Eesti Energia Group results for Q1 2014

Eesti Energia sales revenues reached 226 million euros in the first quarter of 2014, decreasing by 19% compared to the same period in 2013. Despite lower sales, Group EBITDA increased by 14% to 83 million euros in Q1´2014 and net profit amounted to 51 million euros.

Financial results

Group earned lower sales revenues for all main products in Q1 2014, with the main reason being 36% lower electricity sales volume due to low price in the Nord Pool Spot wholesale market. Electricity sales revenues decreased by 27% to 115 million euros, as the impact of lower sales volume was to an extent mitigated by financial hedges, in total leading to 9.9% higher sales revenue per MWh. Distribution network sales revenues decreased 2.9% to 67.9 million euros as warmer weather conditions resulted in 4.5% lower volume of electricity distributed. Shale oil sales revenues reached 13.4 million euros in Q1 2014, which is 41.9% lower than in the same period last year, with both lower average sales price and volume having a negative effect on revenues.

Main driver for higher group EBITDA was electricity sales, where the EBITDA increased by 32.9% to 44.2 million euros on the back of financial hedges as well as lower CO2 expenses and fixed costs. Regular revaluation in group future electricity sales portfolio in Latvia and Lithuania also added a positive contribution in Q1 2014, exceeding the border-crossing expenses in the recent quarter. Lower EBITDA of electricity distribution and shale oil sales was to a large extent balanced by higher EBITDA earned from other products, such as heat and oil shale sales.

Key Performance Indicators

Electricity sales reached 2.2 TWh in Q1 2014, of which sales in the retail market amounted to 1.7 TWh (-13% y-o-y) and sales in the wholesale market 0.6 TWh (-64% y-o-y). Group average market share in Estonian retail market decreased to 60% in Q1 2014, which is 11.4 percentage points lower year-on-year. After having ended signing new electricity sales contracts with fixed prices in Latvia and Lithuania in September 2013, the Group maintained 15% and 6% market shares respectively, which in total resulted in 27% market share in the Baltic electricity market.

Group distributed 1.8 TWh of electricity in Q1 2014, while network losses amounted to 6.4% (+0.5 percentage points y-o-y). Production of shale oil increased by 15.3% to 61.9 thousand tonnes, while sales volume amounted to 34.6 thousand tonnes in Q1 2014 due to temporary variations in product quality.

Capital Expenditure

Group capital expenditure reached 74 million in Q1 2014, which is 0.4% less than in the same period last year. Key investments were made into new Auvere power plant 34 million euros, where in total 482 million euros have been invested since the launch of project in 2011. Distribution network investments by Elektrilevi reached 21 million euros in Q1 2014.

Financing, credit ratings and dividends

Group available liquidity as of 31 March 2014 amounted to 425 million euros, consisting of 175 million euros of liquid assets and 250 million euros of undrawn loan facilities. As at 31 March 2014, Group´s net debt reached 761 million euros at the end of Q1 2014, with net debt / EBITDA ratio reaching 2.4x and net debt / net debt + equity ratio 32%. Group retains credit ratings of BBB+ and Baa2 by Standard & Poor´s and Moody´s respectively, both with stable outlook. Government of Estonia has approved a net dividend payable by Eesti Energia at 113.6 million euros in 2014.


Given the Q1 2014 results and the current status in the wholesale power market, Group has reduced its sales revenues outlook and expects them to decrease in 2014 compared to the year before. At the same time Eesti Energia still expects to earn approximately unchanged EBITDA in 2014, while investments are expected to decrease compared to the year 2013.

The Group has hedged 6.8 TWh of electricity generation (average price of 43.1 €/MWh) and 130,000 tonnes of shale oil production (average price of 468 €/tonne) for Q2-Q4 2014. For 2015 the Group has hedged 5.7 TWh of electricity generation (average price of 39.6 €/MWh) and 192,000 tonnes of shale oil production (average price of 446 €/tonne).

To cover the CO2 emission expenses the Group has relied on forward contracts as well as certificates allocated free of charge to construct Auvere power plant. In total Group has hedged 27.5 million tonnes (average price of 4.9 €/tonne) for the year 2014 and 6.7 million tonnes (average price of 1.9 €/tonne) for the year 2015.

More information about financial results of Eesti Energia Group