Eesti Energia Group results for Q3 2014

Eesti Energia sales revenues reached 197 million euros in the third quarter of 2014, decreasing by 9% compared to the same period in 2013. Group EBITDA was 74 million euros in Q3´2014 (+3% y-o-y) and net profit amounted to 44 million euros (+5% y-o-y).

Financial results

Group sales revenues reduction was mainly driven by lower electricity and shale oil sales volume. Electricity sales volume was 9% lower in Q3 2014, affected by lower generation due to maintenance schedules. On the other hand, sales revenue per MWh increased by 4.6%, as lower wholesale market price was balanced by positive financial hedges. In total, electricity sales revenue decreased by 4.7% to 113 million euros. Shale oil sales revenue was almost two times lower at 13.7 million euros in Q3 2014, as the volume of oil sold was 48.5% lower in Q3 due to volatile markets and focused sales effort aiming towards better transactions. Slightly higher sales revenue was earned from electricity distribution, as substantially warmer summer temperature resulted in 4% higher sales volume.

Group EBITDA growth was primarily driven by an one-off sale of a network construction subsidiary increasing EBITDA by 3.4 million euros as well as a strong performance by distribution network Elektrilevi, as EBITDA earned from the latter increased by 8.2% to 27.4 million euros. Group profitability was negatively affected by electricity and shale oil profitability falling short of the same period last year. Electricity sales EBITDA decreased by 3.1% to 28.8 million euros as the financial hedges did not fully compensate for the lower sales volume and margin. EBITDA from shale oil sales decreased 34.9% to 8.8 million euros, with the lower sales volume the primary reason for the reduction.

Key Performance Indicators

Electricity sales amounted to 2.3 TWh in Q3 2014, of which sales in the retail market amounted to 1.3 TWh (-16.4% y-o-y) and sales in the wholesale market 0.9 TWh (+4.3% y-o-y). Eesti Energia power generation amounted to 2.4 TWh in Q3 2014, which was 7% lower compared to the last year. Group average market share in Estonian retail market reached 59% in Q3 2014, which is 13 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 market shares were 15% and 7% respectively in Q3 2014, which in total resulted in 25% market share in the Baltic electricity market.

Group distributed 1.4 TWh of electricity in Q3 2014, while network losses amounted to 5% (-0.2 percentage points y-o-y). Production of shale oil decreased by 4.4% to 52.9 thousand tonnes, while shale oil sales volume amounted to 32.5 thousand tonnes in Q3 2014.

Capital Expenditure

Group capital expenditure reached 71 million in Q3 2014, which is 43.7% less than in the same period last year. Key investments were made into distribution network, amounting to 22 million euros. Furthermore, 24 million euros were invested in new Auvere power plant, where in total 517 million euros have been invested since the launch of project in 2011.

Financing, credit ratings and dividends

Group available liquidity as of 30 September 2014 amounted to 488 million euros, consisting of 238 million euros of liquid assets and 250 million euros of undrawn loan facilities. As at 30 September 2014, Group´s net debt reached 697 million euros with net debt / EBITDA ratio amounting to 2.2x and financial leverage 32%. Group retains credit ratings of BBB+ and Baa2 by Standard & Poor´s and Moody´s respectively, both with stable outlook. Dividend payment from Eesti Energia to its sole shareholder is expected to take place in Q4 2014.


Given the 9m 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 capital expenditure is expected to decrease compared to the year 2013.

The Group has hedged 2.6 TWh of electricity generation (average price of 43.9 €/MWh) and 53 thousand tonnes of shale oil production (average price of 466 €/tonne) for Q4 2014. For 2015 the Group has hedged 6.2 TWh of electricity generation (average price of 40.3 €/MWh) and 192 thousand 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 related to construction of Auvere power plant. In total Group has hedged 27.5 million tonnes (average price of 4.5 €/tonne) for the year 2014 and 6.5 million tonnes (average price of 1.4 €/tonne) for the year 2015.

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