Latvenergo Group is the largest power supply company in the Baltics; the electricity amount sold in 1H 2013 has increased to 4,371 gigawatt hours (GWh) (1H 2012: 4,307 GWh). The increase has been enabled mainly by greater amounts of electricity supplied in the open market in Lithuania and Estonia.
The amount of customers in Lithuania and Estonia since the beginning of the year has increased more than 10 times, while the amount of electricity sold in the first half of the year in these countries is 1,186 GWh or approximately 27% of the total amount of electricity supplied in the Baltics – more than twice exceeding the supplied volumes by the competing electricity suppliers in Latvia (570 GWh). The volume of electricity supplied in Latvia in 1H 2013 was reduced due to lower electricity consumption in the industrial sector – a decline of 9% compared to the first half of 2012.
In 1H 2013, the revenue of Latvenergo Group has increased by 4%, reaching LVL 401.8 million (EUR 571.7 million), while net profit has declined to LVL 20.2 million (EUR 28.7 million). The results were impacted by such factors as an increase of the electricity purchasing price for supply to retail customers due to transmission system limitations and a lower water level in Nordic hydropower plant reservoirs, the 9% decline in industrial sector electricity consumption in Latvia, a larger amount of electricity purchased from electricity generators under the mandatory procurement process (+44%), as well as losses from electricity supply at regulated tariff in Latvia. Overall, losses from electricity supply at regulated tariff in 1H 2013 are estimated at LVL 11.5 million (EUR 16.3 million).
In 1H 2013, Latvenergo Group generated a total of 2,974 GWh of electricity and 1,608 GWh of thermal energy. The amount of electricity purchased from local generators within the mandatory procurement reached 670 GWh (+44%). Along with increased volume purchased from local generators, the share of Latvenergo AS in the eligible costs of mandatory procurement has declined to 36%.
In the first half of 2013, the Latvenergo Group has increased the amount investments in transmission and distribution assets by 27%; as a result, investments in network assets have reached 64% of the total investments. The reconstruction project of combined heat and power plant Riga TEC-2 approaching completion; commissioning works have been commenced. The completion of the biomass-fired boiler house in Liepāja City is also expected this year. A local fuel source – woodchips – will be used, thus by 40% increasing the proportion of green energy generated by the subsidiary Liepājas enerģija SIA. The most significant investment object for the coming years is the electricity transmission system project Kurzeme Ring.
In 1H 2013, 5-year bonds in the amount of EUR 50 million and 7-year bonds in the amount of EUR 20 million (in Q2) were issued. 7-year bonds ensured a 2.89% yield, which is close to the yield of 5-year bonds. The total amount of bonds issued by Latvenergo AS reaches EUR 90 million.
In 1H 2013, Moody's Investors Service has reaffirmed the credit rating of Latvenergo AS as Baa3 (stable).
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The Latvenergo Group is the largest power supply merchant in the Baltics, engaging in electricity generation and trade as well as providing electricity distribution and management of transmission system assets. Latvenergo holds one-third of the entire Baltic electricity market. Latvenergo AS has been acknowledged as the most valuable company in Latvia for several years in a row. International credit rating agency Moody’s has assigned Latvenergo AS an investment-grade credit rating of Baa3/stable.
The Latvenergo Group includes the parent company Latvenergo AS (electricity generation and trade, thermal energy generation) and its subsidiaries Latvijas elektriskie tīkli AS (management of transmission system assets), Sadales tīkls AS (electricity distribution), Elektrum Eesti OÜ (electricity trade in Estonia), Elektrum Lietuva UAB (electricity trade in Lithuania) and Liepājas enerģija SIA (thermal energy generation and trade, electricity generation), as well as Elektrum Latvija SIA, a subsidiary of Elektrum Eesti OÜ.