News
Eesti Energia channels its profit into local investments
Rapid growth, a feature of Eesti Energia's corporate income and operating profit in recent years, has decelerated. Nonetheless, the company continues investing in local energy generation and power networks on an increasing scale. In addition, sustained profitability makes it possible to meet the growing dividend expectations of the State.
Eesti Energia's corporate income in the 9 months of the 2011 financial year was EUR 634 million (up 12% compared to the same period the year before), its operating profit EUR 118 million (down 2%) and total investments EUR 350 million (up 170%). During the financial year, EUR 56 million has been paid to the State in dividends (down 48%).
Eesti Energia's profit continues to be sustained by successful exports of shale oil bolstered by its high price on the world market. "The new oil plant due for completion next year will double the scale of oil production and make it possible to improve the performance of our liquid fuels business even further," Margus Kaasik, CFO of Eesti Energia, believes.
The Group's performance on electricity generation and sales on the free market were weak in the first half of the year due to the high quota price of carbon dioxide. "Since last summer, the decline in the price of carbon dioxide has improved the competitiveness of oil shale electricity, and the profitability of electricity generation has been recovering since the third quarter. On a 9-month basis, this also offset the decline in the first half of the year," stated a pleased Mr Kaasik while speaking on the Group's business results.
On balance, it is estimated that the operating profit for the year at the largest State-owned business will be on par with the operating profit for 2010, which was EUR 149 million. Year-on-year, the total annual investment by the Group will increase more than two-fold and exceed the anticipated operating profit by as much as three times. Also, the draft national budget for next year indicates a need by the State to support the provision of public services to Estonia's residents with the help of dividends from State-owned business ventures.
According to Mr Kaasik, it is also cause for delight that, despite its reduced profitability, Eesti Energia has dramatically increased investment in the electricity supply to Estonia's residents, and thanks to the fees in effect since 1 August Jaotusvõrk will be able to upgrade the power network more than has been the case to date. "Of all of the Group's investments, investments by Jaotusvõrk will no doubt be the first to be felt by customers," Mr Kaasik affirmed.
Over the upcoming years, Eesti Energia will be channelling the most investment funds – EUR 640 million – into the construction of the new Narva power plant due for completion in 2015. The second biggest investment by the Group will be the upgrading of the power network. Over the next three years, Jaotusvõrk will carry out repairs worth EUR 300 million on the power network, thanks to which the number of supply interruptions per household will drop by approximately 20%. The third biggest investment will be the construction of a new oil plant at Auvere, at a total cost of EUR 207 million.
To finance these major investments by Eesti Energia, there will be a continued need to draw on long-term external financing in the form of a loan or bonds, in addition to the profit accrued. Equity financing planned by the State next year will also be needed to support investment by Eesti Energia currently in progress and to implement the national energy security strategy.
The operating income of Eesti Energia in 2011 Q3 was EUR 191 million (+15% compared to the reference period in the previous year) and the operating profit was EUR 36 million (+62%). The result that was better than in 2010 Q3 enabled to even out underperformance in the first half-year relative to the benchmark in 2010 and therefore the current financial year is expected to yield a similar result compared to that in 2010.
The financial results of the Eesti Energia Group have been detailed in the third quarter interim report, available on the Eesti Energia homepage. For a more detailed overview of investment by the Group, go to www.energia.ee/investeeringud.
Eesti Energia's corporate income in the 9 months of the 2011 financial year was EUR 634 million (up 12% compared to the same period the year before), its operating profit EUR 118 million (down 2%) and total investments EUR 350 million (up 170%). During the financial year, EUR 56 million has been paid to the State in dividends (down 48%).
Eesti Energia's profit continues to be sustained by successful exports of shale oil bolstered by its high price on the world market. "The new oil plant due for completion next year will double the scale of oil production and make it possible to improve the performance of our liquid fuels business even further," Margus Kaasik, CFO of Eesti Energia, believes.
The Group's performance on electricity generation and sales on the free market were weak in the first half of the year due to the high quota price of carbon dioxide. "Since last summer, the decline in the price of carbon dioxide has improved the competitiveness of oil shale electricity, and the profitability of electricity generation has been recovering since the third quarter. On a 9-month basis, this also offset the decline in the first half of the year," stated a pleased Mr Kaasik while speaking on the Group's business results.
On balance, it is estimated that the operating profit for the year at the largest State-owned business will be on par with the operating profit for 2010, which was EUR 149 million. Year-on-year, the total annual investment by the Group will increase more than two-fold and exceed the anticipated operating profit by as much as three times. Also, the draft national budget for next year indicates a need by the State to support the provision of public services to Estonia's residents with the help of dividends from State-owned business ventures.
According to Mr Kaasik, it is also cause for delight that, despite its reduced profitability, Eesti Energia has dramatically increased investment in the electricity supply to Estonia's residents, and thanks to the fees in effect since 1 August Jaotusvõrk will be able to upgrade the power network more than has been the case to date. "Of all of the Group's investments, investments by Jaotusvõrk will no doubt be the first to be felt by customers," Mr Kaasik affirmed.
Over the upcoming years, Eesti Energia will be channelling the most investment funds – EUR 640 million – into the construction of the new Narva power plant due for completion in 2015. The second biggest investment by the Group will be the upgrading of the power network. Over the next three years, Jaotusvõrk will carry out repairs worth EUR 300 million on the power network, thanks to which the number of supply interruptions per household will drop by approximately 20%. The third biggest investment will be the construction of a new oil plant at Auvere, at a total cost of EUR 207 million.
To finance these major investments by Eesti Energia, there will be a continued need to draw on long-term external financing in the form of a loan or bonds, in addition to the profit accrued. Equity financing planned by the State next year will also be needed to support investment by Eesti Energia currently in progress and to implement the national energy security strategy.
The operating income of Eesti Energia in 2011 Q3 was EUR 191 million (+15% compared to the reference period in the previous year) and the operating profit was EUR 36 million (+62%). The result that was better than in 2010 Q3 enabled to even out underperformance in the first half-year relative to the benchmark in 2010 and therefore the current financial year is expected to yield a similar result compared to that in 2010.
The financial results of the Eesti Energia Group have been detailed in the third quarter interim report, available on the Eesti Energia homepage. For a more detailed overview of investment by the Group, go to www.energia.ee/investeeringud.