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The sales revenues of Eesti Energia Group amounted to EUR 415.1 million, -0.2% year-on-year, in Q2 2024. Reported group EBITDA was EUR 153.5 million (+42.5% year-on-year), while adjusted EBITDA* was at EUR 158.9 million (+37.4%). The Group's reported net profit was at EUR 103.1 million (+141.6% year-on-year), adjusted net profit at EUR 108.5 million (+114.5%).

* - adjusted EBITDA and adjusted net profit gives better comparability with the elimination of temporary fluctuations in the fair value of long-term Power Purchase Agreements (PPA) derivatives.

Group financials

In Q2 2024 the group had strong financial performance with all main business segments of the Group being profitable. The biggest contributer to the EBITDA of the Group was shale oil segment representing 53% of the Group’s EBITDA, electricity segment made up 28% and distribution segment 14% of the Group’s EBITDA.

Electricity segment

Eesti Energia's sales revenues from electricity decreased by -1.4% year-on-year to EUR 263 million in Q2 2024. The Group's average electricity sales price excluding derivative impact was at 94.4 EUR/MWh (-16.4% year-on-year). As a comparative figure, the Q2 2024 average market electricity price for Estonian Nord Pool area increased to 76.0 EUR/MWh (+2.1% year-on-year). Electricity sales volume for the quarter totaled at 2.8 TWh (+17.6% year-on-year), from which retail sales amounted to 2.3 TWh (-1.1% year-on-year). Electricity generation during the quarter amounted to 0.8 TWh (+6.9% year-on-year). Renewable electricity production which includes electricity production from wind, solar, and waste wood increased to 0.4 TWh (+37.7% year-on-year) due to the contribution of new and under-construction wind farms to the quarter's wind energy production, which reached nearly 121 GWh.

EBITDA of the electricity segment totaled at EUR 43.1 million (-46.3% year-on-year). Largest decrease came from the effects of realized derivative transactions –44.5 million (realized profit in Q2 2023 +47.6 million euros, +3.1 million euros in Q4 of 2024). Other negative impact came from margin impact (-9.9 million) due to lower sales price but positive impact from also lower variable costs. Largest positive impact was related to sales volume of electricity increasing by 18% year-on-year, or 416 GWh, which had an impact on EBITDA of +11.7 million. The adjusted EBITDA (adjusted with the elimination of temporary fluctuations in the fair value of long-term PPA derivatives) figure for the quarter was at EUR 48.6 million (-44.9% year-on-year) compared to EUR 88.2 million in Q2 2023.

Distribution segment

Eesti Energia's sales revenues from the distribution segment amounted to EUR 67.8 million in Q2 2024 (+2.8% year-on-year). The distributed volumes increased (+2.2% year-on-year) and amounted to 1.4 TWh (+0.03 TWh) for the quarter. Average distribution sales price, the tariff, was at 46.8 €/MWh (+0.6% year-on-year). Distribution EBITDA for the quarter decreased to EUR 21.1 million (-36.1% year-on-year) due to negative impacts mainly from higher transmission tariffs and maintenance cost. The aim of increasing maintenance cost is to improve the quality of the grid.

Shale oil segment

Eesti Energia's sales revenues from shale oil sales amounted to EUR 51.8 million (+19.8% year-on-year), with shale oil sales volume at 124.2 thousand tons (-0.4% year-on-year). Eesti Energia's average shale oil sales price excluding the impact from derivative transactions decreased to 451.8 EUR/ton (+12.6% year-on-year) due to higher oil market prices. The reference products average quarterly market price was at 450 EUR/t (+41.3% year-on-year). Group’s average shale oil sales price including the impact of derivative transactions was at 416.9 EUR/ton (+20.3% year-on-year). EBITDA from Shale oil operations was positive in Q2 2024 with a result of EUR 80.6 million , which is largely related to one-time effect of +64.5 million related to the introduction of an additional amount of free CO2 emission quotas.

Natural gas segment

Eesti Energia's sales revenues from the natural gas segment amounted to EUR 17.0 million in Q2 2024 (+10.2% year-on-year). The sales volumes increased (+37.2% year-on-year), at 0.4 TWh for the quarter. Average natural gas sales price was at 48.3 EUR/MWh (-20% year-on-year). Natural gas EBITDA for the quarter increased to EUR 4.0 million (+175.4% year-on-year).

Other segment

EBITDA from Group's other products and services increased to 4.6 million in Q2 2023 (227.9% year-on-year). The most significant impact is from one-time income from insurance compensation in Q2 2024, which reached 7.5 million euros.

Capital expenditure

The Group's capital expenditure amounted to EUR 212 million (+17.1% year-on-year) in Q2 2024. Investments to the renewable asset developments amounted to EUR 130 million during the quarter. Electricity distribution network investments are in second place with EUR 36 million during the quarter. The distribution network investments are largely aimed at improving connection points to enable additional solar production capacities to be connected to the distribution network and increasing the quality of the grid. Investments to other development projects increased to EUR 31 million, from which the largest share went to the construction of a new oilplant (new Enefit-280). The new Enefit-280 oilplant is scheduled to be completed in 2024 and will increase the annual shale oil output to 700,000 tons while serving as a cornerstone for transforming current liquid fuels production from oil shale to a chemical industry based on circular economy principles with a zero-carbon footprint target by 2045.

Financing, credit ratings and dividends

As of the end of Q2 2024, cash and cash equivalents held by the Group totaled EUR 242.6 million with no additional short-term deposits. As of 30 June 2024, Eesti Energia Group had access to a total of EUR 505.2 million of bank loans, from which revolving credit facilities amounted to EUR 270 million and long-term loan agreements signed with multiple counterparties to EUR 235.2 million. Eesti Energia’s net debt was at EUR 1,384 million, net debt to EBITDA ratio 3.2x (on adjusted EBITDA basis to 3.0x), compared to the 3.5x financial policy target of the company.

During Q2 2024 dividend of EUR 6.3 million was paid to the minority shareholders of the Tallinn stock exchange listed majority owned Enefit Green subsidiary.

In Q2 2024 Eesti Energia prolonged the EUR 150 million Swedbank loan for another 3 years maturing now in 2027. Eesti Energia also made changes to the EIB loan contracts, so that the interest coverage ratio covenant is at more suitable levels for Eesti Energia. In July 2024, Eesti Energia raised EUR 400 million of green hybrid bonds, listed on the London Stock Exchange to support its business and strengthen its financial position. The funds raised will be invested in ongoing and planned projects supporting the development of green energy.

Eesti Energia is rated BBB- (negative) by Standard & Poor’s and Baa3 (stable) by Moody’s. Eesti Energia's financial policy is aimed at maintaining investment grade credit rating and a net-debt to EBITDA long-term target of 3.5 times. For the upcoming quarter we expect the net-debt/EBITDA ratio to increase but stay under the 3.5x financial policy target of the company as the Group continues the execution of its investment pipeline.

Outlook

It is the management’s expectation that in 2024 Eesti Energia's sales revenue and investments will see a slight decline while EBITDA will likely increase compared to 2023 numbers.

Eesti Energia will publish its Q3 results on 31 October 2024.

The Q2 2024 interim report of Eesti Energia and the investor presentation is available at Eesti Energia's web site.

Investor call discussing the 2024 Q2 financial results will take place on 1 August 2024, at 11:00 London time, 12:00 Frankfurt time and 13:00 Tallinn time. Please register to participate. After registration you will be sent the details required to join the conference call.