Iseteenindus

Eesti Energia finished third quarter with a better result than last year

29.10.2020

In the third quarter, Eesti Energia increased its electricity production with the support of renewable energy, increased the sales of liquid fuels, and achieved a better business result compared to the same period in 2019. At the same time, decline in revenue and additional costs due to the corona crisis led to quarterly losses.

With a turnover of EUR 191.1 million, the Group earned EUR 44.4 million in EBITDA and EUR 8 million in net loss. Turnover decreased by 10 million euros (-5%), EBITDA increased by 2.3 million euros (+5%) and net loss decreased by 1.5 million euros (+16%) over the year.

According to Andri Avila, Member of the Management Board and Chief Financial Officer of Eesti Energia, the third quarter is the most difficult one in the energy business every year, especially this time.

"Energy consumption is lower than it used to be due to the coronavirus pandemic, while supply remains high due to the abundance of hydropower from the Nordic countries. This meant up to 30 percent lower electricity prices for our home markets, and the average market price of liquid fuels fell even more," Avila commented.

The pandemic also had a direct impact on network electricity volumes and retail sales. In addition, the company had to close its Estonia Mine for about ten days at the end of August in order to prevent the spread of the virus outbreak, and there were costs involved in ensuring various precautionary and security measures. Its total impact on EBITDA was approximately EUR 6 million.

"An additional negative impact on the financial outcome resulted from the fact that due to more expensive CO2 quotas purchased in the third quarter, we had to revalue our quota reserve from the beginning of the year, which caused an additional CO2 cost of EUR 5 million in the third quarter," Avila said.

Eesti Energia produced 1,076 gigawatt-hours of electricity over the quarter - more than during the two previous quarters, and with an annual increase of 15 percent. At the same time, renewable electricity production increased by 38 percent year-on-year to 315 gigawatt-hours. An important contribution to the growth was made by the increase of renewable energy production at the Narva thermal power plants.

The share of electricity produced from renewable and alternative sources was 45 percent of the total production as a quarterly average. The reduction of direct burning of oil shale and constant increase in the share of renewable energy have reduced Eesti Energia's carbon emissions this year by 45 percent compared to the same period in 2019 and by 70 percent compared to 2018.

The production of liquid fuels remained at the last year’s level of 115,000 tons, but the sales of it increased to 138,000 tons (+36%) and the sales revenue earned from it increased to EUR 45 million (+45%) through derivative transactions.

The group's investments increased by almost 10 percent over the year to 35 million euros. Of this, 25 million was used for improving the security of supply of the power network, including the elimination of storm damage and the construction of new connections. The latter increased by half.

The decision to continue restructuring in large-scale energy production in order to improve competitiveness also remained within the third quarter. Thus in 2021, the mines and energy production that have operated as separate companies will merge into a single company - Enefit Power.

Another important decision concerned the group's network company Elektrilevi which will offer only state-regulated electricity distribution network services from next year. During the course of the division of Elektrilevi, Enefit Connect providing OTC network services will start from next year, which will be managing power networks and a major part of Estonia’s street lighting network, building the internet network, developing the charging network for electric cars, and offering new energy solutions based on contemporary technology.