Energy, Estonia

The group said that its sales revenues reduction was mainly driven by lower electricity and shale oil sales volume. Electricity sales volume was 9% lower in the third quarter of 2014, affected by lower generation due to maintenance schedules. On the other hand, sales revenue per MWh increased by 4.6%, as lower wholesale market price was balanced by positive financial hedges. In total, electricity sales revenue decreased by 4.7% to 113 million euros. Shale oil sales revenue was almost two times lower at 13.7 million euros in the third quarter of 2014, as the volume of oil sold was 48.5% lower due to volatile markets and focused sales effort aiming towards better transactions. Slightly higher sales revenue was earned from electricity distribution, as substantially warmer summer temperature resulted in 4% higher sales volume.

The group's EBITDA was 74 million euros in the third quarter, up 3% year-on-year. Group EBITDA growth was primarily driven by an one-off sale of a network construction subsidiary increasing EBITDA by 3.4 million euros as well as a strong performance by distribution network Elektrilevi, as EBITDA earned from the latter increased by 8.2% to 27.4 million euros. Group profitability was negatively affected by electricity and shale oil profitability falling short of the same period last year. Electricity sales EBITDA decreased by 3.1% to 28.8 million euros as the financial hedges did not fully compensate for the lower sales volume and margin. EBITDA from shale oil sales decreased 34.9% to 8.8 million euros, with the lower sales volume the primary reason for the reduction.

Electricity sales amounted to 2.3 TWh in the third quarter of 2014, of which sales in the retail market amounted to 1.3 TWh (-16.4% y-o-y) and sales in the wholesale market 0.9 TWh (+4.3% y-o-y). Eesti Energia power generation amounted to 2.4 TWh in Q3 2014, which was 7% lower compared to the last year. The group's average market share in Estonian retail market reached 59% in the third quarter of 2014, which is 13 percentage points lower year-on-year. After having ended signing new electricity sales contracts with fixed prices in Latvia and Lithuania in September 2013, the group market shares were 15% and 7% respectively in the third quarter of 2014, which in total resulted in 25% market share in the Baltic electricity market.

The group distributed 1.4 TWh of electricity in the third quarter of 2014, while network losses amounted to 5% (-0.2 percentage points y-o-y). Production of shale oil decreased by 4.4% to 52.9 thousand tonnes, while shale oil sales volume amounted to 32.5 thousand tonnes in the third quarter of 2014.