Eesti Energia Group results for the 2008/2009 financial year

In the 2008/09 financial year ended in March, Eesti Energia had an operating income of 677 million euros, an operating profit of 103 million euros and a net profit of 88 million euros. The strong results were the result of significantly higher export revenue and increased efficiency.

Chairman of the Eesti Energia Management Board Sandor Liive said in comments on the results for 2008/09 that the financial year was a successful one for Eesti Energia. "We responded to changes in the economic environment, effectively implementing cost control. This resulted in a noteworthy increase in the group's efficiency," said Liive. Liive said that the EE Group in the past financial year made the right choices strategically and was a productive performer in the electricity market.

Eesti Energia's Chief Financial Officer Margus Kaasik added with regard to the results that the higher revenue from sales of electricity had an impact on the group's figures. The brisker sales were the primarily the result of increased export income and this compensated for a decline in quantities of domestic electricity sold in the second half of the year. "Besides the healthy profit, the year ended also saw the largest investments," said Kaasik. "For Eesti Energia, earning a profit does not mean having extra cash lying around – it means greater investment opportunities, because each additional euro of profit allows us, with the help of bank loans, to invest four euros into renovation and upgrading power grids and production." Kaasik said the strong figures made it possible to invest 226 million euros into electricity production and power grids. The investments made in the last financial year were the largest of the past six years.

The most important event in the Eesti Energia 2008/09 financial year was the fact that Eesti Energia subsidiary E.Energy achieved a 5% share of the electricity sales market in Latvia. By the end of the financial year, E.Energy had 110 large customers, to which it sold a total of 170 gigawatt-hours (GWh) of electricity. Eesti Energia's customers in Latvia included such big names in Latvia as Latvijas Balzams, Severstallat, JSC Valmieras, food industry companies, including all of the major breweries.

With regard to liquid fuels production, the Oil Factory at Narva Power Plants had a successful year, with output volumes growing 22%. The plant produced 1.03 million barrels of oil-shale-derived fuels.

Success was also seen in reducing grid losses. Losses fell to 9.5%, which is 0.7 percentage points less than in FY 2007/08.

The largest investment decision in the last financial year was the signing of an agreement for the installation of flue gas desulfurization equipment on up to four units at Narva Power Plants, a contract worth almost 100 million euros. Installation of flue gas desulfurization units will make it more environmentally friendly to produce electrical energy from oil shale and will allow Narva Power Plants to maintain its current production capacity even after EU flue gas emissions restrictions come into effect.

Preparations also continued for establishing Estlink 2 – a second submarine cable between Estonia and Finland. By the end of the financial year, the connection point on the Finnish side had been selected. The environmental authorities had approved the location of the land part of the cable, and the path of the sea part had also been selected. The European Union will support the Estlink 2 project with 100 million euros.

Eesti Energia projects in Jordan are also experiencing healthy development. The Jordanian government approved oil industry profitability studies conducted in 2007 and proposed that Eesti Energia start negotiations for entering into a concession agreement for production of oil from oil shale. The negotiations are expected to come to a conclusion in the summer of 2009.

Key events of the financial year ended also include the new, environmentally cleaner technology for producing liquid fuels from oil shale – developed by Eesti Energia and Outotec.

Eesti Energia's mobile Internet service KÕU also showed strong growth. The number of customers increased 47%, rising above 23,000.

The focus of investment activity remained on power grids, as it has in years past. The sector received 140 million euros in investment. The Distribution Grid received the largest amount of investment –102 million euros. The Distribution Grid's most important investment trends were the building of new connections and ensuring the reliability and quality of power lines. The Transmission Grid's biggest investments were related to renovation of distribution equipment and cables. A total of 39 million euros was invested in this field. One of the most important investments in the field of heat and power generation was Aulepa wind farm – the most powerful in the Baltics – where investments last year exceeded 28 million euros. A total of 50 million euros was invested into the field of heat and power generation. Investments into the fuels sector totalled 32 million euros. The primary investments in this field were made into upgrading Estonian Oil Shale's production equipment and improving the operating quality of equipment at the Oil Factory at Narva Power Plants.

In FY 2008/09, domestic electricity sales grew 1.2% compared to the previous financial year and totalled 7,077 gigawatt-hours (GWh). The sales volume growth trend showed signs of slowing in the second half of the financial year. The first half-year's 4.4% pace was replaced by a 1.2% contraction in the second half-year. In the case of corporate customers, a major decrease in consumption could be felt in the second half of the year, but among residential customers, electricity consumption increased 7.2% during this period.

In FY 2008/09, 2,457 GWh of electricity was exported, representing a drop of 268 GWh or 9.8% compared to the same period in the previous year. Export revenue in the financial year was 34% greater compared to the 2007/08 financial year, however, and amounted to nearly 114 million euros.

Sales of thermal energy totalled 1,690 GWh in FY 2008/09, a drop of 49 GWh (2.8%) compared to FY 2007/08. The primary reason for the decrease was increased competition on the Tallinn heat market.

Eesti Energia Group's results consolidate the results for its subsidiaries engaged in production, transmission, distribution and sale as well as other services. The figures are the initial, unaudited results. Eesti Energia's financial year began on 1 April 2008 and ended on 31 March of this year.

The audited results of the 2008/2009 financial year will be released in June. At that point, the annual report will be publicly available on the Eesti Energia website.


Marina Bachmann
Press Officer
Eesti Energia AS
Tel: 71 51 218
GSM: 56 456 600
[email protected]