Eesti Energia Group results for Q2
2024
The sales revenues of Eesti Energia
Group amounted to EUR 415.1 million, -0.2% year-on-year, in Q2
2024. Reported group EBITDA was EUR 153.5 million (+42.5%
year-on-year), while adjusted EBITDA* was at EUR 158.9 million
(+37.4%). The Group's reported net profit was at EUR 103.1 million (+141.6% year-on-year), adjusted net
profit at EUR 108.5 million (+114.5%).
* - adjusted
EBITDA and adjusted net profit gives better comparability with the
elimination of temporary fluctuations in the fair value of
long-term Power Purchase Agreements (PPA) derivatives.
Group financials
In Q2 2024 the group had strong
financial performance with all main business segments of the Group
being profitable. The biggest contributer to the EBITDA of the
Group was shale oil segment representing 53% of the Group's EBITDA,
electricity segment made up 28% and distribution segment 14% of the
Group's EBITDA.
Electricity segment
Eesti Energia's sales revenues from
electricity decreased by -1.4% year-on-year to EUR 263 million in
Q2 2024. The Group's average electricity sales price excluding
derivative impact was at 94.4 EUR/MWh (-16.4% year-on-year). As a
comparative figure, the Q2 2024 average market electricity price
for Estonian Nord Pool area increased to 76.0 EUR/MWh (+2.1%
year-on-year). Electricity sales volume for the quarter totaled at
2.8 TWh (+17.6% year-on-year), from which retail sales amounted to
2.3 TWh (-1.1% year-on-year). Electricity generation during the quarter amounted to 0.8 TWh (+6.9%
year-on-year). Renewable electricity
production which includes electricity production from wind, solar,
and waste wood increased to 0.4 TWh (+37.7%
year-on-year) due to the contribution of new and under-construction
wind farms to the quarter's wind energy production, which reached
nearly 121 GWh.
EBITDA of the electricity segment
totaled at EUR 43.1 million (-46.3% year-on-year). Largest decrease
came from the effects of realized derivative transactions -44.5
million (realized profit in Q2 2023 +47.6 million euros, +3.1
million euros in Q4 of 2024). Other
negative impact came from margin impact (-9.9
million) due to lower sales price but positive impact from also
lower variable costs. Largest positive impact was related to sales
volume of electricity increasing by 18% year-on-year, or 416 GWh,
which had an impact on EBITDA of +11.7 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 48.6 million (-44.9% year-on-year) compared to
EUR 88.2 million in Q2 2023.
Distribution segment
Eesti Energia's sales revenues from
the distribution segment amounted to EUR 67.8 million in Q2 2024
(+2.8% year-on-year). The distributed volumes increased (+2.2% year-on-year) and amounted to 1.4 TWh
(+0.03 TWh) for the quarter. Average distribution
sales price, the tariff, was at 46.8
€/MWh (+0.6% year-on-year).
Distribution EBITDA for the quarter decreased to EUR 21.1 million
(-36.1% year-on-year) due to negative impacts
mainly from higher transmission tariffs and maintenance cost. The
aim of increasing maintenance cost is to improve the quality of the
grid.
Shale oil segment
Eesti Energia's sales revenues from
shale oil sales amounted to EUR 51.8 million (+19.8% year-on-year),
with shale oil sales volume at 124.2 thousand tons (-0.4%
year-on-year). Eesti Energia's average shale oil sales price
excluding the impact from derivative transactions decreased
to 451.8 EUR/ton (+12.6% year-on-year) due
to higher oil market prices. The reference products average
quarterly market price was at 450 EUR/t (+41.3% year-on-year).
Group's average shale oil sales price including
the impact of derivative transactions was at 416.9 EUR/ton
(+20.3% year-on-year). EBITDA from Shale oil operations was
positive in Q2 2024 with a result of EUR 80.6 million , which is
largely related to one-time effect of +64.5 million related to the
introduction of an additional amount of free CO2 emission
quotas.
Natural gas segment
Eesti Energia's sales revenues from
the natural gas segment amounted to EUR 17.0 million in Q2 2024
(+10.2% year-on-year). The sales volumes
increased (+37.2% year-on-year), at 0.4 TWh for the quarter.
Average natural gas sales price
was at 48.3 EUR/MWh (-20% year-on-year). Natural gas EBITDA for the
quarter increased to EUR 4.0 million (+175.4%
year-on-year).
Other segment
EBITDA from Group's other products
and services increased to 4.6 million in Q2 2023 (227.9%
year-on-year). The most significant impact is from one-time income
from insurance compensation in Q2 2024, which reached 7.5 million
euros.
Capital expenditure
The Group's capital expenditure
amounted to EUR 212 million (+17.1% year-on-year) in Q2 2024.
Investments to the renewable asset developments amounted to EUR 130
million during the quarter. Electricity distribution network
investments are in second place with EUR 36 million during the
quarter. The distribution network investments are largely aimed at
improving connection points to enable additional solar production
capacities to be connected to the distribution network and
increasing the quality of the grid. Investments to other
development projects increased to EUR 31 million, from which the
largest share went to the construction of a
new oilplant (new Enefit-280). The new Enefit-280
oilplant is scheduled to be completed in 2024 and will increase the
annual shale oil output to 700,000 tons while serving as a
cornerstone for transforming current liquid fuels production from
oil shale to a 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 Q2 2024, cash and
cash equivalents held by the Group totaled EUR 242.6 million with
no additional short-term deposits. As of 30 June 2024, Eesti
Energia Group had access to a total of EUR 505.2 million of bank
loans, from which revolving credit facilities amounted to EUR 270
million and long-term loan agreements signed with multiple
counterparties to EUR 235.2 million. Eesti Energia's net
debt was at EUR 1,384 million, net debt to EBITDA ratio 3.2x (on adjusted EBITDA basis to
3.0x), compared to the 3.5x financial policy target of the
company.
During Q2 2024 dividend of EUR 6.3
million was paid to the minority shareholders of the Tallinn stock
exchange listed majority owned Enefit Green subsidiary.
In Q2 2024 Eesti Energia prolonged
the EUR 150 million Swedbank loan for another 3 years maturing now
in 2027. Eesti Energia also made changes to the EIB loan contracts,
so that the interest coverage ratio covenant is at more suitable
levels for Eesti Energia. In July 2024, Eesti Energia raised EUR
400 million of green hybrid bonds, listed on the London Stock
Exchange to support its business and strengthen its financial
position. The funds raised will be invested in ongoing and planned
projects supporting the development of green energy.
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 quarter we expect the net-debt/EBITDA
ratio to increase but stay under the 3.5x financial policy target
of the company as the Group continues the execution of its
investment pipeline.
Outlook
It is the management's expectation
that in 2024 Eesti Energia's sales revenue and investments will see
a slight decline while EBITDA will likely increase compared to 2023
numbers.
Eesti Energia will publish its Q3
results on 31 October 2024.
The Q2 2024 interim report of Eesti
Energia and the investor presentation is available at Eesti
Energia's web site: https://www.enefit.com/en/ettevottest/investorile.
Investor call discussing the 2024 Q2
financial results will take place on 1 August 2024, 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.
Danel Freiberg
Head of Treasury and Financial Risk
Management
Eesti Energia AS
Tel +372 5594 3838
danel.freiberg@energia.ee