The first quarter sales revenue of the Estonian state-owned energy group Eesti Energia in 2018 totaled €228.6 million, marking an increase of 6.2 percent on year, while net profits declined 16.1 percent to €40.5 million.
The revenues of most business segments of Eesti Energia grew in the first quarter on the back of higher electricity and shale oil prices and growing sales volumes. The results of the distribution segment are in year-to-year comparison affected by the cuts in the distribution tariff implemented in the second half of last year, Eesti Energia told the London Stock Exchange.
Reported EBITDA, €77 million, declined by 11 percent, or €9.7 million, on year, but adjusting for the positive impact of the sell-down of the Jordan project in the first quarter of 2017 in the amount of €9.2 million, EBITDA remained flat.
"It's a pleasure to note that Estonia continues to be an electricity exporting nation," Eesti Energia CFO Andri Avila said. "During the first quarter, some 600 gigawatt-hours of electricity was exported to neighboring countries, which, considering the average electricity free marker price for the quarter, means an export income of €25 million for the state. While Latvia managed to cover domestic consumption with its own output in the first quarter, Lithuania, Poland and Finland, for instance, continue to run a quite serious electricity deficit."
Avila added that Estonia may soon also lose the status of electricity exporting nation as part of the generating capacities at the power plants in Narva have to be shut down in the next few years.
Eesti Energia's sales revenue in electricity sales increased by 3.5 percent on year to €105.6 million. The group's average electricity sales price equaled €41.4 per megawatt-hour in the first quarter, representing an increase of 3.7 percent on year. The increase in electricity market prices was not fully reflected in Eesti Energia's average sales price due to hedge positions which had been entered into at lower price levels.
Electricity sales volume increased by one percent on year to 2.5 terawatt-hours. Including the full quantity of electricity from the company's Auvere plant, which is partly capitalized in financial statements, electricity sales volumes totaled 2.6 terawatt-hours, representing a decline of 1.9 percent on year.
EBITDA from the electricity segment totaled €32.5 million, down by 13.2 percent. The higher market price of electricity and higher sales volumes had a positive effect on EBITDA compared to the first quarter of 2017. The higher cost of CO2, negative impact from derivative positions and higher fixed costs, however, had a negative contribution.
Eesti Energia's retail market share in the Baltic countries totaled 27 percent in the first quarter of 2018, up by one percent on year.
The group's revenues from shale oil sales amounted to €21.9 million, up by 19 percent on year. The shale oil segment was supported by both increasing prices as well higher volumes. Eesti Energia's average shale oil sales price equaled €261 per ton in the first quarter, up 9.3 percent on year. Shale oil sales volume totaled 84,000 tons, 8.8 percent more than in the first quarter of 2017. EBITDA from shale oil increased by 49 percent on year to €8.4 million. Similarly to the growth in revenues, EBITDA was also driven by better market prices and higher sales volumes.
Eesti Energia's revenues from the distribution segment totaled €70.7 million, down 0.8 percent on year. Distribution volume grew to 2.1 terawatt-hours, an increase of 7.6 percent on year, on the back of colder weather and supportive economic conditions. The average distribution sales price, however, declined to €34.3 per megawatt-hour, a reduction by 7.9 percent, due to the cuts in distribution tariffs in the second half of 2017. Distribution EBITDA totaled €26.1 million, 8.7 percent less than in the first quarter of 2017, as the lower average sales price was only partially offset by higher distribution volumes.
EBITDA from the rest of the group's products and services totaled €9.8 million in the first quarter of 2018, down from €14.9 million in the same period last year. The previous year's result included €9.2 million from the financial close of the Jordan project, however, which affects comparability.
Investments made by Eesti Energia during the quarter totaled €36 million, 37 percent more than the amount invested during the first three months of 2017. Investments in the distribution network amounted to €13 million.
Avila said that developments are taking place at the Auvere Power Plant as well. At the beginning of the year, important tests were conducted at the plant, which in general can be deemed a success.
Following regular maintenance performed every summer, one more test is to be performed there which, if successful, will enable Eesti Energia to accept the plant from General Electric.
Commenting on outlooks for the future, Avila said that forecasts allow to expect both electricity and oil prices to move up somewhat. "Yet apparently, the price of carbon dioxide will rise as well, which means that acting in an effective and flexible fashion will remain essential for the energy producer," the CFO added.
Editor: Aili Vahtla