Eesti Energia Group results for Q2 2023

The sales revenues of Eesti Energia Group amounted to EUR 416.1 million, -0.1% year-on-year, in the second quarter of 2023. Reported group EBITDA was EUR 107.7 million (+17.4% year-on-year), while adjusted EBITDA* was at EUR 115.7 million (+45.0%). The Group's reported net profit was at EUR 42.7 million (-5.6% year-on-year), adjusted net profit at EUR 50.6 million (+52.0%).

* - 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

In Q2 2023 the group had strong financial performance with Electricity segment’s profits increasing the most together with Distribution segment and Shale Oil segment. Natural gas segment showed the biggest decline on the profit line together with Other Products and Services but 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 together with hedges done from higher price levels. Electricity segment’s EBITDA was additionally impacted by non-monetary temporary fluctuations in the fair value of long-term Power Purchase Agreements (PPA) derivatives which were lower than in the second quarter of 2022. In Q2 2023 such temporary fluctuations of PPA derivatives amounted to -8.0 million euros, in Q2 2022 to +11.9 million euros with a total effect of -19.9 million year-on-year.

Despite distribution segment’s slightly lower volumes, revenues increased by 19.1% due to increases in the tariff. Distribution EBITDA grew significantly and was positively affected by the increase of average sales price. Shale oil segments EBITDA saw an increase with increases in production and sales quantities and revenue, despite the lower sales price. Shale oil 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 increased. Natural gas sales volumes have decreased by -41.0% with sales revenue decreasing by -69.4% mostly due to significantly lower market prices and lower demand. Other segment’s performance was mostly negatively impacted by frequency restoration reserve (FRR) service, which was caused by high variable costs and lower electricity prices due to which the group was not able to offer the service to the market in the intended capacity.

Investments during the quarter amounted to 181 million euros, +84.8% higher than a year earlier. The rise in investments mainly came from renewable energy investments to new wind and solar parks and the distribution network. The 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 +5.5% year-on-year to EUR 267 million in Q2 2023. The Group's average electricity sales price excluding derivative impact was at 113.1 EUR/MWh (+9.3% year-on-year). As a comparative figure, the Q2 2023 average market electricity price for Estonian Nord Pool area declined to 74.4 EUR/MWh (-47.6% year-on-year). The Group’s average electricity sales price increased compared to the decrease of 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 totaled at 2.4 TWh (-5.9% year-on-year), from which retail sales amounted to 2.3 TWh (-0.1% year-on-year). Electricity generation during the quarter amounted to 0.7 TWh (-50% year-on-year) as a direct result of lower generation from Group’s flexible power production units (oil shale based hybrid power plants) due to low electricity prices and high CO2 prices. Group’s flexible power production units produced ca 0.4 TWh of electricity in Q2 2023. Renewable electricity production which includes electricity production from wind, solar, and waste wood decreased to 0.3 TWh (-11% year-on-year) due to unfavorable wind conditions Estonia and Lithuania.

EBITDA of the electricity segment totaled at EUR 80.2 million (+20.2% year-on-year). Largest positive impact came from margin impact (+24.7 million) due to higher sales price and lower variable costs. Other positive impacts came from gain on derivatives which amounted to EUR +8.2 million in annual comparison and changes in fixed costs +5.2 million. Largest negative impact was related to changes in value of derivative instruments and power purchase agreements for renewable energy. The effect of these unrealized hedges amounted to EUR -22.0 million in annual comparison. 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 88.2 million (+60.8% year-on-year) compared to EUR 54.9 million in Q2 2022.

Distribution segment

Eesti Energia's revenues from the distribution segment amounted to EUR 65.9 million in Q2 2023 (+19.1% year-on-year). The distributed volumes declined (-9.8% year-on-year) and amounted to 1.4 TWh (-0.2 TWh) for the quarter. Average distribution sales price, the tariff, was at 43.4 €/MWh (+22,9% year-on-year). Distribution EBITDA for the quarter increased to EUR 33.1 million (+66.5% year-on-year) due to positive impacts mainly from higher tariffs. Slightly lower volumes and higher fixed costs had a negative impact but to a small extent.

Shale oil segment

Eesti Energia's revenues from shale oil sales amounted to EUR 43.2 million (+34.3% year-on-year), with shale oil sales volume at 124.7 thousand tons (+18.4% year-on-year) as this year there were less maintenances and disruptions in the second quarter than last year. Eesti Energia's average shale oil sales price excluding the impact from derivative transactions decreased to 401 EUR/ton (-35.7% year-on-year) due to lower oil market prices. The reference products average quarterly market price was at 409 EUR/t (-31.7% year-on-year). Group’s average shale oil sales price including the impact of derivative transactions was at 346.6 EUR/ton (+13% year-on-year). EBITDA from Shale oil operations was positive in the second quarter with a result of EUR 3.3 million (+166% year-on-year).

Natural gas segment

Eesti Energia's revenues from the natural gas segment amounted to EUR 15.5 million in Q2 2023 (-69.4% year-on-year). The sales volumes declined (-41.0% year-on-year), at 0.2 TWh for the quarter due to lower demand. Average natural gas sales price was at 62.1 EUR/MWh (-48% year-on-year). Natural gas EBITDA for the quarter decreased to negative territory and amounted to EUR -5.3 million (-272.0% year-on-year) due to negative impacts mainly from gain on derivatives and high variable costs.

Other segment

EBITDA from Group's other products and services decreased to negative territory and totaled at EUR -3.6 million in the second quarter of 2023 (-151.4% year-on-year). The biggest negative factor came from frequency restoration reserve (FRR) service where high variable costs and lower electricity prices where the reasons why the group was not able to offer the service to the market in the intended capacity. Other changes in EBITDA totaled -5.7 million with negative impacts from solar services, one-off transactions and other ancillary services as well as increased overhead costs.

Capital expenditure

The Group's capital expenditure amounted to EUR 181 million (+84.8% year-on-year) in Q2 2023. Investments to the renewable asset developments amounted to EUR 74 million during the quarter. Electricity distribution network investments are in second place with EUR 44 million during the quarter. The distribution network investments are largely aimed at improving connection points to enable additional solar production capacities to be connected to the distribution network and increasing the liability of the network. Investments to other development projects increased to EUR 46 million, from which the largest share went to the construction of a new chemical plant (new Enefit-280). The new Enefit-280 chemical 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, credit ratings and dividends

As of the end of second quarter 2023, cash and cash equivalents held by the Group totaled EUR 409.2 million with additional short-term deposits of 245 million totaling 654.2 million. As of 30 June 2023, Eesti Energia had access to a total of EUR 730 million of bank loans, from which revolving credit facilities amounted to EUR 270 million and long-term loan agreements signed with multiple counterparties to EUR 460 million. Eesti Energia’s net debt was at EUR 1,278 million (together with short-term deposits 1,033 million), net debt to EBITDA ratio increased to 3.1x (on adjusted EBITDA basis to 2.8x), together with short-term deposits 2.5x (on adjusted EBITDA basis to 2.3x) compared to the 3.5x financial policy target of the company.

During the second quarter 2023 the Group paid out total dividends for the 2022 financial year in the amount of EUR 81.5 million, from which EUR 68.9 million was paid to the sole shareholder, State of Estonia. EUR 12.6 million was paid to the minority shareholders of the Tallinn stock exchange listed majority owned Enefit Green subsidiary.

In Q2 2023 Eesti Energia disbursed the sustainability linked, amortizing 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- (stable) 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.

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


It is the management’s expectation that in 2023 Eesti Energia's sales revenue will see a slight decline while EBITDA and investments will likely increase compared to 2022 numbers.

Eesti Energia will publish its Q3 results on 2 November 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 1.1 TWh for the remainder of 2023 (at average price of 202.9 EUR/MWh) and 0.5 TWh for 2024 (at average price of 148.2 EUR/MWh). The Group's hedge positions for electricity retail sales amounted to 1.9 TWh for the remainder of 2023 (at average price of 80.4 EUR/MWh) and 3.0 TWh for 2024 (at average price of 53.2 EUR/MWh).

For shale oil, the hedge positions totaled 182.2 thousand tons for the remainder 2023 (at average price of 347.2 EUR/ton) and 315.0 thousand tons for 2024 (at average price of 398.3 EUR/ton). For naphtha, the hedge positions totaled 29.0 thousand tons for 2023 (at average price of 485.2 EUR/ton) and 49.7 thousand tons for 2024 (at average price of 567.6 EUR/ton) The Group's position in CO2 emission allowances for 2023 amounts to 3.6 million tons at an average price of 62.3 EUR/ton (including forward transactions, free emission allowances received as investment support and the surplus of unused allowances from previous periods). CO2 emission allowances for 2024 amount to 1.6 million tons at an average price of 33.1 EUR/ton (including forward transactions). The Q2 2023 interim report of Eesti Energia and the investor presentation is available at Eesti Energia's web site:

Investor call discussing the 2023 second quarter financial results will take place on 3 August 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.