OREANDA-NEWS. August 06, 2013. Eesti Energia consolidated sales revenues for Q2 2013 amounted to 215 million euros

(+22% y-o-y), EBITDA to 72 million euros (+4% y-o-y) and net profit to 43 million euros (+76% y-o-y)

Financial results

The Group’s sales revenues were primarily supported by electricity sales, which increased by 39 million euros compared to Q2 2012. Both the sales volume (+32% y-o-y) and average sales price (+21%) increased considerably, as the Group sold electricity on average for 46.2 €/MWh in Q2 2013.

Group?s higher EBITDA in Q2 2013 is mainly attributed to positive performance of distribution network (+1.8 million euros) as well as higher EBITDA from heat sales due to the completion of Iru Waste-to-Energy unit (+ 2.7 million euros). While the Group sold substantially more electricity in Q2 2013, higher generation costs (including full CO2 expenses) reduced sales margin compared to the same period last year and resulted in lower EBITDA contribution. Volume of shale oil sold in the quarter was substantially below Q2 2012 due to logistical reasons, which also reduced quarterly growth of EBITDA slightly.

Key performance indicators

Electricity sales amounted to 2.8 TWh (+32% y-o-y) in Q2 2013.

Sales to retail customers in the Baltic market amounted to 1.7 TWh in Q2 2013, which is 5% less than a year ago. In Estonia, Eesti Energia’s average share in the electricity market was around 70% in Q2 2013. In Latvia and Lithuania the market share was around 16% and 10% of the total electricity market respectively. Group?s average market share in the Baltic market was around 31% in Q2 2013.

In Q2 2013 Eesti Energia sold 1.2 TWh of electricity to power exchanges and wholesale companies. This is almost 3 times more when compared to the same period a year ago due to favourable power generation margins.

Group distributed 1.4 TWh of electricity in Q2 2013, which was 1% more than in the respective period of 2012. Distribution network losses reached 3% in Q2 2013 compared to 4% in Q2 2012.

Sales of shale oil amounted to 22 thousand tonnes (37% less compared to Q2 2012), while the production of shale oil reached 37 thousand tonnes (-8% y-o-y).

Capital expenditure

Eesti Energia?s capital expenditure in Q2 2013 amounted to 95 million euros, which is 0.5% less than in Q2 2012. .

The largest investments were made into construction of new 300 MW Auvere power plant (35 million euros), completion of Iru waste-to-energy plant (14 million euros) and new network connections and improvement of network’s reliability (24 million euros). Maintenance and other capital expenditure amounted to 22 million euros in Q2 2013.

Financing and cash flows

Group’s available liquidity as at 30 June 2013 amounted to 571 million euros (liquid assets of 176 million euros, undrawn revolving credit facilities of 300 million euros and 95 million euros investment loan from EIB).

As at 30 June 2013, the Group?s main source of debt were Eurobonds due in 2018 and 2020 with combined face value of 600 million euros. Group’s total net debt amounted to 557 million euros, while Net debt/EBITDA ratio reached 2.0x and financial leverage 28%.

Group?s operating cash flow amounted to 83 million euros (+76% y-o-y). Postponed corporate income tax (levied on distribution of dividends) and increased power price combined with non-monetary CO2 provisions in Q2 2013 were the main reason behind the improved cash flow. For the second consecutive quarter Eesti Energia operations were cash flow positive.

Outlook

Eesti Energia?s unaudited consolidated sales revenues have reached 494 million euros (+25% y-o-y), while the Group has earned 145 million euros of EBITDA (-4% y-o-y) in H1?2013. Group revenues and EBITDA for 2013 are expected to increase compared to FY2012. While expected oil production from Enefit280 has been reduced due to delays in commissioning, Group power generation is forecasted to exceed prior expectations.

Eesti Energia has sold forward 4.2 TWh of power for H2?2013 at the average price of 44.6 EUR/MWh. Group has also hedged 66 thousand tonnes of shale oil production for the remaining period at the average price of 465 € EUR /tonne. Group?s CO2 emissions exposure for the whole 2013 has been hedged via forward purchases of 12.2 million tonnes at the average price of 8.4 EUR /tonne.

Credit ratings

At the end of Q2 2013, Eesti Energia had a credit rating of BBB+ with stable outlook from Standard & Poor’s and Baa1 with negative outlook from Moody’s. On 26 June 2013 S&P affirmed Eesti Energia’s credit rating at BBB+ with stable outlook.