Iseteenindus

Eesti Energia Group results for Q2 2015

31.07.2015
Eesti Energia sales revenues reached 181 million euros in the second quarter of 2015, decreasing by 11.5% compared to the same period in 2014. Despite lower sales, Group EBITDA increased by 1.9% to 69 million euros in Q2´2015 and net profit amounted to 6.8 million euros (+10% y-o-y).

Financial results

Primary reason for group revenues decline in Q2 2015 were lower electricity sales revenues, which were mainly caused by low prices in the Nord Pool Spot wholesale market. Electricity sales revenue decreased by 21.8% to 85 million euros. On the other hand, sales revenue from electricity distribution increased 3.1% to 55.9 million euros and a strong result was achieved in shale oil sales, as the sales revenue increased by 22% to 24.2 million euros on the back of 50% higher shale oil sales volume. Other products and services sales revenue amounted to 16.3 million euros in Q2´2015 (-26.7% y-o-y).

Despite considerably lower sales revenues, Eesti Energia managed to maintain Group EBITDA in Q2´2015, with better result achieved in all three main product categories. EBITDA earned from electricity product increased by 3.8% to 24 million euros, as lower generation and sales volume impact was outweighed by improvement in margin and reduction in expenses. Group EBITDA in electricity distribution increased by 7.5% to 28.6 million euros and shale oil EBITDA by 11.6% to 14.1 million euros. Eesti Energia earned 2.2 million euros of EBITDA from other products, which was 58.5% lower than in Q2 2014 due to a substantial reduction in oil shale sales. Main reason behind the growth in Group net profit is the lower corporate income tax compared to last year.

Key Performance Indicators

Electricity sales amounted to 1.7 TWh in Q2 2015 (-24.2% y-o-y), of which sales in the retail market amounted to 1.4 TWh (-1.1% y-o-y) and sales in the wholesale market to 0.3 TWh (-61.2% y-o-y). Group average market share in Estonian retail market amounted to 60% in Q2 2015, which is 2 percentage points higher year-on-year. Eesti Energia market shares in Latvia and Lithuania stood at 17% and 5% respectively, which in total resulted in an estimated 26% market share in the Baltic electricity market. Group generated 1.7 TWh of electricity in Q2 2015, which is 29.4% less than in Q2 2014.

Group distributed 1.4 TWh of electricity in Q2 2015(+2.4% y-o-y), while network losses were unchanged at 5.2%. Production of shale oil increased by 29.4% to 73.2 thousand tonnes in Q2 2015, with 29.1 thousand tonnes contributed by new Enefit280 oil plant. Sales volume of shale oil reached 67 thousand tonnes.

Capital Expenditure

Group capital expenditure amounted to 85.3 million euros in Q2 2015, which is 50.8% more than in the same period last year. Key investments were made into the new 300 MW Auvere power plant (27 million euros), which nears completion by the end of 2015. Capital expenditure in distribution network amounted to 23 million euros, as the roll out of smart meter program continued. Maintenance investments (mainly in mining subsidiary and Narva power plants) reached 12.2 million in Q2 2015.

Financing, credit ratings and dividends

Group available liquidity as at 30 June 2015 amounted to 449 million euros, consisting of 199 million euros of liquid assets and 250 million euros of undrawn loan facilities. In July 2015, Group extended its revolving credit facilities maturity to 2020 by signing two new agreements with SEB and Pohjola Bank totalling 150 million euros. Same amount of existing facilities were cancelled consecutively. Group´s net debt amounted to 735 million euros at the end of Q2 2015, with net debt / EBITDA ratio at 2.3x and financial leverage at 32%.

Group retains credit ratings of BBB and Baa2 by Standard & Poor´s and Moody´s respectively, both with stable outlook. During Q2 2015, S&P reduced the credit rating of Eesti Energia by one notch to BBB, citing lower energy market prices and increased financial risk of the Group due to higher leverage.

Government of Estonia has approved a net dividend payable by Eesti Energia at 95 million euros in 2015.

Outlook

Given the H1 2015 results and the current status in the wholesale power market, Group has reduced its sales revenues outlook and now forecasts a decline in sales revenues in 2015 compared to the year before. There has been no change in EBITDA outlook, the Group also expects to post declining EBITDA in 2015.

The Group has hedged 3.4 TWh of electricity generation (average price of 40.2 €/MWh) and 105,000 tonnes of shale oil sales (average price of 415 €/tonne) for H2 2015. For 2016 the Group has hedged 3.4 TWh of electricity generation (average price of 37.8 €/MWh) and 131,000 tonnes of shale oil sales (average price of 366 €/tonne).

To cover the CO2 emission expenses the Group has relied on forward contracts as well as certificates allocated free of charge in relation to the construction of Auvere power plant. In total Group has CO2 position of 8.8 million tonnes (average price of 3.8 €/tonne) for the year 2015 and 13 million tonnes (average price of 5.2 €/tonne) for the year 2016.

More information on the financial results of Eesti Energia Group is available at Eesti Energia homepage »

Veiko Räim
Head of Investor Relations and Treasury
Eesti Energia AS
Tel: +372 715 2884
Mobile: +372 5668 1568
[email protected]