Iseteenindus

Eesti Energia Group results for Q3 2015

30.10.2015
Eesti Energia sales revenues reached 171 million euros in the third quarter of 2015, decreasing by 13.3% compared to the same period in 2014. Alongside lower sales, Group EBITDA decreased by 9.3% to 67.3 million euros in Q3´2015 and net profit amounted to 31.3 million euros (-29.1% y-o-y).

Financial results

Primary reason for group revenues decline in Q3 2015 were lower electricity sales revenues, which were mainly caused by low prices in the Nord Pool Spot wholesale market and lower power generation. Electricity sales revenue decreased by 28.1% to 81 million euros. On the other hand, sales revenue from electricity distribution increased 1.6% to 53.8 million euros and a strong result was achieved in shale oil sales, as the sales revenue increased by 94.3% to 26.7 million euros on the back of 138% higher shale oil sales volume. Other products and services sales revenue amounted to 9 million euros in Q3´2015 (-47.1% y-o-y).

Alongside considerably lower sales revenues, Group EBITDA also decreased in Q3´2015. EBITDA earned from electricity product decreased by 7.9% to 27.2 million euros, as lower generation and sales volume impact was not outweighed by improvement in margin and reduction in expenses. Group EBITDA in electricity distribution increased by 5.3% to 28.8 million euros and shale oil EBITDA by 50% to 13.2 million euros. Eesti Energia EBITDA from other products and services was -1.9 million euros in Q3´2015, which was 122.7% lower than in Q3 2014 due to a substantial reduction in oil shale sales. The second main reason behind the lower EBITDA was the sale of subsidiary in Q3 2014, which affected the comparability of results.

Key Performance Indicators

Electricity sales amounted to 1.6 TWh in Q3 2015 (-31.1% y-o-y), of which sales in the retail market amounted to 1.3 TWh (-3.3% y-o-y) and sales in the wholesale market to 0.3 TWh ( 70.9% y-o-y). Group average market share in Estonian retail market amounted to 59% in Q3 2015, which is 0.3 percentage points higher year-on-year. Eesti Energia market shares in Latvia and Lithuania stood at 15% and 6% respectively, which in total resulted in an estimated 25% market share in the Baltic electricity market. Group generated 1.8 TWh of electricity in Q3 2015, which is 26.0% less than in Q3 2014.

Group distributed 1.4 TWh of electricity in Q3 2015 (+1.3% y-o-y), while network losses of the quarter were 0.9 percentage points lower at 4.1%. Production of shale oil increased by 53.6% to 81.2 thousand tonnes in Q3 2015. Sales volume of shale oil reached 77 thousand tonnes.

Capital Expenditure

Group capital expenditure amounted to 48 million euros in Q3 2015, which is 32.3% less than in the same period last year. Key investments were made into distribution network (23 million euros) to improve the network reliability and roll out smart meter program. Capital expenditure into the new 300 MW Auvere power plant amounted to 3 million euros, as the plant nears completion by the end of 2015. Maintenance investments (mainly in mining subsidiary and oil plant) reached 8 million euros in Q3 2015.

Financing, credit ratings and dividends

Group available liquidity as at 30 September 2015 amounted to 440 million euros, consisting of 190 million euros of liquid assets and 250 million euros of undrawn loan facilities. In September 2015 Group refinanced part of its outstanding Eurobonds (due in 2018 and 2020) with a new benchmark bond issue due in 2023. Furthermore in October, Group took out 30 million of the new EIB facility, while the disbursement period of the remainder is being extended by a year. Group´s net debt amounted to 736 million euros at the end of Q3 2015, with net debt / EBITDA ratio at 2.4x 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 Q3 2015, Moody´s affirmed the Group´s credit rating.

Outlook

Given the 9m´2015 results, Group has slightly revised upwards its EBITDA outlook for the year and now forecasts a slight decline (less than 5%) in 2015 compared to the year before (previously decline was expected). Also, Group has revised its capital expenditure outlook for the year to slight growth compared to 2014 (previously growth was expected). There has been no change in sales revenues outlook, which the Group expects to decline in 2015 compared to the last year.

The Group has hedged 1.8 TWh of electricity generation (average price of 40.9 €/MWh) and 48,000 tonnes of shale oil sales (average price of 426 €/tonne) for Q4 2015. For 2016 the Group has hedged 3.4 TWh of electricity generation (average price of 38.4 €/MWh) and 131,000 tonnes of shale oil sales (average price of 357 €/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]