Eesti Energia Group unaudited results for 2022 financial year

The sales revenues of Eesti Energia Group amounted to EUR 2,218.2 million, +69.0% year-on-year, in the financial year of 2022. Group EBITDA was EUR 420.4 million (+32.4% year-on-year), while adjusted EBITDA\* was at EUR 333.0 million (+37.0%). The Group's net profit was at EUR 215.7 million (+93.5% year-on-year), adjusted net profit at EUR 128 million (+247%).

* - the introduction of adjusted EBITDA and adjusted net profit from 2022 Q1 is to present EBITDA and net profit in a normalized 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 sales revenues and EBITDA of Eesti Energia in 2022 compared to 2021 have risen significantly with Electricity and Natural Gas segment’s revenues and profits increasing the most together with other products and services also contributing. Distribution segment together with Shale oil segment showed declines on the profit line which did not have too significant impact on Group’s overall results.

In the Electricity segment revenue growth was underpinned by strong performance of retail sales and higher generation from production assets together with high electricity price environment. Electricity segment’s EBITDA was additionally impacted by non-monetary temporary fluctuations in the fair value of long-term Power Purchase Agreements (PPA) derivatives. Such temporary fluctuations of PPA derivatives amounted to 87.4 million euros in 2022.

Distribution segment EBITDA fell significantly despite higher sales revenues and sales price with a slight decline in sales volumes. The segment’s EBITDA was affected by electricity costs for network losses that are repurchased at market prices. Shale oil segment’s EBITDA fell despite the relatively stable sales quantities and revenue and a significantly higher sales price. The segment’s EBITDA is held back by hedges made a year ago from lower price levels in accordance with the Group’s hedging strategy, while the cost base has remained stable. Natural gas segment had a significant increase in sales revenue, mostly driven by much higher sales price, despite lower sales volumes. The segment’s EBITDA turned positive with the largest impact coming from unrealized hedges. Other segment’s performance was driven mostly by a new revenue stream frequency restoration reserve (FRR) service.

Investments during the financial year amounted to 447 million euros, +76.6% higher than a year earlier. The rise in investments mainly came from renewable energy investments to new wind and solar parks. The high electricity price environment continues to support the ongoing investments of the Group. These investments help to increase the energy independence and generation of affordable and environmentally friendly electricity in the region.

Electricity segment

Eesti Energia's sales revenues from electricity grew by +93.2% year-on-year to EUR 1,480 million in 2022. The Group's average electricity sales price excluding derivative impact was at 145.8 EUR/MWh (+87.9% year-on-year). As a comparative figure, the 2022 average market electricity price for Estonian Nord Pool area rose to 192.8 EUR/MWh (+122.3% 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 year totaled at 10.5TWh (+11.7% year-on-year), from which retail sales amounted to 9.9TWh (+14% year-on-year). Electricity generation during the year rose to 6.3TWh (+20.0% 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 remained high, mostly between 70 to 100 euros in 2022, the electricity price increases were higher mainly due to gas prices which had increased the variable cost of gas fired power plants and thus providing access to the market for Group’s flexible power production fleet. Group’s flexible power production units (oil shale based hybrid power plants) produced ca 4.8TWh of electricity in 2022 vs 3.6TWh in 2021. Renewable electricity production which includes electricity production from wind, solar, and waste wood amounted to 1.5 TWh and decreased by 0.1TWh compared to 2021 mainly due to unfavorable wind conditions.

EBITDA of the electricity segment totaled at EUR 286.1 million (+31.5% year-on-year) mostly due to positive impact from realized hedges (effect EUR +124.5 million in annual comparison) and higher sales volume (effect EUR +24.3 million in annual comparison). Negative impacts came from higher variable costs (EUR -19.3 million in annual comparison) and fixed costs (EUR -28.8 million in annual comparison). Higher variable costs are the result of high CO2 prices and electricity purchasing cost as the electricity for market-based retail contracts are bought from the market at the currently high price levels. The adjusted EBITDA (adjusted with the elimination of temporary fluctuations in the fair value of long-term PPA derivatives) figure for the year was at EUR 198.7 million (+38.9% year-on-year) compared to EUR 143.0 million in 2021.

Distribution segment

Eesti Energia's revenues from the distribution segment amounted to EUR 242.1 million in 2022 (+3.7% year-on-year). The distributed volumes declined (-6.5% year-on-year) and amounted to 6.7 TWh. Average distribution sales price, the tariff, was at 36.1 EUR/MWh (+10.8% year-on-year). In 2022 there were four tariff increases. Distribution segment’s EBITDA for the year decreased to EUR 85.1 million (-40.3% year-on-year) due to negative impacts mainly from higher electricity costs for network losses. Slightly lower volumes and higher fixed costs also had a negative impact but to a smaller extent than network losses.

Shale oil segment

Eesti Energia's revenues from shale oil sales amounted to EUR 133.2 million (-1.3% year-on-year), with shale oil sales volume at 405.4 thousand tons (-3.4% year-on-year). Yearly oil production was at 423.9 thousand tons (-3% year-on-year) due to large-scale repair and reconstruction works. Eesti Energia's average shale oil sales price excluding the impact from derivative transactions increased to 565.2 EUR/ton (+45% year-on-year) due to supportive oil market prices and good demand for Group’s oil products as reference products average yearly market price was at 542 EUR/t (+43.6% year-on-year). Group’s average shale oil sales price including the impact of derivative transactions was at 328.6 EUR/ton (+2% year-on-year). Due to hedging impacts EBITDA from shale oil operations turned negative in 2022 with a result of EUR -12.0 million (-248.3% year-on-year) compared to EUR 8.1 million in 2021.

Natural gas segment

Eesti Energia's revenues from the natural gas segment amounted to EUR 243.9 million in 2022 (+161.2% year-on-year). The sales volumes declined (-19.5% year-on-year), at 1.9 TWh for the year due to lower demand from higher prices. Average natural gas sales price was at 128.8 EUR/MWh (+224.3% year-on-year). Natural gas EBITDA for the quarter increased to EUR 73.5 million (+1,297.0% year-on-year) due to positive impacts mainly from higher unrealized derivatives.

Other segment

EBITDA from Group's other products and services totaled at EUR 20.6 million in 2022 (+91.4% year-on-year). The biggest negative factor came from heat sales where EBITDA decreased by -7.3 million euros due to higher variable and fixed costs. The biggest positive impact came from the new revenue stream the frequency restoration reserve (FRR) service which contributed 17.1 million euros to EBITDA. FRR is a service offered by Group’s flexible hybrid power plants to transmission system operators in Finland, and Estonia from the start of this year. The nature of the service is to offer TSO’s additional capacities for keeping the electricity system’s frequency in balance through ramping the production units up or down based on the necessity.

Capital expenditure

The Group's capital expenditure amounted to EUR 447 million (+76.6% year-on-year) in 2022. Investments to the renewable asset developments (EUR 161.2 million during the year, +280%) have pushed electricity distribution network investments to the third place (EUR 125.5 million during the year, 24%). The distribution network investments are largely aimed at improving connection points to enable additional solar production capacities to be connected to the distribution network. Investments to other development projects increased to EUR 127 million, from which the largest share went to the construction of a new chemical plant Enefit-280 (EUR 81.8 million). The new Enefit-280 pyrolysis plant is scheduled to be completed in 2024 and will increase the annual shale oil output to 700,000 tons 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 and credit ratings

As of the end of 2022, cash and cash equivalents held by the Group totaled EUR 280.5 million. As of 31 December 2022, Eesti Energia had access to a total of EUR 495 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 245 million. Eesti Energia’s net debt was at EUR 774 million, net debt to EBITDA ratio decreased to 1.8x (on adjusted EBITDA basis to 2.3x) compared to the 3.5x financial policy target of the company as a result of strong operating cash flows.

On February 15th, 2023, Eesti Energia signed a sustainability linked, amortising term loan contract in the amount of 600 million EUR. The term of the senior unsecured loan is 5 years. The loan is sustainability linked with two ESG KPI’s: carbon intensity of scope 1, 2 and 3 emissions and yearly addition of renewable energy capacity. The purpose of the term loan is to primarily refinance the 500 million EUR bond maturing in September 2023 and supporting Eesti Energia’s carbon neutrality strategy.

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 quarter we expect the net-debt/EBITDA ratio to increase as the Group continues the execution of its investment pipeline and working capital requirements (including CO2 allowance purchase) are expected to affect the cash position negatively.

Overall, the Group’s management assesses the Group to be well balanced for current highly volatile environment due to Group’s diverse asset structure.


It is the management’s expectation that in 2023 Eesti Energia's sales revenue, EBITDA and investments will likely increase (defined as at least 5% growth) compared to 2022 numbers.

Eesti Energia will publish its audited report in April 2023.

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 2023 (at average price of 201.7 EUR/MWh) and 0.5TWh for 2024 (at average price of 149.6 EUR/MWh). The Group's hedge positions for electricity retail sales amounted to 4.0 TWh for the year 2023 (at average price of 103.3 EUR/MWh) and 3.1 TWh for 2024 (at average price of 67.7 EUR/MWh).

For shale oil, the hedge positions totaled 364.3 thousand tons for 2023 (at average price of 342.1 EUR/ton) and 315.0 thousand tons for 2024 (at average price of 403.9 EUR/ton). For naphtha, the hedge positions totaled 58.0 thousand tons for 2023 (at average price of 456.2 EUR/ton) and 49.7 thousand tons for 2024 (at average price of 586.1 EUR/ton)

The Group's position in CO2 emission allowances for 2023 amounts to 3.5 million tons at an average price of 63.8 EUR/ton (including forward transactions, free emission allowances received as investment support and the surplus of unused allowances from previous periods).

The 2022 unaudited report of Eesti Energia and the investor presentation is available at Eesti Energia's web site.

Investor call discussing the 2022 financial results will take place on 1 March 2023, at 11:00 London time, 12:00 Frankfurt time and 13:00 Tallinn time. Please to participate. After registration you will be sent the details required to join the conference call.