft wants to contribute to positive developments in society whereby our operations form part of sustainable development Sustainable development is a socio-ecological process characterized by the fulfilment of human needs while maintaining the quality of the natural environment indefinitely. The linkage between environment and development was globally recognized in 1980, when the International Union on environmental, financial, social and ethical fronts. Working with the principle of sustainability is not to be regarded as a fashion or even a trend. It must become part of the future and we must involve our customers and those with interests in our operations. Current evidence of our aggressive focus on the environment is provided by our involvement in the Framtidsstaden (City of the Future) project in Malmo where we coined the expression "100% locally renewable." The energy system we built there was just that, and has significantly strengthened the Sydkraft brand.
Sydkraft is also participating in a partnership with the World Wildlife Fund and some 15 other Nordic companies to jointly develop a business model that supports sustainable development. The result is to be presented at the UN World Summit for Sustainable Development in Johanesburg, South Africa South Africa, Afrikaans Suid-Afrika, officially Republic of South Africa, republic (2005 est. pop. 44,344,000), 471,442 sq mi (1,221,037 sq km), S Africa. in September 2002.
Sydkraft share delisted
Sydkraft was delisted from the Stockholm Exchange on September 28, after 35 years as a listed company listed company n → compañía cotizable
listed company n → société cotée en Bourse
listed company list n → . The reason for this is that with its new ownership structure, Sydkraft no longer meets the requirements for a listing on the Stockholm Exchange's A List.
Today, Sydkraft is part of the E.ON Group, which is listed on the Frankfurt and New York New York, state, United States
New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of Exchanges. With this in mind, I am convinced that we face an interesting future.
With the exception of the accounting of income taxes in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.
As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with the Note referring to consolidated shareholders' equity Shareholders' Equity
A firms' total assets minus its total liabilities. Equivalently, it is share capital plus retained earnings minus treasury shares. Shareholders' equity is the amount by which a company is financed through common and preferred shares. (see below), the accounting principles upon which this interim report has been based are unchanged compared with the accounting principles used in the Annual Report for year 2000.
Sales and earnings
The Group's net sales Net Sales
The amount a seller receives from the buyer after costs associated with the sale are deducted.
This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight for the period amounted to SEK 12 540 M (10 276), an increase of approximately 22%, compared with the corresponding nine months of 2000. Of this amount, sales of SEK 3 567 M (2 886) related to the third quarter. The rise was due to increased sales of electricity, heat and services, normalized price levels and acquired operations (Norrkoping Miljo & Energi, Nora Energi and SAKAB).
Electricity sales rose by 34% to 26 961 GWh (20 116). Sydkraft's total gas deliveries decreased by 1% and amounted to 5 451 GWh (5 456). The acquisition of new heat operations in combination with a cold start to the year led to sales of heat increasing by 38% to 3 814 GWh (2 770).
Operating expenses Operating expenses
The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. totaled SEK 8 172 M (6 947). The increase was due to acquisitions and higher volumes.
Depreciation during the period totaled SEK 1 606 M (1 272). The increase was mainly attributable to the acquisitions implemented.
Earnings from participations in associated companies associated company associate n → Partnerfirma f
associated company n → società collegata amounted to SEK 171 M (246). Norrkoping Miljo & Energi, which was formerly an associated company, is consolidated in the Group's accounts as a wholly owned subsidiary Wholly Owned Subsidiary
A subsidiary whose parent company owns 100% of its common stock.
In other words, the parent company owns the company outright and there are no minority owners. as of January 1, 2001. The holding in HEW was sold in May. At the same time, participations were acquired in Hafslund and Fredrikstadsgruppen from Vattenfall.
Operating profit Operating profit (or loss)
Revenue from a firm's regular activities less costs and expenses and before income deductions.
See operating income. increased by 40% to SEK 4 150 M (2 957), of which SEK 569 M (1 052) pertained to the third quarter. Operating profit includes capital gains totaling SEK 1 217 M, of which the sale of the holding in the associated company HEW accounted for SEK 1 139 M. The operating profit for the year-earlier period included SEK 556 M, corresponding to the current value of expected pension refunds from Alecta. Excluding these two items, operating profit rose by 25%.
The financial net improved by SEK 1 470 M compared with the first nine months of 2000 and amounted to of SEK 895 M (expense: 575). The financial net included a capital gain totaling SEK 1 770 M related to the divestment divestment to strip one's investment from an entity. of the financial holding in E.ON AG. Excluding this capital gain, the financial net deteriorated by SEK 300 M due to increased debt as a result of company acquisitions and negative exchange-rate differences.
Consolidated profit after net financial items amounted to SEK 5 045 M (2 382), of which SEK 299 M (849) related to the third quarter. Excluding capital gains from the sale of HEW and E.ON, and the Alecta refund TO REFUND. To pay back by the party who has received it, to the party who has paid it, money which ought not to have been paid.
2. On a deficiency of assets, executors and administrators cum testamento annexo, are entitled to have refunded to them legacies during 2000, profit improved by 13%.
Net sales and earnings per business sector SEK M Net sales Of which external Earnings Q3 01 Q3 00 Q3 01 Q3 00 Q3 01 Q3 00 Marketing and Sales 5,672 4,344 5,332 4,003 -42 19 Production 5,801 4,846 580 355 1,190 1,124 Distribution 4,320 3,623 3,154 2,722 1,051 941 Consulting and Contracting 2,126 1,739 1,318 1,066 19 40 Energy Trading Result from 4,746 4,225 2,041 2,104 628 134 Participations in associated companies - - - - 173 246 Group -10 -8,588 - - - - eliminations, etc. 294 Other 169 87 115 26 1,131 453 Net sales 12,540 10,276 12,540 10,276 Operating profit 4,150 2,957 Net financial items 895 -575 Profit after net financial items 5,045 2,382
During the most recent 12-month period, the operating margin Operating Margin
A ratio used to measure a company's pricing strategy and operating efficiency.
Calculated by: was 29.1% (24.8) and the profit margin 35.4% (22.0).
The return on equity after tax during the most recent 12-month period was 19.1% (10.4) and the return on capital employed Return on capital employed (ROCE)
Indicator of profitability of the firm's capital investments. Determined by dividing Earnings Before Interest and Taxes by (capital employed plus short-term loans minus intangible assets). before tax was 16.1% (10.0).
Earnings per share for the first six months of 2001 totaled SEK 20.37 (8.40). For 2000 as a whole, Sydkraft's earnings per share amounted to SEK 11.30.
Margin and return values, as well as earnings per share, were positively affected by the capital gains that arose in connection with the sale of the holdings in HEW and E.ON AG.
Marketing and Sales business sector
Net sales for the period totaled SEK 5 672 M (4 344), of which sales to customers outside the Group accounted for SEK 5 332 M (4 003). Operating profit amounted to SEK expense 42 M (19).
The increase in sales was due to both increased volumes and changes in price levels for gas and heat. Physical sales of electricity and heat increased. This was due to the acquisitions of Sydkraft Ost and Nora Energi and the colder weather conditions, which particularly affected sales of district heating District heating (less commonly called teleheating) is a system for distributing heat generated in a centralized location for residential and commercial heating requirements. during the period. Gas sales remained virtually unchanged.
The positive development for Total heat continues and the importance of natural gas is increasing. The build-out of the natural gas network in the province of Smaland has begun and the sales activities linked to this are developing favorably fa·vor·a·ble
1. Advantageous; helpful: favorable winds.
2. Encouraging; propitious: a favorable diagnosis.
Although price levels on the Nord Pool exchange fell somewhat during the third quarter, they were significantly higher than during the year- earlier period. This affected sales prices to customers and the purchase prices paid by the sector. Given the current competition situation, the possibilities for recouping these increases from customers have been limited, which is the primary cause of the loss for the period. Compared with 2000, earnings have been charged with a further approximately SEK 35 M for the modernization modernization
Transformation of a society from a rural and agrarian condition to a secular, urban, and industrial one. It is closely linked with industrialization. As societies modernize, the individual becomes increasingly important, gradually replacing the family, and renewal of IT structure. At the same time, cost efficiency measures and savings continued with favorable fa·vor·a·ble
1. Advantageous; helpful: favorable winds.
2. Encouraging; propitious: a favorable diagnosis.
Production business sector
Net sales totaled SEK 5 801 M (4 846), of which sales to customers outside the Group accounted for SEK 580 M (355). Operating profit amounted to SEK 1 190 M (1 124).
Electricity production totaled 23 300 GWh (19 740).
Hydroelectric power hydroelectric power: see power, electric; water power.
Electricity produced from generators driven by water turbines that convert the energy in falling or fast-flowing water to mechanical energy. production amounted to 9 347 GWh (9 247). The increase was due to the higher run-off during 2000, which affected reservoir levels at the beginning of the year.
Nuclear power produced 13 429 GWh (10 093). In addition to high availability Also called "RAS" (reliability, availability, serviceability) or "fault resilient," it refers to a multiprocessing system that can quickly recover from a failure. There may be a minute or two of downtime while one system switches over to another, but processing will continue. , the increased production between the years is due to the fact that no reductions were made during 2001, because of the limited water supply in the Nordic system. During May 2001, the business sector was supplied with a further 8.5%, corresponding to 2 TWh, from the Forsmark nuclear power plant Forsmark Nuclear Power Plant is a nuclear power plant in Forsmark, Sweden, and also the site of the Swedish Final repository for radioactive operational waste. It is operated by a subsidiary of Vattenfall. as a result of an agreement with Vattenfall. Sydkraft thus utilizes approximately 10% of Forsmark's production capacity. During the period January to September, 2001, production at the Forsmark facility amounted to 878 GWh.
A total of 509 GWh (400) of electricity was produced via co-generation, gas turbine turbine, rotary engine that uses a continuous stream of fluid (gas or liquid) to turn a shaft that can drive machinery.
A water, or hydraulic, turbine is used to drive electric generators in hydroelectric power stations. and windpower plants during the year. The increase was due to electricity production from the acquired co-generation facility in Norrkoping.
Heat production amounted to 3 814 GWh (2 770). District heating production increased due to the acquisition of Norrkoping's heat operations and a colder first quarter, compared with the first quarter of the preceding year, and amounted to 3 105 GWh (2 182). Deliveries of Total heat rose to 709 GWh (538) as a result of newly contracted volumes (during 2000) in combination with colder weather conditions.
Heat operations continued to expand through a number of acquisitions. In Poland, two new acquisitions were concluded in Koszalin and Zlotow, where Sydkraft hold 31% and 70% of the shares, respectively.
The Waste-handling business segment, which is new for 2001, consists of the operations conducted by Sydkraft SAKAB and Sydkraft EcoPlus.
The newly established company Sydkraft EcoPlus will develop, own and market total concepts for the handling of customer waste products and own installations for refuse disposal. The customer base will include companies, government authorities and municipalities.
Sydkraft SAKAB handles hazardous waste Hazardous waste
Any solid, liquid, or gaseous waste materials that, if improperly managed or disposed of, may pose substantial hazards to human health and the environment. Every industrial country in the world has had problems with managing hazardous wastes. and the production of heat. During the period, heat production amounted to 51 GWh.
Distribution business sector
The Sydkraft Group's electricity networks and gas companies are gathered within the Distribution Business Sector, which also includes the water supply operation in Norrkoping.
Net sales totaled SEK 4 320 M (3 623), of which sales to customers outside the Group accounted for SEK 3 154 M (2 722). Operating profit amounted to SEK 1 051 M (941).
During the period, the sector transported 25 216 GWh (23 392) of electricity.
The increase, both in volumes of transported electricity and net sales, was due primarily to acquired companies and to the colder start to the year. The new water and sewerage sewerage, system for the removal and disposal of chiefly liquid wastes and of rainwater, which are collectively called sewage. The average person in the industrialized world produces between 60 and 140 gallons of sewage per day. operation included in the acquisition of Norrkoping Miljo & Energi, as well as hikes made in the price of oil, which affected both the purchasing and selling price of natural gas, also contributed to the increase.
Since the beginning of the year, Osternarke's Kraft, Nora Bergslags Energi, Ostnat (formerly Norrkoping Miljo & Energi) and the electrical network For electrical power transmission and distribution networks, see .
An electrical network is an interconnection of electrical elements such as resistors, inductors, capacitors, transmission lines, voltage sources, current sources, and switches. operations in the Forskraft area, Vikbolandet and Soderkoping, with a combined total of 125,000 customers, have been added. The agreement with Vattenfall in May also provided Sydkraft with 49% of the shares in the Fredrikstad Energiverk group in Norway and a further 74 000 customers.
An important issue for the business sector is the development of infrastructure for natural gas. The expansion of the natural gas network in the Gnosjo-Gislaved area has been under way since September and efforts to bring about a second import channel for natural gas (Baltic Gas Interconnector This article or section contains information about a planned or expected pipeline.
It may contain information of a speculative nature and the content may change dramatically as the construction and/or completion of the pipeline approaches, and more information becomes available. ) are continuing.
Consulting and Contracting business sector
Net sales totaled SEK 2 126 M (1 739). Sales to customers outside the Group accounted for SEK 1 318 M (1 066), which means that the proportion of external projects undertaken rose from 61% to 62%. Operating profit amounted to SEK 19 M (40).
Compared with the corresponding nine months of 2000, the composition of the sector has been changed. During the latter part of 2000, Sycon acquired a number of consulting operations in Sweden and Denmark. Through the Group's acquisition of the NME NME Name
NME New Musical Express
NME Neisseria Meningitidis
NME New Molecular Entities (US FDA New Drug Approval reports)
NME Network Management Ethernet
NME New Music Express Group, Enista (previously NME Service) was consolidated in the sector as of January 1, 2001. Furthermore, ElektroSandberg's installation operations were sold to the NEA NEA
1. National Education Association
2. National Endowment for the Arts
NEA (US) n abbr (= National Education Association) → Verband für das Erziehungswesen group in January.
The unsatisfactory development of earnings, particularly within contracting operations, continued during the third quarter. ElektroSandberg reported a deficit, due, in part, to severe competition and low price levels. Sycon's earnings were affected adversely by weaker demand as a consequence of both lower assignment volumes in its energy operations and by the generally weak business conditions. For IT operations, however, the situation improved. WM-data Ellips, which had suffered insufficient demand for areas of its consultancy operations during the early part of the year, has enjoyed a favorable level of assignments and positive earnings development since May.
Measures intended to improve profitability within contracting operations have been taken and are expected to have an effect during 2002.
Net sales totaled SEK 4 746 M (4 225), of which sales to customers outside the Group amounted to SEK 2 041 M (2 104). Operating profit amounted to SEK 628 M (134).
During the first half of the year, the financial energy market was marked by rising prices. This was primarily due to the spring run-off in Norway being lower than normal. During the third quarter, precipitation was periodically heavier than normal and forward prices fell somewhat. The average spot price in Sweden during the first nine months of the year was SEK 213/MWh, compared with SEK 112/MWh in the corresponding nine months of 2000.
The increase in earnings was primarily due to lower prices for contracted energy purchases and strongly improved trading results.
Investments and acquisitions
Group investments during the period totaled SEK 9 639 M (1 923). Of these, SEK 1 084 M (941) pertained to fixed-asset investments in existing operations, SEK 5 999 M (154) to investments in acquired subsidiaries and SEK 2 556 M (828) to participations in associated companies and other shares.
At the beginning of the year, Sydkraft acquired the remaining shares outstanding in Norrkoping Miljo & Energi for SEK 1 482 M. As a result, NME became a wholly owned Sydkraft Group subsidiary. Notable acquisitions made during the beginning of the year included the acquisition of Birka Energi's participations in the Korsselbranna, Dabbsjo and Bergvattnet power plants on the Fjallsjoalven River, the Betsele and Hallforsen plants on the Umeaalven River, the Storfinnforsen power plant on the Faxalven River and the Olden old·en
Of, relating to, or belonging to time long past; old or ancient: olden days.
[Middle English : old, old; see old + -en, adj. power plant on the Langan tributary. Sydkraft also acquired the district heating operation in Amal from Riksbyggen.
As a result of the agreement reached in May with Vattenfall, regarding Sydkraft's holding in HEW, the Group received 8.5% of the shares in Forsmark Kraft AB and a holding in the listed Norwegian company, Hafslund AS, corresponding to 31.7% of the votes and 20.5% of the equity. The agreement also covers several other network areas in Ostergotland. In addition, a 49% holding was obtained in the Norwegian company Fredrikstad Energiverk AS, and 35% of the shares in both Fredrikstad Energinet AS and Fredrikstad Fjernvarme AS. The holding in Hafslund has subsequently been expanded and amounted to 34.9% of the votes and 26.4% of the equity in the company at the close of the third quarter.
Sydkraft's subsidiary, Sycon, has acquired the Danish consultancy firms, Steensen & Varming, Knudsen & Sorensen and Frigo Consult.
During the third quarter, fixed asset investments in existing operations amounted to SEK 303 M (286).
The decision has been taken to construct a waste-fueled boiler boiler, device for generating steam. It consists of two principal parts: the furnace, which provides heat, usually by burning a fuel, and the boiler proper, a device in which the heat changes water into steam. in Norrkoping for the production of about 550 GWh of district heating. The decision has also been made, and permits obtained, to build a new incineration incineration
the act of burning to ashes. line at SAKAB with a capacity of 75,000 tons. Combined, the investments total approximately SEK 900 M, of which approximately SEK 100 M had been utilized by the close of the third quarter.
Cash Flow and Financial position
Sydkraft's cash flow from operations Cash flow from operations
A firm's net cash inflow resulting directly from its regular operations (disregarding extraordinary items such as the sale of fixed assets or transaction costs associated with issuing securities), calculated as the sum of net income plus noncash expenses during the period amounted to SEK 2 965 M (3 078). Cash flow after investments amounted to SEK 4 454 M (1 353).
Interest-bearing net liabilities totaled SEK 22 707 M (18 913). At year-end 2000, net loan debt amounted to SEK 20 438 M. The change is an effect of the substantial cash contribution generated by the sale of the holdings in HEW and E.ON.
Including cash investments, the Group had liquid funds of SEK 4 450 M (1 981) at the end of the period. At year-end 2000, liquid funds amounted to SEK 1 214 M. The sharp increase was due to the sale of shares noted above, combined with an increase in long-term borrowing at the beginning of the year.
The equity/assets ratio was 41% (41). At year-end 2000, the equity/assets ratio was 41%.
When the stock of a company is removed from a stock exchange.
Reasons for delisting include violating regulations and/or failure to meet financial specifications set out by the stock exchange. from Stockholm Exchange
On September 28, 2001, Sydkraft AB's A and C series shares were delisted from the A List of the Stockholm Exchange. The reason for this is that with its new ownership structure, Sydkraft no longer meets the requirements for a listing on the Stockholm Exchange's A List. Furthermore, there is insufficient turnover volume to warrant effective trading in the Sydkraft share.
Excluding E.ON Energie and Statkraft, which together control 95% of the voting rights Voting rights
The right to vote on matters that are put to a vote of security holders. For example the right to vote for directors.
The type of voting and the amount of control held by the owners of a class of stock. , Sydkraft has approximately 1 000 shareholders following the delisting.
The assessment presented in connection with the six-month interim report remains unchanged. During the first nine months of the year, the development of the Group's earnings has been favorable as a consequence of increased energy sales, continued cost efficiency measures and higher prices. The outlook for the remainder of 2001 is judged to remain favorable.