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Enefit Green interim report for Q3 2022

ENEFIT GREEN AS
ENEFIT GREEN AS

In Q3 2022, Enefit Green group total revenues increased by 66% y-o-y to €60.3m and EBITDA was up by 28% y-o-y at €32.7m. During the quarter, the group earned net profit of €22.9m (€0.09 per share), which is 50% more than in Q3 2021.


Aavo Kärmas, Chairman of the management Board of Enefit Green comments:

Enefit Green will continue on a rapid growth course, because the only long-term solution to the energy crisis is a sufficient amount of renewable energy. Therefore, Enefit Green strives to reach additional investment decisions for more than 300 megawatts of new capacities before the end of this year.

In the third quarter, we invested nearly 80 million euros in renewable energy developments. We are building a total of seven new wind and solar farms in Estonia, Lithuania, Poland and Finland. With these assets we will add 258 megawatts of production capacity to our home electricity markets in 2023, which will produce more than 700 gigawatt-hours of electricity annually. This amount covers the annual electricity consumption of more than 200 000 households.

During the quarter, Enefit Green's solar energy development portfolio in Estonia grew by 200 megawatts. For the first 35 megawatts, we want to reach an investment decision already in the second half of next year.

The production results of the quarter were most affected by the exceptionally low wind conditions and the thorough repairs carried out at the Iru CHP plant before the winter heating season. We also focused on the maintenance of wind turbines to assure availability during upcoming peak season of wind energy production.


Webinar to present the results of Q3 2022

Today, on 3 November 2022 at 13.00 EEST Enefit Green will host a Webinar in English to present and discuss its Q3 2022 results. To participate, please follow this link.


Significant events

  • Cornerstones laid in four wind farm

  • Solar farm developments with up to 200MW capacity acquired

  • Signed new long term PPAs in Lithuania and Estonia with a total volume of 3.1TWh

  • Litigation regarding Purtse wind farm

  • Iru power station repair stoppage


Key figures

 

Q3 2022

Q3 2021

Change

Change %

PRODUCTION VOLUMES

 

 

 

 

Electricity, GWh

189

250

(61)

(24)%

Heat, GWh

84

123

(39)

(32)%

Pellets, th t

39

37

2

6%

 

 

 

 

 

TOTAL REVENUES, m€

60.3

36.4

23.9

66%

Sales revenue, m€

57.3

30.1

27.1

90%

Renewable energy support and other income, m€

3.0

6.3

(3.2)

(52)%

EBITDA, m€

32.7

25.5

7.2

28%

NET PROFIT, m€

22.9

15.3

7.7

50%

EPS, € (post-IPO number of shares)

0.09

0.06

0.03

50%


Sales revenue and other operating income

The group’s electricity production in Q3 2022 was 189 GWh (a 24% decrease compared with 250 GWh in Q3 2021). The group’s average implied captured electricity price including support was 205.1 €/MWh (Q3 2021: 115.8 €/MWh).

The most important revenue driver was growth in electricity prices in the Estonia price area of the Nord Pool (NP) power exchange, which increased the group’s revenue by around €14.5m. The implied captured electricity prices of the group’s Estonian production entities in the respective periods were 275.1 €/MWh and 133.2 €/MWh. The Q3 implied captured electricity prices of the group’s Latvian and Lithuanian production entities were 362.1 €/MWh (Q3 2021: 129.7 €/MWh) and 87.6 €/MWh (Q3 2021: 79.2 €/MWh), respectively. On the Lithuanian market, during the third quarter we fully abandoned the previous revenue model, which was based on the national renewable energy support scheme with fixed electricity tariffs and replaced it with a combination of market prices and long-term PPAs.

Another factor that strongly affected revenue development was the quantity of electricity produced in Estonia, which decreased year on year due to less favourable wind conditions and a five-week outage at the Iru CHP.

Revenue growth was also supported by pellet sales, which grew by €6.7m as sales volume increased from 4k tonnes in Q3 2021 to 39k tonnes in Q3 2022. The sharp rise is attributable to differences in the timing of major pellet supplies during the reporting and the comparative period.

Heat energy production decreased by 32%, mainly due to an unplanned production interruption at the Iru CHP, while the price of heat sold increased by 23% year on year.

Renewable energy support and other income for Q3 2022 were strongly affected by a decrease in the renewable energy support received by the group’s Estonian wind farms, which dropped by €2.0m year on year. Renewable energy support is linked to the quantity of energy produced and since quantity decreased, support received also declined. The renewable energy support received by the Iru CHP decreased by €0.5m year on year due to its five-week outage.

Renewable energy support received by the Polish wind farms dropped by €0.9m year on year. Due to high market prices, revenue generated exceeded the guaranteed price and consistent with local laws in such a situation the positive balance has to be repaid to the Polish state.


EBITDA and segmental breakdown

Group’s EBITDA increased by 28% y-o-y to €32.7m in Q3 2022 driven mostly by the elevated electricity prices and differences in the timing of major pellet supplies. Increased variable costs, lower volume of wind energy production and to a lesser extent the increase in fixed costs and the unplanned maintenance stoppage at Iru had a negative impact on the EBITDA.

Variable costs have increased by €6.2m, which is largely driven by increased purchasing prices of biomass and electricity. In addition, variable costs increased in connection with the sale of inventories in the Solar energy segment due to the exit from the provision of turnkey solar solutions.

Group’s fixed expenses increased by 15% or €1.2m driven by payroll, research and consulting expenses.

Based on total revenues and EBITDA for Q3 2022, the group’s largest segment is Wind energy which accounted for 53% of total revenues and 72% of EBITDA. The Cogeneration segment contributed 34% to total revenues and 29% to EBITDA. The smallest reportable segment is Solar energy, which accounted for 12% of total revenues and 5% of EBITDA.

Among reportable segments, the strongest EBITDA growth was delivered by Wind energy and Cogeneration as they benefited the most from higher market prices of electricity.


Net profit

The group’s net profit increased 50% compared to Q3 2021, amounting to €22.9m for the reporting period. The most significant positive contribution came from high market prices of electricity, to some extent also from lower net finance costs and corporate income tax expense.


Capital Expenditures

The group’s Q3 capital expenditures grew by €71.6m year on year, rising to €79.7m. Growth resulted from development investments, which extended to €78.9m. Out of the total, €33.5m was invested in the construction of three wind farms: €19.2m in the Šilale 2 wind farm, €8.7m in the Akmene wind farm and €5.6m in the Tolpanvaara wind farm. In addition, Enefit Green acquired the Tootsi wind farm development from Eesti Energia for €26.9m. The largest expenditures on solar power were investments of €2.7m in the execution phase of the Purtse solar farm and €2.9m in the Zambrow solar farm. Additionally, Enefit Green AS acquired Rääbiste Põllud OÜ (which has been renamed Enefit Green Solar OÜ) for €6.6m, which is developing two large solar farms in Western Estonia. Base investments amounted to €0.9m in Q3 2022 compared with €0.2m in the same period last year and were mainly made in the cogeneration plants to ensure their availability during the upcoming heating period.


Condensed consolidated interim income statement

€ thousand

Q3 2022

Q3 2021

 

9M  2022

9M  2021

Revenue

57,254

30,133

 

156,900

93,655

Renewable energy support and other income

3,011

6,257

 

17,363

21,143

Change in inventories of finished goods and work in progress

2,028

3702

 

4,607

(2,240)

Raw materials, consumables and services used

(24,969)

(11,097)

 

(55,468)

(30,189)

Payroll expenses

(2,029)

(1,626))

 

(6,641)

(4,932)

Depreciation, amortisation and impairment

(9,637)

(9,467)

 

(28,930)

(28,592)

Other operating expenses

(2,574)

(1,867))

 

(7,721)

(5,549)

OPERATING PROFIT

23,084

16,037

 

80,110

43,296

Finance income

817

1

 

1,703

145

Finance costs

(1,072)

(516)

 

(2,261)

(2,091)

Net finance costs

(255)

(515)

 

(558)

(1,946)

Profit (loss) from associates under the equity method

120

46

 

687

10

PROFIT BEFORE TAX

22,949

15 567

 

80,239

41,360

Corporate income tax expense

-

(308)

 

(5,441)

(1,069)

PROFIT FOR THE PERIOD

22,949

15,259

 

74,798

40,291

 

 

 

 

 

 

Basic and diluted earnings per share

 

 

 

 

 

Weighted average number of shares, thousand

264,276

78,163

 

264,276

29,519

Basic earnings per share, €

0.09

0.20

 

0.28

1.36

Diluted earnings per share, €

0.09

0.20

 

0.28

1.36

 

 

 

 

 

 

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, €

0.09

0.06

 

0.28

0.15


Condensed consolidated interim statement of financial position

€ thousand

30 Sep 2022

31 Dec 2021

ASSETS

 

 

Non-current assets

 

 

Property, plant and equipment

714,715

612,503

Intangible assets

72,550

68,239

Right-of-use assets

4,225

2,750

Prepayments

18,798

20,710

Deferred tax assets

734

442

Investments in associates

479

578

Derivative financial instruments

11,519

-

Long-term receivables

40

78

Total non-current assets

823,060

705,300

 

 

 

Current assets

 

 

Inventories

15,343

9,529

Trade and other receivables and prepayments

22,250

22,373

Cash and cash equivalents

163,711

80,454

Derivative financial instruments

2,198

-

Total current assets

203,502

112,356

Total assets

1,026,562

817,656


€ thousand

30 Sep 2022

31 Dec 2021

EQUITY

 

 

Equity and reserves attributable to equity holders of the parent

 

 

Share capital

264,276

264,276

Share premium

60,351

60,351

Statutory capital reserve

3,259

479

Other reserves

165,510

151,793

Foreign currency translation reserve

(1,645)

(965)

Retained earnings

189,785

157,673

Total equity

681,536

633,607

 

 

 

LIABILITIES

 

 

Non-current liabilities

 

 

Borrowings

249,716

93,884

Government grants

7,209

7,458

Non-derivative contract liability

23,207

23,207

Deferred tax liabilities

12,355

12,568

Other non-current liabilities

3,000

3,000

Provisions

11

13

Total non-current liabilities

295,498

140,130

Current liabilities

 

 

Borrowings

29,733

29,572

Trade and other payables

19,769

14,291

Provisions

26

56

Derivative financial instruments

-

-

Total current liabilities

49,528

43,919

Total liabilities

345,026

184,049

Total equity and liabilities

1,026,562

817,656


Further information:
Sven Kunsing
Head of Finance Communications
investor@enefitgreen.ee
https://enefitgreen.ee/en/investorile/

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.

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