TIDM96DB
RNS Number : 4278K
Eesti Energia AS
05 May 2022
Eesti Energia Group results for Q1 2022
The sales revenues of Eesti Energia Group amounted to EUR 571.5
million, +92.2% year-on-year, in the first quarter of 2022. Group
EBITDA was EUR 213.0 million (+194.4% year-on-year), while adjusted
EBITDA was at EUR 127.3 million (+88.2%). The Group's net profit
was at EUR 163.0 million (+514.5% year-on-year), adjusted net
profit at EUR 77.2 million (+254.2%).
The introduction of adjusted EBITDA and adjusted net profit from
2022 Q1 is to present EBITDA and net profit in a normalised way for
better comparability with the elimination of temporary fluctuations
in the fair value of long-term Power Purchase Agreements (PPA)
derivatives.
Group financials
The increase in sales revenues and EBITDA of Eesti Energia in
the first quarter of 2022 compared to same period of 2021 are
attributable to the Electricity segment, where revenue growth was
underpinned by strong performance of retail sales and generation
assets together with continuing record high electricity price
environment. The high electricity price environment has carried on
from the second half of last year due to continuing low levels of
Nordic hydro reservoirs, and lack of flexible electricity
generation to meet the demand side of the market as gas prices have
pushed variable cost of gas fired power plants significantly
higher. Electricity segment's EBITDA was additionally impacted by
non-monetary temporary fluctuations in the fair value of long-term
Power Purchase Agreements (PPA) derivatives, but for better
comparability the adjusted EBITDA figure has been introduced.
Distribution segment's sales revenue fell due to lower
consumption volumes as weather this year in Q1 was warmer than in
2021. Also, distribution EBITDA was negatively affected by
electricity costs for network losses that have to be repurchase at
current high market prices. Shale oil segments revenue and EBITDA
fell due to lower production quantities as the result of different
maintenance schedule compared to last year, while hedges made in in
accordance with the Group's hedging strategy held back EBITDA
growth. Other segment's performance was driven by gas sales which
benefitted from low inventory purchases from mid-last year and from
the current high market prices, but there were also some sizeable
derivative instrument effects.
Electricity segment
Eesti Energia's sales revenues from electricity grew by +146.3%
year-on-year to EUR 364 million in Q1 2022. The Group's average
electricity sales price excluding derivative impact was at 118.7
EUR/MWh (+112.7% year-on-year). As a comparative figure, the Q1
2022 average market electricity price for Estonian Nord Pool area
rose to 133.4 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 for the quarter
totalled at 2.9TWh (+12.7% year-on-year), from which retail sales
amounted to 2.6TWh (+13.3% year-on-year) on the back of strong
sales increases especially from Latvia, Lithuania and Poland.
Electricity generation during the quarter rose to 1.7TWh (+31.1%
year-on-year) as a direct result of higher generation from Group's
flexible power production units (oil shale based hybrid power
plants) despite high prices of CO2. Although CO2 emission allowance
prices increased from 30-40 euros in Q1 2021 to 80-90 euros in Q1
2022, the electricity price increases have been higher mainly due
to gas prices which have increased the variable cost of gas fired
power plants and thus providing access to the market for Group's
flexible power production fleet. Group's flexible power production
units (oil shale based hybrid power plants) produced 1.2TWh of
electricity in Q1 2022 vs 0.9TWh in Q1 2021. Renewable electricity
production which includes electricity production from wind, solar,
and waste wood was stable at 0.4TWh.
EBITDA of the electricity segment totalled at EUR 155.6 million
(+370.6% year-on-year) mostly due to change in the value of
long-term PPA derivatives (year-on-year effect of EUR 81.0
million). The adjusted EBITDA (adjusted with the elimination of
temporary fluctuations in the fair value of long-term PPA
derivatives ) figure for the quarter was at EUR 69.9 (+146.1%
year-on-year) million compared to EUR 28.4 million in Q1 2021.
Distribution segment
Eesti Energia's revenues from the distribution segment amounted
to EUR 63.7 million in Q1 2022 (-2.9% year-on-year). The
distributed volumes declined slightly to 2.0TWh (-6.0%
year-on-year), while average distribution sales price was at 32.4
EUR/MWh (+3.2% year-on-year). Distributed average sales price rose
due to lower consumption quantities magnifying the share of fixed
price portion in the revenue structure. Also from 1 March 2022 a
new tariff took effect as a result of which average tariff will
increase by 3%. Distribution EBITDA for the quarter decreased to
EUR 15.3 million (-35.7% year-on-year) due to negative impacts from
higher electricity costs for network losses, lower volumes and
higher costs related to maintenance works due to more severe and
stormy weather.
Shale oil segment
Eesti Energia's revenues from shale oil sales amounted to EUR
31.6 million (-9.8% year-on-year), with shale oil sales volume at
104 thousand tonnes (-7.1% year-on-year). Quarterly oil production
was at 106 thousand tons (-15.3% year-on-year) due to different
maintenance schedule compared to 2021. Eesti Energia's average
shale oil sales price excluding the impact from derivative
transactions increased to 574.0 EUR/tonne (+68.2% year-on-year) due
to supportive oil market prices and good demand for Group's oil
products as reference products average quarterly market price was
at 544 EUR/t (+64.0% year-on-year). Group's average shale oil sales
price including the impact of derivative transactions was at 303.8
EUR/tonne (-2.8% year-on-year). Due to lower production volumes and
hedging impacts EBITDA from shale oil operations decreased from EUR
5.8 million to EUR 2.6 million (-54.5% year-on-year).
Other segment
EBITDA from Group's other products and services totalled at EUR
39.5 million in the first quarter of 2022 (+305.9% year-on-year).
The biggest positive factor came from retail gas sales where
despite sales quantities falling from 1.0TWH to 0.8TWh the high gas
market price environment pushed gas sales revenues higher, while
the profit line also had impacts from derivative instruments.
Capital expenditure
The Group's capital expenditure amounted to EUR 59 million
(+84.6% year-on-year) in Q1 2022. Investments to the electricity
distribution network made up the largest part of investments, EUR
21.1 million (+30.8% year-on-year) aimed at improving connection
points to enable additional solar production capacities to be
connected to the distribution network. Renewable energy investments
increased to EUR 13.3 million (+85.0%). Investments to other
development projects increased to nearly EUR 19 million, from which
EUR 12.1 million was invested to the construction of a new chemical
plant (new Enefit-280). The new Enefit-280 pyrolysis plant is
scheduled to be completed in 2024, and will increase the annual
shale oil output to 700,000 tonnes while serving 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 first quarter 2022, cash and cash equivalents
held by the Group totalled EUR 305.8 million. As of 31 March 2022,
Eesti Energia had access to a total of EUR 665 million of bank
loans, from which revolving credit facilities amounted to EUR 250
million and long-term loan agreements signed with multiple
counterparties to EUR 415 million. Eesti Energia's net debt was at
EUR 600 million, net debt to EBITDA ratio declined to 1.3x (on
adjusted EBITDA basis to 2.0x) compared to the 3.5x financial
policy target of the company as a result of strong operating cash
flows.
At the end of April 2022 the Annual General Meeting confirmed
the net dividend payout for the sole shareholder in the amount of
EUR 46.7 million. The Group is expected to pay total dividends in
2022 in the amount of EUR 55.7 million, which also includes the
Tallinn stock exchange listed majority owned Enefit Green dividends
payable to its minority shareholders in the amount of ca EUR 9
million. Overall, the Group's management assesses the Group to be
well balanced for current highly volatile environment due to
Group's diverse asset structure.
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, EBITDA and investments will likely increase (defined
as at least 5% growth) compared to 2021 numbers.
Eesti Energia will publish its second quarter results on 4
August, 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 2.4 TWh for the
remainder of 2022 (at average price of 97.0 EUR/MWh) and 0.4TWh for
2023 (at average price of 98.1 EUR/MWh). The Group's hedge
positions for electricity retail sales amounted to 2.6 TWh for the
remainder of 2022 (at average price of 61.2 EUR/MWh) and 2.8TWh for
2023 (at average price of 43.5 EUR/MWh).
For shale oil, the hedge positions totalled 266.1 thousand
tonnes for the remainder 2022 (at average price of 294.9 EUR/tonne)
and 351.1 thousand tonnes for 2023 (at average price of 335.7
EUR/tonne). For naphtha, the hedge positions totalled 41.5 thousand
tonnes for 2022 (at average price of 343.1 EUR/tonne) and 53.3
thousand tonnes for 2023 (at average price of 429.8 EUR/tonne)
The Group's position in CO2 emission allowances for 2022 amounts
to 4.3 million tonnes at an average price of 55.7 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 0.3
million tonnes at an average price of 74.0 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 2022 first quarter financial
results will take place on 5 May 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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