Eesti Energia Group results for Q3 2021


The sales revenues of Eesti Energia Group increased to EUR 290.8 million in the third quarter of 2021 (+52.2% year-on-year). Group EBITDA amounted to EUR 65.9 million (+48.5% year-on-year). The Group's net profit for the third quarter was at EUR 16.9 million compared to previous year’s net loss of EUR 8.0 million.

Group financials

The performance dynamics in the third quarter of 2021 were quite similar to the trends in the first half of 2021. On the back of climbing electricity market prices, and better electricity sales volumes, Eesti Energia’s sales revenue in the third quarter increased by more than a half from last year’s levels while EBITDA growth was held back by pressure on margins from increased market prices of CO2 and higher electricity purchase costs. Quarterly average electricity prices in the Baltic Nord Pool price regions were around 100 euros per MWh, roughly 2.6 times higher compared to Q3 2020. Distribution segment’s sales revenue also rose as the electricity consumption volumes have grown on the back of recovering economic activity, although distribution segment’s EBITDA has been held back by higher costs associated to network losses that are adversely affected by the higher electricity market prices. Shale oil segment’s sales revenue and EBITDA declined due to maintenance works carried out during the quarter, while also hedged positions running through the Income Statement for the unsettled positions had negative effect. Although Group recorded an income of 28.0 million euros after a reached agreement with GE for the availability guarantees of Auvere power plant, the “Other” segment was negatively influenced by gas hedging effects not covered under the IFRS hedge accounting framework, thus affecting the Income Statement with the unsettled positions. Reported EBITDA of the Group rose compared to last year’s same period by EUR 21.5 million (+48.5% year-on-year) to EUR 65.9 million due to strong performance of the electricity segment.

Impact of hedge transactions to Group financials

As in the second quarter of this year, the 2021 third quarter EBITDA result was significantly influenced by unrealised gains of derivative transactions – these are the market-to-market valuations of the hedge transactions done in accordance with the Group’s hedging strategy. Because some of the hedge transactions do not fall under the IFRS hedge accounting framework, these positions affect the Profit and Loss statement with the unrealised gain figures. Most of the Group’s hedge transactions are covered with the IFRS hedge accounting framework, thus the effect on the Profit and Loss statement takes place only when the final settlements of the hedge transactions occur. The impact from the unrealised gains of derivative transactions to EBITDA profit amounted to EUR -2.7 million with EUR -3.4 million from oil instruments (naphtha derivatives), EUR -30.1 million from gas instruments and EUR +30.8 million from electricity instruments. This means that had there been no unrealised gain impacts from derivative transactions, the quarterly EBITDA figure would have been EUR 2.7 million higher.

Electricity segment

Eesti Energia's sales revenues from electricity increased by 121.3% year-on-year to EUR 186 million. The Group's average electricity sales price equalled 80.3 EUR/MWh in the third quarter (+63.5% year-on-year), while the quarterly average market electricity price for Estonian Nord Pool area increased to 97.5 EUR/MWh (+164.6% year-on-year). After last year’s lowest electricity prices since 2010, prices in the first 9 months of 2021 have been at the highest level for the last couple of years, with monthly average electricity prices making new records and peaking at 122 euros per MWh for the month of September in the Estonian price region. Electricity sales volume of the group grew by 25.2% year-on-year to 2.2 TWh. Wholesale electricity sales increased 14% year-on-year to 0.2 TWh, while the major share of the electricity sales volume goes to retail which increased by 0.41TWh on an annual basis (+26% year-on-year). Electricity generation during the third quarter rose by 12.4% to 1.2TWh on the back of favourable electricity market prices. Renewable energy generation grew on an annual basis to 0.3TWh (+8.6% year-on-year) due to increased biomass usage at the group’s hybrid power plants, and favourable wind conditions.

EBITDA from the electricity segment rose by EUR 52.6 million to EUR 56.2 million (+1433.2% year-on-year). Better volumes together with derivative effects had the biggest positive impacts on EBITDA compared to the same period of last year, while the margin impact was negative due to higher variable cost associated to increased CO2 prices and electricity purchase costs amidst higher electricity market prices. As mentioned in the previous interim reports, perhaps the most significant events in the first nine months of 2021 have taken place without a direct effect on the bottom line. We have witnessed an increased interest from Baltic corporate clients to establish long-term (up to 10 year) renewable electricity contracts with fixed prices to decrease their environmental footprint and hedge the price risk for the future. For this Eesti Energia has signed long-term Power Purchase Agreements (PPAs) internally and externally with wind park developers.

Distribution segment

Eesti Energia's revenues from the distribution segment totalled EUR 52.2 million (+7.7% year-on-year). The increase in revenues can be traced to the growth in the distributed volumes (+6.1% year-on-year) which grew to 1.5TWh. The average distribution sales price increased slightly to 34.1 EUR/MWh (+1.6% year-on-year). In Q3 2021 an acquisition of third largest DSO network in Estonia was finalised, the impact to annual volumes is around 0.2TWh. Distribution EBITDA totalled EUR 22.9 million (-6.0% year-on-year) as electricity purchases costs for network losses increased due to increased electricity market price, while planned maintenance costs also rose slightly from last year’s figures.

Shale oil segment

Eesti Energia's revenues from shale oil sales amounted to EUR 29.4 million, a decrease of 28.0% year-on-year. Shale oil sales volume totalled 94.3 thousand tonnes (-30.8% year-on-year), while production quantity was at 89.6 thousand tons (-22.3% year-over-year). The main reason for the decreases in the sales revenues and volumes is the smaller production volume as this year the maintenances were carried out during the third quarter while last year the maintenances took place in the second quarter. Group's average shale oil sales price excluding the impact of derivative transactions rose to 399 EUR/tonne (+60.2% year-on-year) on the back of recovering global oil prices. Group’s average shale oil sales price including the impact of derivative transactions rose to 311.6 EUR/tonne (+3.9% year-on-year), with derivative transactions resulting in a loss of 87.2 EUR/tonne in Q3 2021.

EBITDA from shale oil decreased by 115.3% year-on-year to an EBITDA loss of EUR 2.4 million. Biggest effects came from derivatives, both settled and unsettled instruments. The negative effect from the settled instruments (EUR +6.9 million in 2020 Q3 vs EUR -8.2 million in 2021 Q3) reflects the hedging effect for the shale oil sold during the quarter as hedged positions prices are lower from current market prices. From the end of last year the Group started to hedge the smaller part of the production, the gasoline product, through the use of the naphtha derivatives. Since the gasoline hedges are not included in the hedge accounting framework, the market movements of all hedged naphtha positions go through the Income Statement resulting in a loss of 3.4 million euros in the third quarter of 2021 as the global oil prices have been recovering lately. Lower sales volumes from last year’s third quarter influenced EBITDA negatively in the amount of EUR 6.3 million. Comparable EBITDA profit, adjusted with the lower volumes and impact from unsettled hedge positions, was at EUR 11.6 million.

Other segment

EBITDA from Group's other products and services totalled at EUR -10.8 million euros compared to an EBITDA profit of EUR 0.5 million in the same period last year. The biggest effect came from the unrealised gas derivative instruments, impact from this figure amounted to EUR -30.1 million in Q3 2021 (EUR +2.3 million in Q3 2020; change of EUR -32.4 million year-on-year). Segment’s loss was balanced by the booking of the reached agreement with GE for the availability guarantee of Auvere power plant in the amount of EUR 28.0 million, for which the group made a stock exchange announcement in September 2021.

Capital expenditure

The Group's capital expenditure totalled EUR 60 million in the third quarter (+57.0% year-on-year). The increase is attributable to the higher development investments (new wind parks and oil plant Enefit282), and also increased electricity distribution network investments. The largest part of the development investments went to the new oil plant Enefit282, EUR 10.8 million. The new oil plant together with investments to traditional renewable capacities such as wind, solar, are the cornerstones that will position the Group in the best way possible for the future taking into account today’s global renewable and sustainable trends, but also the expectations from its owner, the State of Estonia. In addition to capex amounts brought out above, in Q3 2021 group finalised the acquisition of third largest DSO network in Estonia (Imatra Elekter AS) for EUR 29.8 million.

Financing, credit ratings and dividends

The cash and cash equivalents held by the Group totalled EUR 162.7 million at the end of September 2021. As of 30 September 2021, the Group had access to a total of EUR 665 million of bank loans, from which EUR 515 million belonged to the parent company and EUR 150 million to Enefit Green. At the end of the third quarter 2021 the Group's net debt amounted to EUR 755 million. No dividends shall be paid in 2021, as decided by the Annual General Meeting in April 2021.

After the third quarter, in October 2021, Eesti Energia’s renewable subsidiary Enefit Green AS was successfully listed at the Nasdaq Tallinn Stock Exchange. As a result of the IPO, 22.8% of Enefit Green’s shares are listed and group received IPO gross proceeds of EUR 175 million which is not taken into account in the third quarter figures.

Eesti Energia's net debt to EBITDA ratio stood at 3.1x at the end of Q3 2021, in line with the long term target of 3.5x from the financial policy of the company. Eesti Energia’s credit ratings are unchanged at BBB- (negative) by Standard & Poor’s and Baa3 (stable) by Moody’s. Eesti Energia’s financial policy is aimed at maintaining investment grade credit ratings. In the end of October S&P affirmed the rating and outlook for Eesti Energia group.


Management’s expectations for 2021 are unchanged. For 2021 Eesti Energia's sales revenue, EBITDA and investments will likely grow (defined as at least 5% growth) compared to 2020 numbers. The largest development investments will be made in the construction of a new oil plant and the development of the renewable energy portfolio.

Eesti Energia will publish its 2021 annual audited results at the beginning of March 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 0.9 TWh for Q4 of 2021 (at average price of 64.3 EUR/MWh), and 1.6TWh for 2022 (at average price of 71.6 EUR/MWh). The Group's hedge positions for electricity retail sales amounted to 0.9 TWh for Q4 of 2021 (at average price of 49.4 EUR/MWh) and to 2.6TWh for 2022 (at average price of 44.1 EUR/MWh). For shale oil, the fuel oil hedge positions totalled 90.2 thousand tonnes for Q4 of 2021 (at average price of 300.7 EUR/tonne) and 332.6 thousand tonnes for 2022 (at average price of 284.2 EUR/tonne). For naphtha, the hedge positions totalled 13.8 thousand tonnes for Q4 of 2021 (at average price of 330.6 EUR/tonne) and 51.2 thousand tonnes for 2022 (at average price of 316.8 EUR/tonne).

The Group's position in CO2 emission allowances for Q4 2021 amounts to 4.2 million tonnes at an average price of 33.2 EUR/tonne. The position for 2022 amounts to 2.4 million tonnes at an average price of 36.3 EUR/tonne. CO2 hedge positions consist of forward transactions, free emission allowances received as investment support and the surplus of unused allowances from previous periods.

The full quarterly report of Eesti Energia along with an investor presentation is available at Eesti Energia's web site.

Investor call discussing the 2021 Q3 financial results will take place on 5 November 2021, 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 & Treasury
Eesti Energia AS
Lelle 22, 11318 Tallinn
Phone +372 465 2885
[email protected]