Enefit Green interim report for Q2 2022
In Q2 2022, Enefit Green group total revenues increased by 30% y-o-y to €47.3m and EBITDA was up by 51% y-o-y at €30.7m. During the quarter, the group earned net profit of €16.9m (€0.06 per share), which is 80% more than in Q2 2021.
Aavo Kärmas, Chairman of the management Board of Enefit Green comments:
“Energy prices in the region continued to break new records in the second quarter, keeping consumers and industry under intense pressure across Europe. European countries are abandoning Russian gas and oil and are searching for new and alternative solutions. The only viable long-term solution for the energy crisis is electrification through renewable sources replacing fossil energy sources such as motor fuels in transport or natural gas in heat production. The more we can produce green electricity, the less we will depend on uncertain and expensive fossil fuel supplies.
Enefit Green is currently constructing four new wind farms in Estonia, Lithuania and Finland and three solar farms in Estonia and Poland. Investments in new assets amounted to about 40 million euros during the second quarter. In order to accelerate the deployment of renewable electricity and reduce the carbon footprint in the region, we will quadruple the current production capacity (457 megawatts) to about 1900 megawatts by 2026. For this purpose, we are investing ca 1.5 billion euros in new development projects.
The most recent step in the implementation of the growth plan is the acquisition of the Tootsi wind farm. We plan to simultaneously build the Tootsi (74 MW) and Sopi (161 MW) wind farms and double the current production of Estonian wind power by doing so. The implementation of the growth strategy is also supported by the construction of the new 32MW Purtse solar farm. Together with the wind farm to be built nearby (21 MW), it will become Estonia's first hybrid farm for large-scale electricity production.
In May, the general meeting of shareholders of Enefit Green decided to pay investors a dividend of 0.151 euros per share for financial year 2021. In total, we distributed investors nearly 40 million euros in dividends, or 50% of the net profit in 2021. Just as prescribed by our dividend policy.
To grow production of renewable energy, and together with it our financial results and dividends in the future, we plan to make investment decisions for the construction of new wind and solar parks in the amount of 358 MW before the end of this year.”
Webinar to present the results of Q2 2022
Today, August 4, 2022 at 13.00 EEST Enefit Green will host a Webinar in English to present and discuss its Q2 2022 results. To participate, please follow this link.
- Approval of the updated strategy
- Final investment decision on 32MW Purtse solar farm (Estonia)
- Sale of minority stake in Wind Controller
- Annual general meeting of shareholders and dividend distribution
- 74MW Tootsi wind farm project acquisition (July 2022)
- Change in the management board composition (July 2022)
| ||Q2 2022||Q2 2021||Change||Change %|
|PRODUCTION VOLUMES|| || || || |
| Electricity, GWh ||270||256||15||6%|
| Heat, GWh||152||146||6||4%|
| Pellets, th t||36||26||9||35%|
| || || || || |
|TOTAL REVENUES, m€||47.3||36.2||11.0||30%|
| Sales revenue, m€||41.5||29.4||12.1||41%|
| Renewable energy support and other income, m€||5.8||6.8||-1.1||-16%|
|NET PROFIT, m€||16.9||9.4||7.5||80%|
|EPS, € (post-IPO number of shares)||0.06||0.04||0.03||80%|
Sales revenues and other operating income
Group’s electricity production in 2Q 2022 was 270 GWh, increasing 6% year-on-year. The implied captured electricity price (including various subsidies) received by the group across markets was €127/MWh in Q2 2022, compared with 87 €/MWh in Q2 2021.
The most important revenue driver was the surge in the electricity price in the Estonia price area of the Nord Pool (NP) power exchange, which increased the group’s revenue by around €11.5m. The average market price in the NP Estonia price area in Q2 2022 was 142.0 €/MWh compared with 54.6 €/MWh in Q2 2021. The implied captured electricity prices of the group’s Estonian production entities in the two periods were 115.9 €/MWh and 45.0 €/MWh. The implied captured electricity price differs from the average NP price because wind farms do not produce the same amount of electricity in each hour and the figure also includes the effects of long-term fixed-price power purchase agreements (PPAs).
Wind conditions in Q2 2022 were comparable to Q2 2021 and their influence on the production results was relatively neutral.
Heat energy production increased by 4% and sales price increased by 8% compared with a year earlier.
Other income for Q2 2022 was strongly affected by a decrease in the renewable energy support received by the group’s Estonian wind farms, which dropped by €0.9m year on year. The eligibility period of the Tooma 1 wind farm expired in April 2022 and that of the earliest completed part of the Aulepa wind farm (39 MW) expired in July 2021.
EBITDA and segmental breakdown
Group’s EBITDA increased by 51% y-o-y to €30.7m in Q2 2022 driven mostly by the elevated Estonian electricity prices and somewhat by higher wind energy production volume in Estonia.
Variable costs have increased by €7.0m, which is largely due to the increase in the price of balancing energy transactions due to the increased price of electricity and the change in the financial accounting of intraday Nord Pool transactions (€2.9m), which has no effect on EBITDA. In addition, the cost of technological fuel (€2.4m) and other direct production costs (€1.8m) have also increased.
Group’s fixed expenses increased by 19% or €1.4m of which around half derived from payroll expenses, driven mainly by expanded development team and growth in compensation.
Based on total revenues and EBITDA, the group’s largest segment is Wind energy with 57% of total revenues and 67% of EBITDA for the reporting period. The Cogeneration segment contributed 34% to total revenues and 35% to EBITDA. The smallest reportable segment is Solar energy, which accounted for 8% of the group’s total revenues and 4% of the group’s EBITDA for Q2.
Among reportable segments, Wind and the Cogeneration delivered the strongest EBITDA growth supported by high electricity prices.
The group’s net profit increased 80% compared to Q2 2021, amounting to €16.9m for the reporting period. The most significant positive contribution came from high market prices of electricity , but also from lower net financial expenses. At the same time €4.3m increase in corporate income tax expense (primarily related to the dividend distribution from Estonian profits) had considerable negative effect on net profit growth.
The group’s Q2 capital expenditures grew by €4.8m year on year, rising to €40.9m. Growth resulted from development investments, which extended to €39.9m. Out of the total, €37.8m was invested in the construction of three wind farms: €24.9m in the Akmene wind farm, €6.9m in the Šilale 2 wind farm and €6.0m in the Tolpanvaara wind farm. The largest investment in solar power was €1.1m, which was invested in the execution phase of the Purtse solar farm. Baseline investments (expenditure on the improvement and maintenance of existing assets) amounted to €1m in Q2 2022 compared with €1.8m in the same period last year and were mainly related to operating turbines. Baseline investments may differ significantly quarter by quarter because they depend on the wind turbines’ repair and maintenance needs during the period.
Condensed consolidated interim income statement
|€ thousand||Q2 2022||Q2 2021|| ||1H 2022||1H 2021|
|Renewable energy support and other income||5,773||6,833|| ||14,352||14,886|
|Change in inventories of finished goods and work-in-progress||4,646||(3,158)|| ||2,579||(5,942)|
|Raw materials, consumables and services used||(16,365)||(9,508)|| ||(30,499)||(19,086)|
|Payroll expenses||(2,169)||(1,477)|| ||(4,612)||(3,307)|
|Depreciation, amortisation and impairment ||(9,644)||(9,547)|| ||(19,292)||(19,126)|
|Other operating expenses||(2,645)||(1,772)|| ||(5,150)||(3,688)|
|OPERATING PROFIT||21,101||10,778|| ||57,025||27,259|
|Finance income||1,117||50|| ||1,525||145|
|Finance costs||(626)||(1,022)|| ||(1,188)||(1,576)|
|Net finance costs||491||(972)|| ||337||(1,431)|
|Profit (loss) from associates under the equity method||(76)||(58)|| ||(72)||(36)|
|PROFIT BEFORE TAX||21,516||9,748|| ||57,290||25,792|
|Corporate income tax expense||(4,592)||(328)|| ||(5,441)||(760)|
|PROFIT FOR THE PERIOD||16,924||9,420|| ||51,849||25,032|
| || || || || || |
|Basic and diluted earnings per share|| || || || || |
|Weighted average number of shares, thousand||264,276||4,793|| ||264,276||4,793|
|Basic earnings per share, €||0.06||1.97|| ||0.20||5.22|
|Diluted earnings per share, €||0.06||1.97|| ||0.20||5.22|
| || || || || || |
|Basic earnings per share based on post-IPO number of shares|| || || || || |
|Post-IPO number of shares, thousand||264,276||264,276|| ||264,276||264,276|
|Basic earnings per share, €||0.06||0.04|| ||0.20||0.09|
Condensed consolidated interim statement of financial position
|€ thousand||30 June 2022||31 Dec 2021|
|ASSETS|| || |
|Non-current assets|| || |
|Property, plant and equipment||647,634||612,503|
|Deferred tax assets||734||442|
|Investments in associates||427||578|
|Derivative financial instruments||6,703||-|
|Total non-current assets||748,444||705,300|
| || || |
|Current assets|| || |
|Trade and other receivables and prepayments||23,479||22,373|
|Cash and cash equivalents||90,845||80,454|
|Derivative financial instruments||12||-|
|Total current assets||130,603||112,356|
|€ thousand||30 June 2022||31 Dec 2021|
|EQUITY|| || |
|Equity and reserves attributable to equity holder of the parent|| || |
|Statutory reserve capital||3,259||479|
|Foreign currency translation reserve||(1,209)||(965)|
| || || |
|LIABILITIES|| || |
|Non-current liabilities|| || |
|Non-derivative contract liability||23,207||23,207|
|Deferred tax liabilities||12,384||12,568|
|Other long-term liabilities||3,000||3,000|
|Total non-current liabilities||178,244||140,130|
|Current liabilities|| || |
|Trade and other payables||25,791||14,291|
|Derivative financial instruments||191|| -|
|Total current liabilities||48,973||43,919|
|Total equity and liabilities||879,047||817,656|
Head of Finance Communications
Enefit Green is one of the leading diversified renewable energy producers in the Baltic sea area. The Company wind farms in Estonia and Lithuania, cogeneration plants in Estonia and Latvia, solar farms in Estonia and Poland, a pellet plant in Latvia and a hydroelectric plant in Estonia. In addition the Company is developing several wind and solar farms in the mentioned countries and Finland. As of the end of 2021, the Group had a total installed electricity production capacity of 457 MW and a total installed heat production capacity of 81 MW. During 2021, the Company produced 1,193 GWh of electricity and 618 GWh of heat.