TIDM96DB
RNS Number : 9938C
Eesti Energia AS
28 February 2022
Eesti Energia Group unaudited results for 2021 financial
year
The sales revenues of Eesti Energia Group amounted to EUR
1,313.0 million, +57.5% year-on-year, in the financial year of
2021. Group EBITDA was EUR 317.6 million (+48.7% year-on-year). The
Group's net profit was at EUR 111.5 million (+478%
year-on-year).
Group financials
The increase in sales revenues and EBITDA of Eesti Energia in
2021 compared to 2020 are attributable to the Electricity segment,
where the main impact came from high regional electricity prices
due to record-high gas prices, lower than average Nordic hydro
reservoir levels, and increased electricity consumption as a result
of economic activity recovery from the Covid-19 pandemic lows.
Although the CO2 emission allowance prices nearly tripled during
the year, the oil shale based hybrid electricity production units
saw more activity than in 2020 as the region suffered from lack of
competitive controllable electricity generation to meet the demand
side of the market. Liquid fuel production, distribution and
renewable assets (renewables are included under the Electricity
segment) performed well during the year, despite some one-off
items, and effects from non-hedge accounting derivative
transactions that effect the Profit and Loss Statement on
continuous basis as the market prices of the instruments change.
Most of Group's hedge transactions fall under IFRS hedge accounting
framework and therefore only effect the Profit and Loss Statement
with the final settlement of the instruments.
Electricity segment
Eesti Energia's sales revenues from electricity grew by 112.9%
year-on-year to EUR 766 million in 2021. The Group's average
electricity sales price excluding derivative impact was at 77.6
EUR/MWh (+60.8% year-on-year). As a comparative figure, the 2021
annual average market electricity price for Estonian Nord Pool area
rose to 86.7 EUR/MWh (+157.4% year-on-year). The Group's average
electricity sales price increased to a lesser extent compared to
the market average due to retail sales contracts where the
electricity prices are fixed. Such contracts make up roughly half
of the retail portfolio. Electricity sales volume totalled at
9.4TWh in 2021 (+20.3% year-on-year), from which retail sales
amounted to 8.6TWh. 2021 was the first year when retail sales
quantities in other markets exceeded those of Estonia. Sales in
Poland, Lithuania, Latvia and Finland accounted for 52% of the
portfolio. Electricity generation rose to 5.2TWh (+37.0%
year-on-year) as a direct result of larger generation from oil
shale based electricity production units despite record high CO2
prices. Renewable energy production increased to 1.6TWh (+9%
year-on-year) thanks to larger use of biomass (waste wood) at oil
shale based hybrid electricity production units. Renewable
electricity production from wind and solar decreased by 12% mainly
due to less favourable wind conditions and wind farms' slightly
lower availability.
EBITDA from the electricity segment totalled at EUR 217.6
million (+164.2% year-over-year) mostly due to higher volumes and
improved electricity prices. Growth in gain on realised derivative
transactions increased EBITDA by 54.2 million euros in annual
comparison. Other impacts of +60.5 million euros in annual
comparison mostly resulted from changes in the value of derivative
financial instruments not covered by IFRS hedge accounting
framework which constitute the Power Purchase Agreements (PPAs)
priced according to latest electricity market price forecasts. As
the market price forecasts have increased, so has the market value
of those contracts as this instrument is not covered under IFRS
hedge accounting framework. In 2021 the Group signed fixed price
renewable electricity agreements with Baltic consumers in the
amount of 9TWH for the next 10 years to cover the electricity
production of the Group's renewable investment decisions in the
amount of 200MW, and also the electricity to be produced by other
renewable developers in the region.
Distribution segment
Eesti Energia's revenues from the distribution segment amounted
to EUR 233.6 million in 2021 (+7.3% year-on-year). The distributed
volume was at 7.2TWh (+7.0% year-on-year), while average
distribution sales price was at 32.6 EUR/MWh (+0.3% year-on-year).
Distributed volume rose due to increased economic activity, colder
winter and hotter summer, and the addition of the sales volume of
Imatra Elekter (+115GWh; 1.7% compared to 2020 distributed volumes)
which was acquired in mid-2021. Distribution EBITDA was at EUR 87.3
million (-0.4% year-on-year) in 2021 as negative impacts from
higher electricity costs for network losses took away the gain from
increased distributed volumes.
Shale oil segment
Eesti Energia's revenues from shale oil sales amounted to EUR
135.0 million (-2.2% year-on-year), with shale oil sales volume at
420 thousand tonnes (-7.4% year-on-year). Full year oil production
was at 438 thousand tons (-3.1% year-on-year) due to larger scale
repair and reconstruction works compared to 2020. Eesti Energia's
average shale oil sales price excluding the impact from derivative
transactions increased to 389.9 EUR/tonne (+50.9% year-on-year) due
to supportive oil market prices. Group's average shale oil sales
price including the impact of derivative transactions was at 321.6
EUR/tonne (+5.6% year-on-year).
Due to lower production volumes and effects from unrealised
hedge transactions, EBITDA from shale oil operations decreased to
EUR 8.1 million (-85.0 year-on-year). The unrealised hedge
transaction effects include the Naphtha derivatives, which the
Group uses to hedge the gasoline fraction of the production (ca 10%
of the production). From 2022 Naphtha instruments will be covered
under IFRS hedge accounting framework, thus not affecting the PNL
statement anymore. The unrealised annual change in the value of
derivatives amounted to around EUR 29 million with the adjusted
EBITDA figure of the shale oil segment at EUR 37.6 million.
Other segment
EBITDA from Group's other products and services totalled at EUR
4.7 million in 2021 (-75.1% year-on-year). The biggest negative
factor came from retail gas sales where sales quantities grew from
2.0TWH ot 2.4TWh while unrealised gas hedge transaction not covered
under IFRS hedge accounting framework impacted the result in the
amount of EUR 14.0 million, while the realised gain was at EUR 4.7
million. Also, the segment includes different one-off items, most
material of which were the amounts received under the liquidated
damages agreement related to the Auvere power plant (impact in
2021: +28.0 million euros) and income from the sale of CO2 emission
allowances in 2020 (impact in 2021: -13.7 million euros).
Capital expenditure
The Group's capital expenditure amounted to EUR 251.6 million
(+35.3% year-on-year) in 2021. Investments to the electricity
distribution network made up the largest share of investments, EUR
99.5 million (+4.3% year-on-year) with now ca 71.4% of the
distribution network being weather-proof. Although renewable
investments decreased on an annual basis to EUR 42 million, in 2020
the investments were mainly acquisition related compared to 2021
investments to construction on the capacities. In 2021 EUR 50.1
million euros was invested in the construction of another Enefit
280 pyrolysis shale oil plant. The new pyrolysis plant, which is
scheduled to be completed in 2024, will increase our annual shale
oil output to 700,000 tonnes and will serve as a cornerstone for
transforming the current liquid fuels and electricity oriented
production from oil shale to chemical industry based on circular
economy principles with a zero carbon footprint target by 2045.
Financing, credit ratings and dividends
As of the end of 2021, cash and cash equivalents held by the
Group totalled EUR 198.0 million. As of 31 December 2021, Eesti
Energia had access to a total of EUR 535 million of bank loans,
from which revolving credit facilities amounted to EUR 200 million
and long-term loan agreements signed with multiple counterparties
to EUR 335 million. In 2021, the Group successfully included the
listing of the renewable subsidiary Enefit Green minority share for
which the group received gross proceeds of EUR 175 million. Eesti
Energia's net debt was at EUR 759 million, net debt to EBITDA ratio
declined to 2.4x compared to the 3.5x financial policy target of
the company. According to the decision of the annual general
meeting no dividends were paid in 2021, while the management
proposes a dividend payment of EUR 55.7 million to be paid for
2022. The proposed dividend is 50% from 2021 net profit of 111.5
million (2020 net profit of EUR 19.3 million). The owner is
expected to decide the dividend payment together with the approval
of the 2021 audited report in April, 2022.
Eesti Energia is rated BBB- (negative) by Standard & Poor's
and Baa3 (stable) by Moody's. Eesti Energia's financial policy is
aimed at maintaining investment grade credit rating and a net-debt
to EBITDA long-term target of 3.5 times. For the upcoming quarters
we expect the net-debt/EBITDA ratio to increase as the Group
continues the execution of its investment pipeline.
Outlook
It is the management's expectation that in 2022 Eesti Energia's
sales revenue and investments will likely increase (defined as at
least 5% growth), while EBITDA will likely decline (defined as at
least 5% decline) compared to 2021 numbers.
Eesti Energia will publish its audited 2020 annual report in
April, 2022.
Eesti Energia conducts derivative transactions to hedge the
price risk of electricity, CO2 and oil. The Group's hedge positions
for electricity power production amounted to 3.2 TWh for 2022 (at
average price of 92.2 EUR/MWh) and 0.1TWh for 2023 (at average
price of 75.8 EUR/MWh). The Group's hedge positions for electricity
retail sales amounted to 3.3 TWh for 2022 (at average price of 58.8
EUR/MWh) and 1.8TWh for 2023 (at average price of 38.8
EUR/MWh).
For shale oil, the hedge positions totalled 354.8 thousand
tonnes for 2022 (at average price of 293.6 EUR/tonne) and 275.9
thousand tonnes for 2023 (at average price of 297.9 EUR/tonne). For
naphtha, the hedge positions totalled 55.3 thousand tonnes for 2022
(at average price of 340.2 EUR/tonne) and 41.8 thousand tonnes for
2023 (at average price of 379.6 EUR/tonne)
The Group's position in CO2 emission allowances for 2022 amounts
to 3.8 million tonnes at an average price of 50.8 EUR/tonne
(including forward transactions, free emission allowances received
as investment support and the surplus of unused allowances from
previous periods). CO2 emission allowances for 2023 amount to 0.03
million tonnes at an average price of 60.0 EUR/tonne (including
forward transactions).
The unaudited annual report of Eesti Energia and the investor
presentation is available at Eesti Energia's web site:
https://www.energia.ee/en/ettevottest/investorile .
Investor call discussing the 2021 unaudited financial results
will take place on 28 February 2022, at 11:00 London time, 12:00
Frankfurt time and 13:00 Tallinn time. Please register to
participate. After registration you will be sent the details
required to join the conference call.
Rasmus Noormägi
Head of Investor Relations and Treasury
Eesti Energia AS
Tel +372 465 2885
rasmus.noormagi@energia.ee
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END
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