Eesti Energia Group unaudited results for 2021 financial year

The sales revenues of Eesti Energia Group amounted to EUR 1,313.0 million, +57.5% year-on-year, in the financial year of 2021. Group EBITDA was EUR 317.6 million (+48.7% year-on-year). The Group's net profit was at EUR 111.5 million (+478% year-on-year).

Group financials

The increase in sales revenues and EBITDA of Eesti Energia in 2021 compared to 2020 are attributable to the Electricity segment, where the main impact came from high regional electricity prices due to record-high gas prices, lower than average Nordic hydro reservoir levels, and increased electricity consumption as a result of economic activity recovery from the Covid-19 pandemic lows. Although the CO2 emission allowance prices nearly tripled during the year, the oil shale based hybrid electricity production units saw more activity than in 2020 as the region suffered from lack of competitive controllable electricity generation to meet the demand side of the market. Liquid fuel production, distribution and renewable assets (renewables are included under the Electricity segment) performed well during the year, despite some one-off items, and effects from non-hedge accounting derivative transactions that effect the Profit and Loss Statement on continuous basis as the market prices of the instruments change. Most of Group’s hedge transactions fall under IFRS hedge accounting framework and therefore only effect the Profit and Loss Statement with the final settlement of the instruments.

Electricity segment

Eesti Energia's sales revenues from electricity grew by 112.9% year-on-year to EUR 766 million in 2021. The Group's average electricity sales price excluding derivative impact was at 77.6 EUR/MWh (+60.8% year-on-year). As a comparative figure, the 2021 annual average market electricity price for Estonian Nord Pool area rose to 86.7 EUR/MWh (+157.4% year-on-year). The Group’s average electricity sales price increased to a lesser extent compared to the market average due to retail sales contracts where the electricity prices are fixed. Such contracts make up roughly half of the retail portfolio. Electricity sales volume totalled at 9.4TWh in 2021 (+20.3% year-on-year), from which retail sales amounted to 8.6TWh. 2021 was the first year when retail sales quantities in other markets exceeded those of Estonia. Sales in Poland, Lithuania, Latvia and Finland accounted for 52% of the portfolio. Electricity generation rose to 5.2TWh (+37.0% year-on-year) as a direct result of larger generation from oil shale based electricity production units despite record high CO2 prices. Renewable energy production increased to 1.6TWh (+9% year-on-year) thanks to larger use of biomass (waste wood) at oil shale based hybrid electricity production units. Renewable electricity production from wind and solar decreased by 12% mainly due to less favourable wind conditions and wind farms’ slightly lower availability.

EBITDA from the electricity segment totalled at EUR 217.6 million (+164.2% year-over-year) mostly due to higher volumes and improved electricity prices. Growth in gain on realised derivative transactions increased EBITDA by 54.2 million euros in annual comparison. Other impacts of +60.5 million euros in annual comparison mostly resulted from changes in the value of derivative financial instruments not covered by IFRS hedge accounting framework which constitute the Power Purchase Agreements (PPAs) priced according to latest electricity market price forecasts. As the market price forecasts have increased, so has the market value of those contracts as this instrument is not covered under IFRS hedge accounting framework. In 2021 the Group signed fixed price renewable electricity agreements with Baltic consumers in the amount of 9TWH for the next 10 years to cover the electricity production of the Group’s renewable investment decisions in the amount of 200MW, and also the electricity to be produced by other renewable developers in the region.

Distribution segment

Eesti Energia's revenues from the distribution segment amounted to EUR 233.6 million in 2021 (+7.3% year-on-year). The distributed volume was at 7.2TWh (+7.0% year-on-year), while average distribution sales price was at 32.6 €/MWh (+0.3% year-on-year). Distributed volume rose due to increased economic activity, colder winter and hotter summer, and the addition of the sales volume of Imatra Elekter (+115GWh; 1.7% compared to 2020 distributed volumes) which was acquired in mid-2021. Distribution EBITDA was at EUR 87.3 million (-0.4% year-on-year) in 2021 as negative impacts from higher electricity costs for network losses took away the gain from increased distributed volumes.

Shale oil segment

Eesti Energia's revenues from shale oil sales amounted to EUR 135.0 million (-2.2% year-on-year), with shale oil sales volume at 420 thousand tonnes (-7.4% year-on-year). Full year oil production was at 438 thousand tons (-3.1% year-on-year) due to larger scale repair and reconstruction works compared to 2020. Eesti Energia's average shale oil sales price excluding the impact from derivative transactions increased to 389.9 EUR/tonne (+50.9% year-on-year) due to supportive oil market prices. Group’s average shale oil sales price including the impact of derivative transactions was at 321.6 EUR/tonne (+5.6% year-on-year).

Due to lower production volumes and effects from unrealised hedge transactions, EBITDA from shale oil operations decreased to EUR 8.1 million (-85.0 year-on-year). The unrealised hedge transaction effects include the Naphtha derivatives, which the Group uses to hedge the gasoline fraction of the production (ca 10% of the production). From 2022 Naphtha instruments will be covered under IFRS hedge accounting framework, thus not affecting the PNL statement anymore. The unrealised annual change in the value of derivatives amounted to around EUR 29 million with the adjusted EBITDA figure of the shale oil segment at EUR 37.6 million.

Other segment

EBITDA from Group's other products and services totalled at EUR 4.7 million in 2021 (-75.1% year-on-year). The biggest negative factor came from retail gas sales where sales quantities grew from 2.0TWH ot 2.4TWh while unrealised gas hedge transaction not covered under IFRS hedge accounting framework impacted the result in the amount of EUR 14.0 million, while the realised gain was at EUR 4.7 million. Also, the segment includes different one-off items, most material of which were the amounts received under the liquidated damages agreement related to the Auvere power plant (impact in 2021: +28.0 million euros) and income from the sale of CO2 emission allowances in 2020 (impact in 2021: -13.7 million euros).

Capital expenditure

The Group's capital expenditure amounted to EUR 251.6 million (+35.3% year-on-year) in 2021. Investments to the electricity distribution network made up the largest share of investments, EUR 99.5 million (+4.3% year-on-year) with now ca 71.4% of the distribution network being weather-proof. Although renewable investments decreased on an annual basis to EUR 42 million, in 2020 the investments were mainly acquisition related compared to 2021 investments to construction on the capacities. In 2021 EUR 50.1 million euros was invested in the construction of another Enefit 280 pyrolysis shale oil plant. The new pyrolysis plant, which is scheduled to be completed in 2024, will increase our annual shale oil output to 700,000 tonnes and will serve as a cornerstone for transforming the current liquid fuels and electricity oriented production from oil shale to 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 2021, cash and cash equivalents held by the Group totalled EUR 198.0 million. As of 31 December 2021, Eesti Energia had access to a total of EUR 535 million of bank loans, from which revolving credit facilities amounted to EUR 200 million and long-term loan agreements signed with multiple counterparties to EUR 335 million. In 2021, the Group successfully included the listing of the renewable subsidiary Enefit Green minority share for which the group received gross proceeds of EUR 175 million. Eesti Energia’s net debt was at EUR 759 million, net debt to EBITDA ratio declined to 2.4x compared to the 3.5x financial policy target of the company. According to the decision of the annual general meeting no dividends were paid in 2021, while the management proposes a dividend payment of EUR 55.7 million to be paid for 2022. The proposed dividend is 50% from 2021 net profit of 111.5 million (2020 net profit of EUR 19.3 million). The owner is expected to decide the dividend payment together with the approval of the 2021 audited report in April, 2022.

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 quarters we expect the net-debt/EBITDA ratio to increase as the Group continues the execution of its investment pipeline.


It is the management’s expectation that in 2022 Eesti Energia's sales revenue and investments will likely increase (defined as at least 5% growth), while EBITDA will likely decline (defined as at least 5% decline) compared to 2021 numbers.

Eesti Energia will publish its 2021 Audited Annual Report in April, 2022.

Eesti Energia conducts derivative transactions to hedge the price risk of electricity, CO2 and oil. The Group's hedge positions for electricity power production amounted to 3.2 TWh for 2022 (at average price of 92.2 EUR/MWh) and 0.1TWh for 2023 (at average price of 75.8 EUR/MWh). The Group's hedge positions for electricity retail sales amounted to 3.3 TWh for 2022 (at average price of 58.8 EUR/MWh) and 1.8TWh for 2023 (at average price of 38.8 EUR/MWh).

For shale oil, the hedge positions totalled 354.8 thousand tonnes for 2022 (at average price of 293.6 EUR/tonne) and 275.9 thousand tonnes for 2023 (at average price of 297.9 EUR/tonne). For naphtha, the hedge positions totalled 55.3 thousand tonnes for 2022 (at average price of 340.2 EUR/tonne) and 41.8 thousand tonnes for 2023 (at average price of 379.6 EUR/tonne)

The Group's position in CO2 emission allowances for 2022 amounts to 3.8 million tonnes at an average price of 50.8 EUR/tonne (including forward transactions, free emission allowances received as investment support and the surplus of unused allowances from previous periods). CO2 emission allowances for 2023 amount to 0.03 million tonnes at an average price of 60.0 EUR/tonne (including forward transactions).

The unaudited annual report of Eesti Energia and the investor presentation is available at Eesti Energia's web site.

Investor call discussing the 2021 unaudited financial results will take place on 28 February 2022, 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.