Eesti Energia Group results for Q1 2022

The sales revenues of Eesti Energia Group amounted to EUR 571.5 million, +92.2% year-on-year, in the first quarter of 2022. Group EBITDA was EUR 213.0 million (+194.4% year-on-year), while adjusted EBITDA was at EUR 127.3 million (+88.2%). The Group's net profit was at EUR 163.0 million (+514.5% year-on-year), adjusted net profit at EUR 77.2 million (+254.2%).

The introduction of adjusted EBITDA and adjusted net profit from 2022 Q1 is to present EBITDA and net profit in a normalised way for better comparability with the elimination of temporary fluctuations in the fair value of long-term Power Purchase Agreements (PPA) derivatives.

Group financials

The increase in sales revenues and EBITDA of Eesti Energia in the first quarter of 2022 compared to same period of 2021 are attributable to the Electricity, where revenue growth was underpinned by strong performance of retail sales and generation assets together with continuing record high electricity price environment. The high electricity price environment has carried on from the second half of last year due to continuing low levels of Nordic hydro reservoirs, and lack of flexible electricity generation to meet the demand side of the market as gas prices have pushed variable cost of gas fired power plants significantly higher. Electricity segment’s EBITDA was additionally impacted by non-monetary temporary fluctuations in the fair value of long-term Power Purchase Agreements (PPA) derivatives, but for better comparability the adjusted EBITDA figure has been introduced.

Distribution segment’s sales revenue fell due to lower consumption volumes as weather this year in Q1 was warmer than in 2021. Also, distribution EBITDA was negatively affected by electricity costs for network losses that have to be repurchase at current market prices. Shale oil segments revenue and EBITDA fell due to lower production quantities as the result of different maintenance schedule compared to last year, while hedges made in in accordance with the Group’s hedging strategy held back EBITDA growth. Other segment’s performance was driven by gas sales which benefitted from low inventory purchases from mid-last year and from the current high market prices, but there were also some sizeable derivative instrument effects.

Electricity segment

Eesti Energia's sales revenues from electricity grew by +146.3% year-on-year to EUR 364 million in Q1 2022. The Group's average electricity sales price excluding derivative impact was at 118.7 EUR/MWh (+112.7% year-on-year). As a comparative figure, the Q1 2022 average market electricity price for Estonian Nord Pool area rose to 133.4 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 for the quarter totalled at 2.9TWh (+12.7% year-on-year), from which retail sales amounted to 2.6TWh (+13.3% year-on-year) on the back of strong sales increases especially from Latvia, Lithuania and Poland. Electricity generation during the quarter rose to 1.7TWh (+31.1% year-on-year) as a direct result of higher generation from Group’s flexible power production units (oil shale based hybrid power plants) despite high prices of CO2. Although CO2 emission allowance prices increased from 30-40 euros in Q1 2021 to 80-90 euros in Q1 2022, the electricity price increases have been higher mainly due to gas prices which have increased the variable cost of gas fired power plants and thus providing access to the market for Group’s flexible generation fleet. Group’s flexible power production units (oil shale based hybrid power plants) produced 1.2TWh of electricity in Q1 2022 vs 0.9TWh in Q1 2021.Renewable electricity production which includes electricity production from wind, solar, and waste wood was stable at 0.4TWh.

EBITDA of the electricity segment totalled at EUR 155.6 million (+370.6% year-on-year) mostly due to change in the value of long-term PPA derivatives (year-on-year effect of EUR 81.0 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 69.9 (+146.1% year-on-year) million compared to EUR 28.4 million in Q1 2021.

Distribution segment

Eesti Energia's revenues from the distribution segment amounted to EUR 63.7 million in Q1 2022 (-2.9% year-on-year). The distributed volumes declined slightly to 2.0TWh (-6.0% year-on-year), while average distribution sales price was at 32.4 €/MWh (+3.2% year-on-year). Distributed average sales price rose due to lower consumption quantities magnifying the share of fixed price portion in the revenue structure. Also from 1 March 2022 a new tariff took effect as a result of which average tariff will increase by 3%. Distribution EBITDA for the quarter decreased to EUR 15.3 million (-35.7% year-on-year) due to negative impacts from higher electricity costs for network losses, lower volumes and higher costs related to maintenance works due to more severe and stormy weather.

Shale oil segment

Eesti Energia's revenues from shale oil sales amounted to EUR 31.6 million (-9.8% year-on-year), with shale oil sales volume at 104 thousand tonnes (-7.1% year-on-year). Quarterly oil production was at 106 thousand tons (-15.3% year-on-year) due to different maintenance schedule compared to 2021. Eesti Energia's average shale oil sales price excluding the impact from derivative transactions increased to 574.0 EUR/tonne (+68.2% year-on-year) due to supportive oil market prices and good demand for Group’s oil products as reference products average quarterly market price was at 544 EUR/t (+64.0% year-on-year). Group’s average shale oil sales price including the impact of derivative transactions was at 303.8 EUR/tonne (-2.8% year-on-year). Due to lower production volumes and hedging impacts EBITDA from shale oil operations decreased from EUR 5.8 million to EUR 2.6 million (-54.5% year-on-year).

Other segment

EBITDA from Group's other products and services totalled at EUR 39.5 million in the first quarter of 2022 (+305.9% year-on-year). The biggest positive factor came from retail gas sales where despite sales quantities falling from 1.0TWH to 0.8TWh the high gas market price environment pushed gas sales revenues higher, while the profit line also had impacts from derivative instruments.

Capital expenditure

The Group's capital expenditure amounted to EUR 59 million (+84.6% year-on-year) in Q1 2022. Investments to the electricity distribution network made up the largest part of investments, EUR 21.1 million (+30.8% year-on-year) aimed at improving connection points to enable additional solar production capacities to be connected to the distribution network. Renewable energy investments increased to EUR 13.3 million (+85.0%). Investments to other development projects increased to nearly EUR 19 million, from which EUR 12.1 million was invested to the construction of a new chemical plant (new Enefit-280). The new Enefit-280 pyrolysis plant is scheduled to be completed in 2024, and will increase the annual shale oil output to 700,000 tonnes while serving 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 first quarter 2022, cash and cash equivalents held by the Group totalled EUR 305.8 million. As of 31 March 2022, Eesti Energia had access to a total of EUR 665 million of bank loans, from which revolving credit facilities amounted to EUR 250 million and long-term loan agreements signed with multiple counterparties to EUR 415 million. Eesti Energia’s net debt was at EUR 600 million, net debt to EBITDA ratio declined to 1.3x (on adjusted EBITDA basis to 2.0x) compared to the 3.5x financial policy target of the company as a result of strong operating cash flows.

At the end of April 2022 the Annual General Meeting confirmed the net dividend payout for the sole shareholder in the amount of EUR 46.7 million. The Group is expected to pay total dividends in 2022 in the amount of EUR 55.7 million, which also includes the Tallinn stock exchange listed majority owned Enefit Green dividends payable to its minority shareholders in the amount of ca EUR 9 million. Overall, the Group’s management assesses the Group to be well balanced for current highly volatile environment due to Group’s diverse asset structure.

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, EBITDA and investments will likely increase (defined as at least 5% growth) compared to 2021 numbers. Eesti Energia will publish its second quarter results on 4 August, 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 2.4 TWh for the remainder of 2022 (at average price of 97.0 EUR/MWh) and 0.4TWh for 2023 (at average price of 98.1 EUR/MWh). The Group's hedge positions for electricity retail sales amounted to 2.6 TWh for the remainder of 2022 (at average price of 61.2 EUR/MWh) and 2.8TWh for 2023 (at average price of 43.5 EUR/MWh).

For shale oil, the hedge positions totalled 266.1 thousand tonnes for the remainder 2022 (at average price of 294.9 EUR/tonne) and 351.1 thousand tonnes for 2023 (at average price of 335.7 EUR/tonne). For naphtha, the hedge positions totalled 41.5 thousand tonnes for 2022 (at average price of 343.1 EUR/tonne) and 53.3 thousand tonnes for 2023 (at average price of 429.8 EUR/tonne).

The Group's position in CO2 emission allowances for 2022 amounts to 4.3 million tonnes at an average price of 55.7 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 0.3 million tonnes at an average price of 74.0 EUR/tonne (including forward transactions).

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