Eesti Energia Group's results for the first half of the 2009/10 financial year

In the first half of the 2009/10 financial year, Eesti Energia's operating income was 291 million euros, operating profit was 47 million euros and net profit amounted to 17 million euros. Success of the energy trading activity and fixed costs saving had a positive impact on Eesti Energia's financial results. The decrease in domestic electricity sales, which was influenced by the recession had a negative impact. Eesti Energia's Chief Financial Officer Margus Kaasik said that the recession, which became deeper in the second quarter, exerted a strong negative impact on volumes of electricity and thermal energy sold, and necessitated action to improve the energy company's efficiency. "Thanks to the austerity programme instituted in 2008, we increased the Group's profitability even in the recession, above all by bringing fixed costs under control and increasing our efficiency," said Kaasik. "This financial year, Eesti Energia commenced a number of new strategic investment projects and made essential capital expenditure into maintaining our existing asset productivity. In spite of this fact, our net cash flow is positive – thanks to strong economic results," added Kaasik, commenting on Group activity. In the six months of the 2009/10 financial year, Eesti Energia invested a total of 88 million euros, with the largest investments being made into development of distribution network and generation of electricity. Eesti Energia invested 33 million euros into power grids and 33 million euros into power generation. Fuels division performed a total of 21 million euros of capital expenditure, primarily related to the construction of the new Enefit technology-based oil production plant. Important event in Electricity and Heat Generation division was the launch of the tender for establishing up to two new power-generating oil shale fired units at Narva Elektrijaamad. Furthermore, renewable energy generation was launched at Narva Elektrijaamad through the combustion of biomass. In addition, Eesti Energia selected the contractor that will establish a waste-to-energy plant. The new co-generation plant (located next to Iru power plant) will be ready by 2012 and it is expected to burn 220,000 tons of municipal solid waste per annum, generated in Estonia. Additionally, an agreement was signed for Eesti Energia to sell electricity to the Lietuvos Energija in 2010. Under the agreement, Eesti Energia will start providing ten per cent of the electricity consumed in Lithuania – about one terawatt-hour of power. One of the most important events in Fuels division was the agreement signed between Eesti Energia and the international technology development company Outotec to build key components of the new oil plant. In the first half of the financial year, Eesti Energia invested 13 million euros into building the new Enefit system. The oil plant will use more environmentally friendly, reliable and higher-unit-capacity Enefit technology. Eesti Energia and Outotec also established a joint venture which will primarily be engaged in developing the new-generation Enefit shale oil production technology. Sales of Eesti Energia's other products and services continued growing. The number of users of KÕU, the company's mobile Internet service, has reached nearly 25,000. Over 1,000 customers joined the Green Energy package. Green Energy agreements now represent a total of 22 gigawatt-hours. In addition, Eesti Energia started offering electrician's services and energy labels for buildings. Other key events include a decision in principle by the Eesti Energia supervisory board to sell the TSO, Elering OÜ, to the Estonian state. The reason behind the sale is to conform to European Union requirements that TSOs be independent from generation and sales activity as well to establish the conditions for the creation of an open electricity market in Estonia. The Group's financial statements for the first half-year recognize Elering OÜ results as discontinued operations; the sale transaction will be completed in the current financial year. Eesti Energia's domestic sales of electricity dropped by 10% in the first half of the 2009/10 financial year, partly as a result of the recession and drop in industrial output. Total sales amounted to 2 991 GWh of electricity. Corporate customers were sold 1,783 GWh of electricity, which is 15.4% less than a year ago. Eesti Energia sold 698 GWh of electricity to residential customers – 0.3 per cent more than last year. Eesti Energia's sales to network operators amounted to 509 GWh, which is an decrease of 1.4% from last year. Eesti Energia's sales of heat reached 217 GWh in the first half of the 2009/10 financial year, a drop of 50.3% from the same period a year ago. Electricity exports in the first 6 months of 2009/10 financial year have been 1 115 GWh, which is 4.1% more than in the first six months of the last financial year. Lower price on the Nordic power exchange Nord Pool has reduced sales to Finland by 476 GWh. However, the latter has been compensated by increased sales to Latvia, which grew 498 GWh. The Eesti Energia Group's financial results and the company's operating environment will be described in detail in the interim financial statements, which will be available from 4 November 2009 on Eesti Energia's website. More information: Marina Bachmann
Press Officer
Eesti Energia AS
Tel: +372 71 51 218
GSM: + 372 56 456 600
[email protected]