Eesti Energia Group results for Q2 2014

Eesti Energia sales revenues reached 205 million euros in the second quarter of 2014, decreasing by 5% compared to the same period in 2013. Group EBITDA was 68 million euros in Q2´2014 (-6% y-o-y) and net profit amounted to 6 million euros.

Financial results

Group sales revenue reduction was mainly driven by electricity sales, whereas shale oil sales were considerably higher, thus helping the group results. Electricity sales volume was 20.6% lower in Q2 2014, affected by lower market share in Estonian retail market and different netting of cross border trades. On the other hand, sales revenue per MWh increased by 1.3%, as lower wholesale market price was balanced by positive financial hedges. In total, electricity sales revenues decreased by 17.9% to 108 million euros. Distribution network sales revenues decreased 3.2% to 54.3 million euros as warmer weather conditions resulted in 1.1% lower volume of electricity distributed. Shale oil sales revenues reached 19.9 million euros in Q2 2014, which is 150% higher than in the same period last year. Shale oil revenue growth was driven both by high shale oil sales volume (+107.7%) as well as 20.3% higher average sales price.

Group EBITDA was similarly affected, with electricity profitability under pressure and shale oil EBITDA improving. Electricity sales EBITDA decreased by 34% to 22.3 million euros mainly on the back of Estonia-Latvia border crossing costs and increasing border crossing provisions for Latvian and Lithuanian retail portfolios. EBITDA from electricity distribution reduced slightly to 26.6 million euros on the back of lower margin and volume, whereas shale oil EBITDA increased by 164.5% to 11.9 million euros mainly due to higher sales volume and positive financial hedges.

Key Performance Indicators

Electricity sales reached 2.3 TWh in Q2 2014, of which sales in the retail market amounted to 1.4 TWh (-17.0% y-o-y) and sales in the wholesale market 0.9 TWh (-25.7% y-o-y). Eesti Energia power generation amounted to 2.4 TWh in Q2 2014, which was 2.1% lower compared to the last year. Group average market share in Estonian retail market reached 58% in Q2 2014, which is 12 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 achieved 17% and 7% market shares respectively in Q2 2014, which in total resulted in 26% market share in the Baltic electricity market.

Group distributed 1.4 TWh of electricity in Q2 2014, while network losses amounted to 5.2% (+2.2 percentage points y-o-y). Production of shale oil increased by 53.6% to 56.6 thousand tonnes, while shale oil sales volume increased to 44.8 thousand tonnes in Q2 2014.

Capital Expenditure

Group capital expenditure reached 57 million in Q2 2014, which is 40.4% less than in the same period last year. Key investments were made into distribution network, amounting to 24 million euros. Furthermore, 12 million euros were invested in new Auvere power plant, where in total 494 million euros have been invested since the launch of project in 2011.

Financing, credit ratings and dividends

Group available liquidity as of 30 June 2014 amounted to 462 million euros, consisting of 212 million euros of liquid assets and 250 million euros of undrawn loan facilities. As at 30 June 2014, Group´s net debt reached 723.6 million euros with net debt / EBITDA ratio reaching 2.3x and financial leverage 33%. 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 by Eesti Energia at 113.6 million euros, payable in Q4 2014.


Given the 1H 2014 results and the current status in the wholesale power market, Group has retained its sales outlook expecting sales revenues 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 5 TWh of electricity generation (average price of 43.7 €/MWh) and 98,000 tonnes of shale oil production (average price of 471 €/tonne) for Q3-Q4 2014. For 2015 the Group has hedged 6 TWh of electricity generation (average price of 40.3 €/MWh) and 192,000 tonnes of shale oil production (average price of 428 €/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 27.6 million tonnes (average price of 4.6 €/tonne) for the year 2014 and 6.5 million tonnes (average price of 1.5 €/tonne) for the year 2015.

More information on the financial results of Eesti Energia Group is available at Eesti Energia homepage