Eesti Energia Group Results for Q3 2024
Sales Revenues and Profitability
Eesti Energia Group's sales revenues
amounted to EUR 387.6 million in Q3 2024, a decrease of 5%
year-on-year. The reported group EBITDA was EUR 40.6 million, down
56% year-on-year, while the adjusted EBITDA* stood at EUR 43.4
million, a decline of 58%. The Group's reported net profit was EUR
-8.4 million, a decrease of 130% year-on-year, and the adjusted net
profit was EUR -5.6 million, down 114%. The electricity segment was
the largest contributor to the Group's EBITDA, representing 67%,
followed by the distribution segment at 44%, and the shale oil
segment at 11%.
*Adjusted EBITDA and adjusted net profit provide better
comparability by eliminating temporary fluctuations in the fair
value of long-term Power Purchase Agreements (PPA)
derivatives.
Electricity Segment
Eesti Energia's sales revenues from
electricity decreased by 7% year-on-year to EUR 258 million in Q3
2024. The average electricity sales price, excluding derivative
impacts, was 112.5 EUR/MWh, a decrease of 14% year-on-year. The
average market electricity price for the Estonian Nord Pool area
slightly increased to 96.5 EUR/MWh, up 1% year-on-year. Electricity
sales volume for the quarter totalled 2.3 TWh, an increase of 8%
year-on-year, with retail sales also at 2.3 TWh. Electricity
generation during the quarter was 0.7 TWh, up 21% year-on-year.
Renewable electricity production, including wind, solar, and waste
wood, increased to 0.4 TWh, up 21% year-on-year, due to new and
under-construction wind farms contributing nearly 131
GWh.
The EBITDA of the electricity
segment was EUR 27.2 million, down 58% year-on-year. The largest
decrease came from realized derivative transactions, which had a
negative impact of EUR 40 million compared to the
extraordinary levels in Q3 2023. Despite last year's extremely
favourable hedges, we still incurred profit from derivative
transactions, but less compared to the base period (Q3
2023). Other negative impacts included a margin impact of EUR
-7.4 million due to lower sales prices, partially offset by lower
variable costs. The largest positive impact was related to changes
in the fair value of derivative instruments and power purchase
agreements for renewable energy, which contributed EUR 6.1 million.
The adjusted EBITDA for the quarter was EUR 30 million, down 61%
year-on-year, compared to EUR 76.3 million in Q3 2023.
Distribution Segment
Sales revenues from the distribution
segment amounted to EUR 65 million in Q3 2024, an increase of 2%
year-on-year. Distributed volumes increased by 2% year-on-year to
1.4 TWh for the quarter. The average distribution sales price, or
tariff, was 47.9 €/MWh, up 0.4% year-on-year. Distribution EBITDA
for the quarter decreased to EUR 17.7 million, down 34%
year-on-year, mainly due to higher transmission tariffs.
Shale Oil Segment
Sales revenues from shale oil
amounted to EUR 38 million, an increase of 2% year-on-year, with
sales volumes at 94 thousand tons, down 18% year-on-year. The
average shale oil sales price, excluding derivative impacts,
decreased to 412 EUR/ton, down 12% year-on-year, due to lower oil
market prices. The reference product's average quarterly market
price was 423 EUR/ton, down 12.5% year-on-year. The Group's average
shale oil sales price, including derivative impacts, was 400.2
EUR/ton, up 24% year-on-year. EBITDA from shale oil operations was
positive at EUR 4.5 million, up 67% year-on-year, largely due to a
gain on derivatives of EUR 9 million. Similar to the
electricity segment, we gained from hedges due to the low base
period (Q3 2023) value.
Other Segment
EBITDA from the Group's other
products and services totalled EUR -8.8 million in Q3 2023. The
most significant impact was a negative EUR 10.1 million from the
sale of natural gas, partially offset by wind farm insurance
compensation totalling EUR 5.3 million.
Capital Expenditure
The Group's capital expenditure
amounted to EUR 164 million in Q3 2024, down 18% year-on-year.
Investments in renewable asset developments totalled EUR 77
million. Electricity distribution network investments were EUR 33
million, aimed at improving connection points for additional solar
production capacities and enhancing grid quality. Investments into
Enefit-280 shale oil plant amounted to EUR 27 million, which is,
after multiple operational test programs, scheduled to be completed
late 2025 and will serve as a cornerstone for strategic
transformation of current liquid fuels production from shale oil to
a chemical industry feedstock.
Financing and Credit Ratings
As of the end of Q3 2024, the Group
held EUR 529 million in cash and cash equivalents. The Group had
access to EUR 530 million in bank loans, including EUR 320 million
in revolving credit facilities and EUR 210 million in long-term
loan agreements. Eesti Energia's net debt was EUR 1,108 million,
with a net debt to EBITDA ratio of 2.9x, compared to the company's
financial policy target of 3.5x.
In Q3 2024, Eesti Energia raised EUR
400 million in green hybrid bonds, listed on the London Stock
Exchange, to support its business and strengthen its financial
position. The funds will be invested in ongoing and planned green
energy projects.
Eesti Energia is rated BBB-
(negative) by Standard & Poor's and Baa3 (stable) by Moody's.
The company's financial policy aims to maintain an investment-grade
credit rating and a long-term net debt to EBITDA target of 3.5x.
The net debt to EBITDA ratio is expected to increase in the
upcoming quarters but remain below the 3.5x target as the Group
continues its investment pipeline.
Outlook
Management expects a slight decline
in sales revenue for 2024, while EBITDA is expected to increase
slightly compared to 2023. Investments for FY24 are planned to
decrease as several projects are near completion. The investment
plan includes the launch of several wind and solar farms
(incl. Sopi-Tootsi wind park totalling 255 MW of
additional production capacity),
improvements to the electricity distribution network, and the
development of a sustainable chemical industry through the
Enefit-280 project.
Eesti Energia will publish its
unaudited annual results on 27 February 2025. The Q3 2024 interim
report and investor presentation are available on Eesti
Energia's website.
An investor call discussing the Q3 2024 financial results will take
place on 31 October 2024 at 11:00 London time, 12:00 Frankfurt
time, and 13:00 Tallinn time. Please
register to participate. After
registration, you will receive the details required to join the
conference call.
Danel Freiberg
Head of Treasury and Financial Risk Management
Eesti Energia AS
Tel: +372 5594 3838
Email: danel.freiberg@energia.ee