Energy, Estonia, EU – Baltic States

International Internet Magazine. Baltic States news & analytics Saturday, 08.08.2020, 09:17

Eesti Energia sees Q2 profit decline 26%

BC, Tallinn, 30.07.2020.Print version
The sales revenue of Estonia' state-owned energy group Eesti Energia amounted to 168 million euros and the group's net profit totaled seven millions euros in the second quarter of 2020, marking respective decreases by 18 percent and 26 percent year over year, reports LETA/BNS.

Group EBITDA declined 13 percent on year to 54.8 million euros, Eesti Energia said.

Andri Avila, chief financial officer and board member of the group, said that the economic results are satisfactory, considering the overall unfavorable operating environment due to a global decline in energy consumption and overabundant supply in production. In order to cope with the deterioration in the external environment, the group had to change its production processes and reduce its costs and investments.

Electricity prices in the Nordic countries were exceptionally low due to record high hydro resources and a steep decline in demand caused by the confinement measures imposed to prevent the spread of the virus, according to Avila.

"Average electricity prices in our home markets tumbled by 30-60 percent year on year. With so much volatility in the market, we also saw a negative electricity price in the Baltics for the first time," Avila said in a press release.

The Nordic hydro power production alone grew by 8 TWh, or by one-fifth, year over year in the second quarter of 2020. For comparison, the growth is similar in scale to Estonia's total annual electricity consumption. Electricity consumption dropped to the past four years' lowest level on the Nord Pool power exchange and to the past six years' lowest level in the Estonian market. 

Eesti Energia's retail sales volumes in Estonia, Latvia, Lithuania, Poland, Finland and Sweden declined by one-tenth in yearly comparison to 1,532 GWh. The production of electricity fell 46 percent to 629 GWh, of which renewable electricity accounted for 277 GWh -- 11 percent more than last year.

The group's renewable energy output grew by one-fifth on year to 390 GWh, of which electricity generated at wind farms in Estonia and Lithuania made up 230 GWh, electricity produced from biomass 47 GWh and heat 113 GWh. Renewable energy accounted on average for 41 percent of total electricity and heat output during the second quarter.

The production of liquid fuels from oil shale declined 8 percent to 85,900 tons. The decrease in output is attributable to a shorter operating time of the Enefit 280 oil plant: at the end of March 2020 the plant was closed for planned overhaul, which lasted until the end of April. Revenue from the sale of fuel oil decreased by one-fifth to 26 million euros.

"Global demand for oil products declined by a quarter during the coronavirus crisis, and for a moment we also witnessed a historical negative price. Our oil production didn't need to be reduced, however. The shale oil segment was supported by hedge transactions totaling eight million euros, concluded in the past from higher price levels. The market is on its way to recovery and prices are exhibiting a favorable upward trend," Avila said.

Lower electricity consumption reduced the sales volume in the distribution segment by 3 percent to 1.5 TWh, revenues from which totaled 50.1 million euros, or 1 percent less than in the same quarter last year.

Investments declined by one-third on year to 28 million euros, two-thirds of which were made towards improving security of supply of electricity distribution networks.

Eesti Energia also saw a net profit of five million euros in the first half of the year.

"When the Nordic hydro balance stabilizes and no second wave of the coronavirus occurs, the outlook for energy markets is expected to improve and we can proceed with our long-term investment plans," Avila said.

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