Enefit Green interim report for Q2 2024
The Enefit Green group’s operating income for Q2 2024 decreased by 7% while operating expenses (excl. D&A) decreased by 12% compared to the same period last year. As a result, EBITDA decreased by 2% to €19.3m. Net profit for the quarter increased by €2.8m to €3.9m (earnings per share €0.015).
Andres Maasing, interim chairman of the management board of Enefit Green comments:
"Construction activities are underway in several development sites, including three large wind farms in Estonia and Lithuania, with a total capacity of 422 megawatts. Investments during the last quarter exceeded a tenth of our total ongoing investment programme. The volume of investments required to complete all ongoing constructions is close to €250m.
In the Sopi-Tootsi wind farm, 25 of the 38 wind turbines have been erected, and the installation of the remaining turbines is proceeding as planned. In the solar farm, which we are building in the close vicinity, installation of the panel frames is about to be completed and the installation of the panels is already ongoing. In Lithuania, in the Kelmė I wind farm all 14 wind turbines have been erected, and turbine foundations are being built in the Kelmė II wind farm. In Latvia, we are building our first solar farms. We expect to start generating electricity in all these projects later this year, except for the Kelmė II wind farm, which will take longer to complete.
In the second quarter, we produced 358 gigawatt-hours of electricity (+35% y-o-y) and 96 gigawatt-hours of thermal energy (-27%). The significant increase in electricity production for several quarters in a row is due to the production from both wind and solar farms already commissioned and from those still under construction. During the last year and a half, a total of eight new projects have started generating electricity, of which five have been commissioned and three are nearing the end of construction.
The contribution of new production assets in our production portfolio is gradually growing, but the achievement of the electricity production target has been primarily affected by lower wind speeds and the configuration activities of new wind farms (especially in the Tolpanvaara wind farm). The performance indicators for the quarter were affected by lower market prices of electricity and higher-than-expected output.
We continue to focus on completing ongoing construction projects on time, maintaining high availability, and working to bring storage and hydrogen technologies to market."
Webinar to present the results of Q2 2024
Today, 1 August 2024 at 13.00 EEST Enefit Green will host a Webinar in English to present and discuss its Q2 2024 results. To participate, please follow this link.
Significant events
- The Supervisory Board of Enefit Green has appointed Juhan Aguraiuja as the new Chairman of the Management Board. Mr Aguraiuja will take office on 14 October
- CFO Veiko Räim will not be applying for a new term as a member of the Management Board after the end of the current contract on 24 September
- Active construction activities in major Sopi-Tootsi (255 MW), Kelmė I (80 MW), Kelmė II (87 MW) wind farms and Sopi solar farm (74 MW)
- Commissioning of the Tolpanvaara wind farm (72 MW) in Finland
- Amendment of the Swedbank loan agreement: increased loan amount to €100m and extension of the term to December 2028
- Purtse hybrid farm passed Elering's grid compliance tests
Key figures
| Q2 2024 | Q2 2023 | Change | Change % | |
| PRODUCTION AND SALES VOLUMES | ||||
| Electricity production, GWh | 358 | 265 | 93 | 35% |
| incl. new wind and solar farms | 141 | 56 | 85 | 152% |
| incl. assets sold | - | 9 | (9) | (100)% |
| Electricity sales | 460 | 357 | 103 | 29% |
| Heat energy production, GWh | 96 | 141 | (45) | (32)% |
| OPERATING INCOME, m€ | 38.3 | 41.2 | (2.9) | (7)% |
| Sales revenue, m€ | 33.9 | 36.8 | (2.9) | (8)% |
| Renewable energy support and other income, m€ | 4.4 | 4.4 | 0.0 | (1)% |
| EBITDA, m€ | 18.9 | 19.3 | (0.4) | (2)% |
| NET PROFIT, m€ | 3.9 | 1.1 | 2.8 | 246% |
| EPS, € | 0.015 | 0.004 | 0.011 | 246% |
Sales revenue and other operating income
The group’s Q2 electricity production grew by 93 GWh (35%) to 358 GWh, with the output of new wind and solar farms increasing by 85 GWh. Heat energy production decreased by 45 GWh (32%). The comparison of the group’s Q2 performance indicators is strongly affected by the sale of the Brocēni CHP plant and pellet factory, which was completed in Q4 2023, and the sale of the Paide and Valka CHP plants, which was completed in March 2024 (‘assets sold’). Assets sold had a negative impact, reducing Q2 electricity and heat energy production by 9 GWh and 36 GWh respectively compared to Q2 2023.
Electricity production in Q2 was about 61 GWh lower compared to our earlier forecast. More than half of this shortfall was driven by weaker than expected wind conditions, the remainder was primarily driven by lower availability of wind farms under construction and of Iru power station, but also by production curtailments (related both to negative prices as well as those ordered by DSO (in Poland)).
Total operating income decreased by €2.9m, the figure reflecting a decrease in revenue of €2.9m, an increase in renewable energy support of €0.6m and a decrease in other operating income of €0.8m. The effect of assets sold on operating income was positive at €4.7m in Q2 2023 and negative at €0.8m in Q2 2024.
Excluding the impact of assets sold, i.e. operating income from continuing operations, was €36.5m for Q2 2023 and €39.1m for Q2 2024 (operating income grew by €2.5m, the figure reflecting revenue growth of €1.7m and an increase in other operating income of €0.8m).
Of the €1.7m growth in revenue from continuing operations, €2.1m resulted from electricity sales revenue that was driven by higher production. In Q2 2024, the average electricity price in the group’s core markets was €72.2/MWh (Q2 2023: €78.7/MWh). The group’s average implied captured electricity price was €69.7/MWh (Q2 2023: €89.3/MWh). The implied captured electricity price differs from the average market price in the group’s core markets, because it takes into account long-term fixed-price power purchase agreements (PPAs), renewable energy support, purchases of balancing energy, electricity purchases from the Nord Pool day-ahead and intraday markets and the fact that wind farms do not produce the same amount of electricity every hour.
The group’s average price of electricity sold to the market in Q2 2024 was €52.3/MWh (Q2 2023: €63.7/MWh). The group sold 214 GWh of electricity to the market in Q2 2024 compared with 139 GWh a year earlier.
In Q2 2024, 246 GWh of the group’s electricity production was covered by PPAs at an average price of €68.0/MWh. A year earlier, 218 GWh of electricity was sold under PPAs at an average price of €83.5/MWh. The average price of electricity sold under PPAs has decreased significantly year on year because the settlement periods of PPAs signed in Lithuania and Finland in 2021 at lower prices began in Q1 2024. The share and prices of production covered by PPAs in future periods are disclosed in the risk management chapter of the attached interim report.
In Q2 2024, we purchased 108 GWh of electricity from the market at an average price of €80.4/MWh, compared with 97 GWh at an average price of €83.8/MWh in Q2 2023 (the prices and volumes exclude the electricity purchased for pellet production in Q2 2023). The volume of electricity purchased increased slightly as sales under PPAs have increased, but as the share of production covered by PPAs has decreased, the ratio of electricity purchased to electricity produced decreased year on year. The purchase price decreased compared to Q2 2023, because the market price has declined, but due to a higher wind profile discount the gap between the purchase price and the sales price increased.
In Lithuania, the Q2 wind profile discount increased by 4.4 percentage points year on year, rising to 13%. In Estonia, the solar profile discount increased by 6.3 percentage points to 30.3%, while the wind profile discount decreased by 1.6 percentage points to 7.9% In 2024, we began to supply electricity under a PPA in Finland, which is why we also started to purchase electricity in Finland. In Finland, the wind profile discount in Q2 2024 was 26.6%.
Renewable energy support and other operating income (excl. the effect of assets sold) increased by €0.8m compared to the same period last year. Renewable energy support increased by €0.7m. The amount of renewable energy support received is based on the quantity of energy produced by wind farms eligible for support. The eligibility period of the Purtse wind farm began in Q2 2024, which increased the amount of support received by €0.2m. The output of other wind farms eligible for support was 6.4 GWh higher than in Q2 2023.
EBITDA and segmental breakdown
The factor with the strongest impact on EBITDA development was the price of electricity sold, which decreased compared to Q2 2023 (negative impact: €5.4m). Due to PPAs, the quantity of electricity sold grew significantly (positive impact: €8.2m), which also increased the volume of electricity purchased to balance the electricity portfolio (negative impact: €0.8m). The combined effect of the above factors on EBITDA is influenced by the volume and profile of electricity produced during the period.
The total impact of assets sold on EBITDA development was negative at €1.6m. The figure consists of a positive impact on Q2 2023 of €0.8m and a negative impact on Q2 2024 of €0.8m. The latter results from the correction of the gain on the sale of the Paide and Valga CHP plants recognised in April. For further information, see the financial results chapter of the attached interim report.
The EBITDA of the Iru cogeneration plant excluding the effects of the electricity price and volume decreased by €0.3m to €4.2m. The calculation takes into account the effects of heat energy, gate fees for waste received and technological fuel. The decrease was mainly due to lower energy production resulting from lower availability, which was partly offset by a rise in the price cap for heat energy.
Based on total operating income and EBITDA, the group’s largest segment is Wind energy, which accounted for 70% of operating income and 80% of EBITDA for Q2 2024. The Cogeneration segment contributed 22% to operating income and 28% to EBITDA. The smallest reportable segment is Solar energy, which accounted for 8% the group’s operating income and 11% of the group’s EBITDA for Q2 2024. The only reportable segment that delivered EBITDA growth was Wind energy. This growth was driven by significant growth in electricity generation. EBITDA of the Cogeneration segment declined primarily due to the assets sold. EBITDA of the Solar energy segment remained at last year’s level. More detailed information is available in the attached interim report.
Net profit
Net profit increased by €2.8m to €3.9m compared to the same period last year. The increase in net profit was mainly driven by a decrease in income tax expense by €4.1m.
Capital Expenditures
The group invested €129.8m in Q2 2024, €55.3m more than in Q2 2023. The growth was driven by development investments, which amounted to €129.6m. Of this, €106.9m was invested in the construction of three wind farms: €86.6m in the Sopi-Tootsi wind farm and €20.4m in the Kelmė wind farms (€11.6m in Kelmė I and €8.7m in Kelmė II). The largest development investment in solar energy was made in the Sopi solar project at €7.4m. Base investments remained at an insignificant level of €0.2m.
Financing
At 30 June 2024, the amortised cost of the group’s interest-bearing liabilities amounted to €629.0m (31 March 2024: €503.2m). During the second quarter, the group drew down bank loans of €125m. In addition, at the end of the second quarter, the group increased the amount of a previously signed loan agreement with Swedbank to €100m and extended the term of this loan until the end of 2028. Investment loans raised but not drawn down at 30 June 2024 amounted to €235m. The average interest rate of bank loans drawn down at 30 June 2024 was 4.23% (31 March 2024: 3.79%). The net debt/EBITDA ratio stood at 5.52 at the end of the quarter (31 March 2024: 4.39). The increase in the ratio is due to a large number of development projects under construction.
Condensed consolidated interim income statement
| € thousand | Q2 2024 | Q2 2023 | H1 2024 | H1 2023 | |
| Revenue | 33,875 | 36,760 | 90,067 | 106,451 | |
| Renewable energy support and other operating income | 4,377 | 4,406 | 17,106 | 12,219 | |
| Change in inventories of finished goods and work in progress | 0 | 4,892 | 0 | (168) | |
| Raw materials, consumables and services used | (13,910) | (20,583) | (34,584) | (45,375) | |
| Payroll expenses | (2,363) | (2,905) | (4,588) | (5,391) | |
| Depreciation, amortisation and impairment | (9,829) | (9,707) | (19,171) | (19,522) | |
| Other operating expenses | (3,073) | (3,274) | (6,668) | (7,329) | |
| OPERATING PROFIT | 9,077 | 9,589 | 42,162 | 40,885 | |
| Finance income | 456 | 1,191 | 1,026 | 1,598 | |
| Finance costs | (436) | (402) | (742) | (782) | |
| Net finance income and costs | 20 | 789 | 284 | 816 | |
| Profit (loss) from associates under the equity method | (39) | 22 | (49) | 41 | |
| PROFIT BEFORE TAX | 9,058 | 10,400 | 42,397 | 41,742 | |
| Income tax expense | (5,117) | (9,260) | (5,010) | (10,080) | |
| PROFIT FOR THE PERIOD | 3,941 | 1,140 | 37,387 | 31,662 | |
| Basic and diluted earnings per share | |||||
| Weighted average number of shares, thousand | 264,276 | 264,276 | 264,276 | 264,276 | |
| Basic earnings per share, € | 0.015 | 0.004 | 0.14 | 0.12 | |
| Diluted earnings per share, € | 0.015 | 0.004 | 0.14 | 0.12 |
Condensed consolidated interim statement of financial position
| € thousand | 30 June 2024 | 31 December 2023 |
| ASSETS | ||
| Non-current assets | ||
| Property, plant and equipment | 1,250,517 | 1,027,057 |
| Intangible assets | 59,808 | 59,891 |
| Right-of-use assets | 8,651 | 9,097 |
| Prepayments for non-current assets | 47,477 | 55,148 |
| Deferred tax assets | 1,487 | 2,013 |
| Investments in associates | 499 | 548 |
| Derivative financial instruments | 5,772 | 5,054 |
| Non-current receivables | 1,026 | 0 |
| Total non-current assets | 1,375,237 | 1,158,808 |
| Current assets | ||
| Inventories | 5,425 | 3,180 |
| Trade receivables | 6,207 | 8,618 |
| Other receivables | 6,970 | 16,380 |
| Prepayments | 13,098 | 30,084 |
| Derivative financial instruments | 4,135 | 3,806 |
| Cash and cash equivalents | 39,372 | 65,677 |
| 75,207 | 127,745 | |
| Assets classified as held for sale | 0 | 15,370 |
| Total current assets | 75,207 | 143,115 |
| Total assets | 1,450,444 | 1,301,923 |
| € thousand | 30 June 2024 | 31 December 2023 |
| EQUITY | ||
| Equity and reserves attributable to shareholders of the parent | ||
| Share capital | 264,276 | 264,276 |
| Share premium | 60,351 | 60,351 |
| Statutory capital reserve | 8,291 | 5,556 |
| Other reserves | 166,296 | 163,451 |
| Foreign currency translation reserve | (103) | (162) |
| Retained earnings | 230,620 | 223,718 |
| Total equity | 729,731 | 717,190 |
| LIABILITIES | ||
| Non-current liabilities | ||
| Borrowings | 532,860 | 454,272 |
| Government grants | 3,139 | 3,102 |
| Non-derivative contract liability | 12,412 | 12,412 |
| Deferred tax liabilities | 12,442 | 12,497 |
| Other non-current liabilities | 5,239 | 5,239 |
| Provisions | 7 | 8 |
| Total non-current liabilities | 566,099 | 487,530 |
| Current liabilities | ||
| Borrowings | 96,100 | 32,126 |
| Trade payables | 32,720 | 29,464 |
| Other payables | 22,916 | 24,981 |
| Provisions | 2 | 6 |
| Non-derivative contract liability | 2,876 | 5,674 |
| 154,614 | 92,251 | |
| Liabilities directly associated with assets classified as held for sale | 0 | 4,952 |
| Total current liabilities | 154,614 | 97,203 |
| Total liabilities | 720,713 | 584,733 |
| Total equity and liabilities | 1,450,444 | 1,301,923 |
Further information:
Sven Kunsing
Head of Finance Communications
investor@enefitgreen.ee
https://enefitgreen.ee/en/investorile/
Enefit Green is one of the leading renewable energy producers in the Baltic Sea area. The Company operates wind farms in Estonia and Lithuania, waste-to-energy CHP plant in Estonia, solar farms in Estonia and Poland and a hydroelectric plant in Estonia. In addition, the Company is developing several wind and solar farms in the mentioned countries, Latvia and Finland. As of the end of 2023, the Company had a total installed electricity production capacity of 515 MW and a total installed heat production capacity of 50 MW. During 2023, the Company produced 1,343 GWh of electricity, 604 GWh of heat energy and 156 thousand tonnes of wood pellets. In the end of 2023, Enefit Green exited the biomass based CHP and pellet production businesses.
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