News

Eesti Energia’s sales revenues for the financial year 2015 amounted to EUR 777 million (-11.7%, EUR -103.2 million down from 2014), while EBITDA totalled EUR 266 million (-14.9%, EUR -46.5 million) and net profit EUR 40 million (-74.6%, EUR -118.8 million).

Financial results

The decline in the Group’s sales revenues is mainly attributable to lower electricity sales revenues (EUR 356 million, -21.2% y-o-y) as weak market prices compelled the Group to reduce its electricity generation and sales volumes, primarily on the wholesale side. Power prices in the Nord Pool Estonia price area were in decline, reaching 31.1 EUR/MWh on average in 2015 (-17.3% y-o-y), however Eesti Energia’s average electricity sales price declined much less (to EUR 46.6 EUR/MWh, -2.1% y-o-y) as it was supported by hedges and careful production planning with the aim to generate more electricity during higher priced peak hours. Revenues from shale oil sales increased to EUR 104 million (+21.7% y-o-y) owing to higher production quantities from the new Enefit280 plant. The effect of higher quantities was to some extent offset by the decline in oil prices, although Eesti Energia’s sales price was substantially helped by hedge positions. Revenues from electricity distribution totalled EUR 242 million (+0.6% y-o-y). Other products and services contributed EUR 75 million to Eesti Energia’s sales revenues, declining by 27% y-o-y, mainly due to the fact that oil shale sales to an extra-group clients stopped in 2015.

Group EBITDA totalled EUR 266 million (-14.9% y-o-y). The decline in EBITDA was largely driven by lower electricity sales volume as electricity EBITDA decreased by 19.2% to EUR 114 million. Distribution EBITDA grew by 8.1% to EUR 105 million, primarily because of lower cost of network losses. Shale oil EBITDA also improved (to EUR 41 million, +2.0% y-o-y) as the rise in sales volume and a positive impact from derivative instruments outweighed the decline in global oil prices. EBITDA from other products and services decreased to EUR 5 million (-84.8% y-o-y). The main contributors for this development were a revaluation of a loan receivable related to the Group’s oil project in Jordan and discontinuance of oil shale supplies to external customers.

The Group’s net profit for 2015 was strongly influenced by non-cash impairment losses of EUR 65.5 million in total, recognised for the Auvere power plant and the assets of Eesti Energia’s Utah project (EUR 39.6 million and EUR 26.0 million, respectively). The assets were written down due to the downtrend in the Nordic power and the global oil market prices, for which the Group does not forecast rapid recovery.

Although EBITDA declined, the Group had a good result in terms of operating cash flow which amounted to EUR 308 million (+34.8% y-o-y).

Key performance indicators

The Group’s electricity sales amounted to 7.2 TWh in 2015 (-21.1% y-o-y), out of which sales to retail clients made up 5.9 TWh (-2.3%) and sales in the wholesale market contributed 1.3 TWh (-57.2%). Eesti Energia’s share of the retail power market in Estonia grew to 61% in 2015, while in Latvia and Lithuania its market share amounted to 15% and 5%, respectively. Eesti Energia generated 7.7 TWh of power in 2015, which is 20.6% less than in 2014.

The Group distributed 6.3 TWh of electricity last year (+0.7% compared to 2014). Eesti Energia sold 315 thousand tonnes of shale oil in 2015 (+36.6% y-o-y), while production amounted to 337 thousand tonnes (+26.8% y-o-y).

Capital expenditure

The Group’s capital expenditure amounted to EUR 246 million in 2015 (-11.0% y-o-y). Investments have been decreasing as many of Eesti Energia’s largest investment projects are being completed. The largest share of the capex was directed towards the distribution network (EUR 93 million), maintenance and repair investments (EUR 41 million) and the Auvere power plant (EUR 34 million).

Financing, credit ratings and dividends

The Group’s available liquidity as at the end of 2015 totalled EUR 380 million, including EUR 160 million of cash and equivalents, EUR 150 million of revolving credit facilities (with maturity in July 2020) and EUR 70 million undrawn investment loan from EIB. In September 2015, the Group completed a tender offer of its eurobonds with maturities in 2018 and 2020 (tendered bonds in nominal value of EUR 442 million) and replaced these with a new longer dated bond with maturity in 2023.

The Group’s net debt totalled EUR 792 million as of December 31, 2015 (EUR -42.7 million compared to the end of 2014). The net debt to EBITDA ratio equalled 3.0x (2.7x as at the end of 2014) and financial leverage 34% (unchanged from the end of 2014).

The Group is rated BBB and Baa2 by S&P and Moody’s, respectively. The outlook for the rating from S&P is stable while Moody’s has placed the rating under review for downgrade.

Outlook

Eesti Energia currently expects that in 2016 the Group’s sales revenues will decline slightly (which is defined as a less than 5% decline) while EBITDA and capital expenditure will decline (defined as more than 5% decline), in year-on-year comparison. The Group’s results will be impacted by low shale oil and electricity prices, and the gradual roll off of hedge positions. Investments will decline as large development projects are completed.

The Group’s hedge positions for 2016 comprise 4.2 TWh of electricity (including retail electricity sales) with an average price of 37.2 €/MWh and 131.3 thousand tonnes of shale oil with an average price of 357.1 €/t. Hedge positions for 2017 comprise 1.5 TWh of electricity (average price 36.1 €/MWh).

The Group’s CO2 emission allowance position for 2016 amounts to 12.0 million tonnes at an average price of 6.0 €/t (including forward transactions, free emission allowances to be received as investment support and the surplus of unused allowances from previous periods). The position for 2017 amounts to 3.1 million tonnes at an average price of 0.1 €/t.

More information on the audited financial results of Eesti Energia Group is available at Eesti Energia homepage