REG - Eesti Energia AS - Eesti Energia Group Unaudited Results for Q2 2025

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31/07/2025 08:15

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RNS Number : 2888T  Eesti Energia AS  31 July 2025

Eesti Energia Group Unaudited Results for Q2 2025

Sales Revenues and Profitability

In a challenging energy market marked by declining electricity and oil prices,
Eesti Energia Group's sales revenue in Q2 2025 totalled EUR 388 million. Group
EBITDA declined to EUR 80 million, while adjusted EBITDA* reached EUR 83
million. Reported net profit for the quarter was EUR 30 million, with adjusted
net profit at EUR 33 million.

This quarter's performance was mainly driven by falling shale oil and
electricity prices. In fact, as of 25Q2, Baltic energy prices have returned to
pre-energy crisis levels seen before 2022. Additionally, the 24Q2 benefited
from one-off CO₂-related gains, which provided an exceptional gain to
financial results at that time. In contrast, 25Q2 reflects a return to normal,
resulting in lower profitability compared to 24Q2. Despite this, the 'Other'
segment-particularly frequency services-showed strong growth in both revenue
and EBITDA.

*Adjusted EBITDA and adjusted net profit exclude temporary fluctuations in the
fair value of long-term Power Purchase Agreement (PPA) derivatives to enable
better period-to-period comparability.

CFO Marlen Tamm commentary:

"This quarter's financial results were primarily influenced by shifts in the
energy market. Thanks to the new wind and solar parks established over the
past year, we generated more renewable energy than the year before. This helps
reduce electricity prices and has a positive effect on consumers' bills.

However, lower market prices also mean decreased revenues for energy
companies, which in turn limits future investments-such as the development of
new generation capacities. Low prices and significant price fluctuations have
become the new normal in the energy market, a trend expected to continue in
the coming years.

To navigate this environment, energy companies must adapt. That's why Eesti
Energia has already taken steps to build an integrated energy group. By
bringing together renewable energy, dispatchable generation, battery
solutions, and a customer portfolio under one umbrella, we are strengthening
our competitiveness in this evolving market landscape."

Renewable Generation and Electricity Sales Segment

Sales revenue from the renewable generation and electricity sales segment
decreased by 26% year-on-year to EUR 170 million. Renewable electricity
production rose by 27% to 0.6 TWh, driven by new wind farms such as the
Sopi-Tootsi facility, which contributes 255 MW of additional capacity compared
to the previous year. Retail electricity sales volumes, however, declined by
7% to 2.1 TWh.

Segment EBITDA dropped by 64% to EUR 13 million. The main impact came from
lower sales prices (EUR -29.9 million), partly due to a 20% drop in the Nord
Pool Estonia area's average price compared to Q2 2024. Lower sales volumes
(EUR -7.4 million) also weighed on performance, though partially offset by
reduced electricity purchasing costs (EUR +17.8 million). Adjusted EBITDA
declined by 62% (EUR -25 million).

Non-Renewable Electricity Production

Sales revenue from non-renewable electricity increased by 6% year-on-year to
EUR 37.1 million. Generation rose by 2% to 0.3 TWh, largely due to the
continued outage of the EstLink2 transmission cable, which required increased
domestic generation. The cable, severely damaged in December 2024, had caused
the loss of ~650 MW of transmission capacity between Estonia and Finland. It
was reconnected on 20 June.

Segment EBITDA declined by EUR 18 million. This was driven by higher CO₂
costs (EUR -8.3 million), increased fixed costs (EUR -4.0 million), and lower
derivative gains (EUR -5.3 million).

Despite weaker results, fossil-based generation facilities remain critical
strategic assets, providing both power generation and frequency services.
Notably, Estonia currently lacks a compensation mechanism for maintaining
strategic reserve power services, meaning Eesti Energia has been providing
this functionality at no cost. However, a new regulation effective 1 January
2026 will enable the Transmission System Operator (TSO), Elering, to procure
reserves to ensure region's energy security, creating a new revenue
opportunity.

Distribution Segment

Sales revenue from the distribution segment increased by 9% to EUR 73.7
million, supported by higher tariffs and a 2% increase in distributed volumes.
Network losses and planned outages declined, while unplanned outages remained
stable at a low level.

Segment EBITDA grew by 35% year-on-year. The margin impact was EUR +5.1
million, driven by a higher average sales price and lower variable costs.
Increased distributed volumes contributed EUR +0.8 million, while deferred
maintenance led to a EUR 1.4 million reduction in fixed costs.

Shale Oil Segment

Sales revenue in the shale oil segment fell by 17% to EUR 43 million, mainly
due to a 15% drop in sales volumes and a 20% decrease in average sales price
(excluding derivatives). Including derivative gains, the average realised
price was EUR 405.5/t, down just 3% year-on-year. This result reflects the
effectiveness of the Group's updated hedging strategy, which now favours
financial options over swaps-providing downside protection with upside
potential, especially for the commodity mainly trading in backwardation.

Shale oil production totalled 103 thousand tonnes (-7%). Segment EBITDA
declined by EUR 64 million, due to the exceptional one-off benefit recorded in
Q2 2024 - EUR 64.5 million in free CO₂ allowances - which did not recur this
year. Excluding this, lower prices impacted EBITDA by EUR -9.6 million and
lower volumes by EUR -5.7 million. On the positive side, derivative gains
contributed EUR +10.0 million, highlighting the positive impact of the revised
hedging strategy.

Other Products and Services

Sales revenue from other products and services nearly doubled year-on-year
(+97%) to EUR 32 million, mainly due to the strong performance of frequency
services. After the Baltic region desynchronized from the Russian grid, new
frequency markets were established - bringing significant price volatility
during the first months. Eesti Energia was well prepared, with both battery
and generation assets in place, and consequently achieved strong profitability
from mentioned area. Frequency services contributed EUR 27.0 million in
revenue and EUR 31.3 million in EBITDA. Heat and gas revenues also grew
modestly, while natural gas EBITDA declined by EUR 2.3 million. Overall,
segment EBITDA rose by EUR 23 million.

Looking ahead, we expect frequency services to normalize due to new market
dynamics in Baltics' frequency markets. While frequency services remain a
promising and profitable business segment, forward-looking returns are likely
to be less exceptional compared to Q2 2025.

Investments

Group capital expenditure amounted to EUR 120 million in Q2 2025, down 43%
year-on-year. The largest share (EUR 51.3 million) was directed toward
near-completion renewable energy projects-primarily the Kelme wind farm in
Lithuania (EUR 35.3 million), expected to begin production in Q4 2025.
Investments in the electricity distribution network increased by 7% to EUR
40.2 million, aimed at reducing the risk of outages and making the network
more resilient to various weather conditions. Investments in the Enefit-280
shale oil plant totalled EUR 13.8 million as the project entered its final
construction phase.

Financing and Liquidity

As of 30 June 2025, Eesti Energia held EUR 619 million in liquid assets, with
total available liquidity of EUR 1,019 million (including EUR 400 million in
undrawn credit lines). Total debt stood at EUR 1,731 million, and net debt
amounted to EUR 1,113 million, down EUR 271 million from a year earlier.

Key financing developments during the quarter included:

·      In April 2025, Eesti Energia acquired approximately 20% of
publicly traded Enefit Green AS shares through a voluntary takeover bid,
increasing its total ownership to 97.2%. A mandatory takeover will follow on 1
August 2025, after which Eesti Energia will hold 100% of Enefit Green AS
shares. According to Nasdaq's decision, the shares will be delisted on 4
August 2025

·      EUR 100 million equity injection from the Government of Estonia
in May 2025

·      EUR 50 million senior unsecured bond issuance listed on Nasdaq
Baltic in June 2025

·      In July 2025, Fitch Ratings assigned Eesti Energia a first-time
long-term issuer default rating of BBB- with a stable outlook

Current credit ratings:

·      Fitch: BBB-, Outlook: Stable

·      Moody's: Baa3, Outlook: Negative

·      S&P: BB+, Outlook: Negative

Outlook

Management expects full-year 2025 sales revenue and EBITDA to remain broadly
in line with 2024, while capital expenditure is expected to decline. The
Group's strategic focus remains on finalising key projects-including new
renewable energy parks and the Enefit-280-2 shale oil facility-as well as
continued enhancements to the electricity distribution network.

 

Key financial information

Condensed Consolidated Interim Income Statement

                                                                 2nd Quarter       Half year
 in million EUR                                                  2025     2024     6m 2025  6m 2024
 Revenue                                                         387.8    415.1    917.9    915.4
 Other operating income                                          14.7     42.7     42.1     93.2
 Change in inventories of finished goods and work-in-progress    (1.0)    2.8      (8.9)    7.2
 Raw materials and consumables used                              (247.3)  (210.6)  (582.5)  (530.4)
 Payroll expenses                                                (51.1)   (48.8)   (99.9)   (97.0)
 Depreciation, amortisation and impairment                       (41.3)   (40.3)   (81.8)   (79.1)
 Other operating expenses                                        (23.5)   (47.7)   (67.1)   (107.6)
 OPERATING PROFIT                                                38.3     113.2    119.8    201.7
 Financial income                                                2.1      1.5      5.3      3.0
 Financial expenses                                              (17.1)   (11.3)   (29.8)   (24.3)
 Net financial income (expense)                                  (15.0)   (9.8)    (24.5)   (21.3)
                                                                                             
 Profit from associates under the equity method                  4.6      1.2      6.5      3.0
 PROFIT BEFORE TAX                                               27.9     104.6    101.8    183.4
 Corporate income tax expense                                    2.1      (1.5)    6.0      (1.7)
 PROFIT FOR THE PERIOD                                           30.0     103.1    107.8    181.7

 

Condensed Consolidated Interim Statement of Financial Position

 in million EUR                                            30 June 2025  31 December 2024
 Non-current assets                                                       
 Property, plant and equipment                             3,698.5       3,563.8
 Right-of-use assets                                       27.8          27.9
 Intangible assets                                         93.8          93.5
 Prepayments for non-current assets                        60.4          61.1
 Deferred tax assets                                       5.7           4.2
 Derivative financial instruments                          195.3         213.3
 Investments in associates                                 79.3          74.9
 Other shares and holdings                                 0.2           0.3
 Non-current receivables                                   3.4           3.3
 Total non-current assets                                  4,164.4       4,042.3
  
 Current assets
 Inventories                                               145.8         172.0
 Greenhouse gas allowances and certificates of origin      76.0          74.5
 Trade and other receivables                               206.6         282.2
 Derivative financial instruments                          48.5          90.0
 Cash and cash equivalents                                 618.5         468.9
 Total current assets                                      1,095.4       1,087.6
 Total assets                                              5,259.8       5,129.9

 

 

 

 in million EUR                                                              30 June 2025  31 December 2024
 EQUITY                                                                                     
 Capital and reserves attributable to equity holder of the Parent Company                   
 Share capital                                                               746.6         746.6
 Unregistered share capital                                                  100.0
 Share premium                                                               259.8         259.8
 Statutory reserve capital                                                   75.0          75.0
 Perpetual bond                                                              414.2         398.5
 Other reserves                                                              119.1         160.2
 Retained earnings                                                           746.6         565.5
 Total equity and reserves attributable to equity holder of the Parent       2,338.0       2,205.6
 Company
 Non-controlling interest                                                    3.7           177.8
 Total equity                                                                2,341.7       2,383.4
                                                                                            
 LIABILITIES                                                                                
 Non-current liabilities                                                                    
 Borrowings                                                                  1,540.5       1,498.7
 Deferred tax liabilities                                                    23.2          28.0
 Other payables                                                              7.9           8.0
 Derivate financial instruments                                              9.5           4.4
 Contract liabilities and government grants                                  493.3         467.9
 Provisions                                                                  39.9          39.0
 Total non-current liabilities                                               2,114.3       2,046.0
 Current liabilities                                                                        
 Borrowings                                                                  210.7         197.0
 Liquidity swap                                                              112.3         79.8
 Trade and other payables                                                    255.7         267.5
 Derivative financial instruments                                            22.7          22.6
 Contract liabilities and government grants                                  3.1           2.0
 Provisions                                                                  199.3         131.6
 Total current liabilities                                                   803.8         700.5
 Total liabilities                                                           2,918.1       2,746.5
 Total liabilities and equity                                                5,259.8       5,129.9

 

 

Eesti Energia will publish its unaudited Q2 2025 results on 31 July 2025. The
Q2 2025 interim report and investor presentation are available on Eesti
Energia's website (https://www.enefit.com/en/ettevottest/investorile) . An
investor call discussing the Q2 2025 financial results will take place on 31
July 2025 at 11:00 London time, 12:00 Frankfurt time, and 13:00 Tallinn time.
Please register to participate
(https://events.teams.microsoft.com/event/b524e711-a0fe-4bfd-ac1c-192d81c455db@15cd778b-2b28-4ebc-956c-b5977a36cd28)
. After registration, you will receive the details required to join the
conference call.

http://www.rns-pdf.londonstockexchange.com/rns/2888T_1-2025-7-30.pdf
(http://www.rns-pdf.londonstockexchange.com/rns/2888T_1-2025-7-30.pdf)

Further Information:

Danel Freiberg

Head of Treasury and Financial Risk Management

Eesti Energia AS

Tel: +372 5594 3838

Email: danel.freiberg@energia.ee (mailto:danel.freiberg@energia.ee)

 

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