Enefit Green's unaudited financial results Q4 and 12 months of 2023
Enefit Green's consolidated operating income for Q4 2023 decreased by 19 percent to €66.9m compared to the same time last year, and operating expenses (excluding depreciation) increased by 1 percent to 37.3 million euros. As a result, Q4 2023 EBITDA fell by 35 per cent to €29.6m. In the last quarter of the year, the Group earned a net profit of €19.1m, which is 46 percent less than in the same period last year.
In 2023 as a whole, Enefit Green's consolidated operating income decreased by 10 percent compared to the previous year to €230.1m, EBITDA by 32 percent to €105.9m, and net profit by 49 percent to €55.8m. 2023 earnings per share was €0.21 (2022: EUR 0.42).
The Management Board of Enefit Green, in coordination with the Supervisory Board, proposes to pay the shareholders €27.7m or €0.105 per share in dividends.
Aavo Kärmas, Chairman of the Management Board of Enefit Green, comments:
"Enefit Green continued to work on development projects in 2023 and we completed two new renewable power plants in Estonia and one in Poland. As of the end of the year, the company had more than 500 megawatts of operating production capacity and more than 700 megawatts under construction.
We made investment decisions for the construction of one onshore wind farm in Lithuania and the construction of three solar farms in Estonia and Latvia. The total capacity of these investments is approximately 180 megawatts and the total investment will exceed 200 million euros.
In 2023, we produced 1.3 terawatt-hours of electricity and 604 gigawatt-hours of thermal energy. 20% growth in electricity production result was driven by the increase in the output of new completed wind and solar farms and of those still under construction. Although the new wind and solar farms added a significant part of the year's electricity production, it turned out to be smaller than planned, primarily due to the low wind speed, the Akmenė incident and the lower availability of the Šilutė wind farm.
Lower than planned production led to an increase in the cost of purchasing electricity to fulfil the obligations related to the long-term electricity contracts (PPAs). To reduce the power price risk, large proportion of Enefit Green's electricity production has been sold forward with long-term PPAs. As the actual production was well below the planned level, the shortfall had to be purchased on the market to meet contractual obligations.
We will continue to work this year to ensure the completion of our construction projects and that every megawatt-hour of electricity will be produced. Enefit Green has a strong development portfolio of approximately 4,900 megawatts of short- and long-term on- and offshore wind and solar farm projects. We have long-term development and operating experience and a good access to capital markets. However, the speed of the company's growth is determined by the demand on our core markets and of our customers, as well as our promise to manage the assets of our shareholders well."
Webinar to present the results
Enefit Green is organising a webinar in English for investors today, 29 February at 13:00 (EET) to present the unaudited 2023 results. To participate, please use this link.
Highlights in 2023
- 65 MW of new wind and solar parks completed
- Suspension and restart of the construction of the Akmene wind farm
- One final investment decision to build a wind farm – 87 MW
- Three final investment decisions to build a new solar farm – a total of 91 MW
- Total value of 2023 final investment decisions exceeds €200m
- A total of €505m of loan facilities signed during 2023
- In Q4, we signed contracts for the sale of all biomass assets
Key indicators
| Q4 2023 | Q4 2022 | Change % | 12m 2023 | 12m 2022 | Change % | ||
| PRODUCTION AND SALES VOLUMES | |||||||
| Electricity production, GWh | 413 | 291 | 42% | 1 343 | 1 118 | 20% | |
| Incl. new wind and solar farms | 112 | 0 | - | 259 | 0 | - | |
| Sales of electricity, GWh | 520 | 340 | 53% | 1 736 | 1 217 | 43% | |
| Heat production, GWh | 172 | 157 | 10% | 604 | 566 | 7% | |
| Pellet production, thousand t | 42 | 42 | 0% | 156 | 154 | 1% | |
| Pellet sales, thousand t | 43 | 47 | -9% | 134 | 149 | -10% | |
| OPERATING INCOME, m€ | 66.9 | 82.8 | -19% | 230.1 | 257.0 | -10% | |
| Sales revenue, m€ | 61.2 | 76.4 | -20% | 205.8 | 233.3 | -12% | |
| Support for renewable energy and other business income, m€ | 5.7 | 6.4 | -10% | 24.3 | 23.7 | 2% | |
| OPERATING EXPENSES*, m€ | 37.3 | 36.9 | 1% | 124.2 | 102.2 | 22% | |
| EBITDA, m€ | 29.6 | 45.8 | -35% | 105.9 | 154.8 | -32% | |
| NET PROFIT, m€ | 19.1 | 35.4 | -46% | 55.8 | 110.2 | -49% | |
| EPS, € | 0.07 | 0.13 | -46% | 0.21 | 0.42 | -49% |
* excluding D&A
Operating income
The Group's electricity production increased to 1,343 gigawatt-hours in 2023 (+20% compared to the reference period). The growth was driven by the wind and solar farms completed last year and by those still under construction.
Total operating income decreased by €27.0m, the figure reflecting a decrease in revenue of €27.5m and an increase in renewable energy support and other operating income of €0.6m. Of the €27.5m revenue decrease, €24.4m was attributable to electricity sales, which were strongly influenced by the market price of electricity.
In 2023, the average electricity price in the group’s core markets was 92.7 €/MWh (2022: 205.5 €/MWh) and the group’s average implied captured electricity price was 89.6 €/MWh (2022: 149.5 €/MWh).
The implied captured electricity price differs from the average market price in the group’s core markets, because it takes into account long-term fixed-price power purchase agreements (PPAs), renewable energy support, purchases of balancing energy, electricity purchases from the Nord Pool day-ahead and intraday markets, and the fact that wind farms do not produce the same amount of electricity every hour.
The group’s average price of electricity sold to the market in 2023 was 73.0 €/MWh compared with 165.7 €/MWh in 2022. The group sold 783 GWh of electricity to the market in 2023 compared with 786 GWh in 2022. In 2023, 953 GWh of the group’s portfolio was covered by PPAs at an average price of 86.9 €/MWh. A year earlier, 432 GWh of electricity was sold under an income model based on PPAs and the feed-in tariff (FiT) at an average price of 90.8 €/MWh.
Various factors like the incident-induced long stoppage of Akmene wind farm, lower than average wind speeds and lower than forecasted availabilities caused lower than expected electricity production, which in turn contributed to increased cost of purchasing electricity, because to fulfil the obligations under the PPAs, we had to cover the resulting production deficit with purchases from the market. In 2023, we purchased 411 GWh of electricity from the market at an average price of 110.2 €/MWh, compared with 115 GWh at an average price of 229.2 €/MWh in 2022 (the prices and volumes exclude the electricity purchased for pellet production). In 2022, the amount of electricity purchased from the market was significantly lower as part of the production was covered by the fixed-price FiT support scheme and the volumes agreed under PPAs were very small.
Pellet sales revenue grew by €1.7m compared to the previous year. While the average sales price of pellets increased by 17% to 238.6 €/t in 2023, the pellet sales volume decreased by 10% to 134 k tonnes.
Heat production grew by 38 GWh to 604 GWh (2022: 566 GWh) and the heat price increased by 11% (+1.7 €/MWh). Through the combined effect of higher production and a higher price, heat sales revenue grew by €1.4m.
Other operating income grew by €0.6m to €24.3 million (2022: €23.7m). Other operating income was also supported by liquidated damages of €1.0m received for the low availability of the Šilute wind farm and a gain of €1.0m on the sale of the Brocēni cogeneration (CHP) plant and the pellet factory.
Operating expenses
Operating expenses excluding depreciation increased by 22 million or 22% to 124.2 million euros last year.
Expenses on raw materials, consumables and services increased by €14.4m (17%). The biggest changes were in electricity costs, which grew by €15.7m due an increase in balancing energy costs (up €1.7m due to production growth) and the cost of electricity purchased to service the PPA portfolio (up €16.8m compared to 2022).
Technological fuel costs grew by €3.8m, driven by an increase in the price of wood chips. Repair and maintenance costs increased by €2.5m due to the indexation of full-service maintenance contracts and additional planned and unplanned maintenance of wind farms.
Expenses on materials, supplies and spare parts decreased by €7.5. Expenses on materials, supplies and spare parts were higher in 2022 due to a increase in solar services. Due to its low profit margin, however, we decided to exit the solar services business in mid-2022 in order to focus on our more profitable core business and sold related inventories.
The group’s payroll expenses grew by 1.7m (19%) compared to 2022, mainly due to an increase in the number of full-time equivalent staff from 183 to 194 and a general pay rise. The sale of the Brocēni CHP plant and the pellet factory, which was finalised on 29 December 2023, reduced the group’s headcount by 40 to 154 by the end of 2023.
Other operating expenses increased by €4.8m, driven by growth in consulting expenses (€2.9m), IT expenses (€0.3m) and insurance expenses (€0.2m). The biggest items within consulting expenses were the compensation paid to Eesti Energia AS for development expenses incurred in connection with development projects (€0.7m) and consulting expenses related to wind energy development projects (€0.8m), solar energy development projects (€0.4m) and the sale of the CHP plants and the pellet factory (€0.4m).
EBITDA and segment reporting
2023 EBITDA of the Group decreased by EUR 48.9 million to EUR 105.9 million (-32%).
The factor with the strongest impact on EBITDA development was the price of electricity sold, which fell steeply compared to 2022 (negative impact: €77.6m). Due to PPAs, the volume of electricity purchase to balance the electricity portfolio grew significantly (negative impact: €33.4m), which also increased the volume of electricity sold (positive impact: €49.3m).The combined effect of the above factors on EBITDA development is influenced by the volume and profile of electricity produced during the period.
The increase in fixed costs by €8.6m also played an important role in the decrease of EBITDA. The increase in fixed costs was driven by maintenance costs, research and consulting expenses and payroll expenses, as explained above.
In terms of operating income and EBITDA for 2023, the Group’s largest segment is Wind energy, which accounted for 59% of operating income and 71% of EBITDA. The Cogeneration segment contributed 37% of operating income and 35% of EBITDA. The smallest reportable segment is Solar energy, which accounted for 4% of operating income and 3% of EBITDA. In absolute terms, the EBITDA of the Wind energy and the Cogeneration segments decreased the most as those segments were hit the hardest by the fall in the market price of electricity sold.
Depreciation, amortisation and impairment (D&A)
D&A expense grew by €2.8m to €40.6m in 2023 (2022: €37.8m). Major assets completed and recognised during the period included the Purtse wind and solar farm and a solar power plant built for the Estonia mine in Estonia and the Zambrów solar farm in Poland. Recognition of the Purtse wind and solar farm and the Zambrów solar farm increased D&A expense by €0.9m and €0.1m, respectively. D&A expense for 2022 was reduced by €1.4m by the reversal of the impairment losses recognised for the Aulepa and the Šilale wind farms.
Net finance income
Net finance income increased by €2.1m year on year. Interest expense on bank loans grew by €9.5m to €12.9m but 94% of it was capitalised due to the wind farms still being under construction. The change in the exchange rate of the Polish zloty had a positive impact (2023: a gain of €0.5m, 2022: a loss of €0.5m).
Net profit
In addition to the factors explained above, net profit was additionally affected by the increase in income tax expense by €4.1m to €9.7m due to the higher income tax expense in Estonia related to the payment of larger dividends last year. As a result, 2023 net profit of the Group was €55.8m, which was €54.4m or 49% lower than in 2022.
Investments
The Group invested €355.7m in 2023, which is €162.2m more than in 2022.
Growth resulted from development investments, which extended to €350.6m. Of this, €262.5m was invested in the construction of three wind farms: €127.5m in the Kelmė wind farms, €84.1m in the Sopi-Tootsi wind farm and €51.8m in the Tolpanvaara wind farm. Investments made in the Kelmė wind farms consisted of investments of €89.5m in the Kelmė I wind farm, €27.9m in the Kelmė II wind farm and €10.2m in the Kelme III wind farm.
The largest investments in the development of solar energy were €12.7m for the Purtse solar farm and €9.4m for the Vändra solar farm.
Base investments amounted to €5.1m (2022: €5.4m) and were mainly related to the Estonian wind farms (€2.5m) and the Iru power plant (€1.3m).
Financing
Enefit Green finances its operations with equity and debt capital. In 2023, we continued to optimise our capital structure by raising debt by securing new and drawing down previously secured loans to finance our ongoing investment programme for wind and solar farms.
During the year, we signed new loan agreements for €505m. In January, we signed a 12-year loan agreement for €100m with NIB and a 7-year loan agreement for €225m with SEB. In September, we signed a 12-year loan agreement for €180m with EIB.
As of 31 December 2023, we had €285m of undrawn investment loans.
In addition to investment loans, Enefit Green has signed three revolving credit facility agreements of €50m in total, which mature between 2024–2026 (all facilities were undrawn as of 31 December 2023).
As of 31 December 2023, the amortised cost of the group’s interest-bearing liabilities was €482.4m (31 December 2022: €279.6m). The figure comprises bank loans and finance lease liabilities of €472.6m and €9.8m, respectively.
The weighted average interest rate of bank loans drawn down as at 31 December 2023 was 3.75% (31 December 2022: 2.60%). The base rates at the end of 2023 were significantly higher than a year earlier. During the year, the 3-month EURIBOR increased by 1.78 percentage points to 3.91% and the 6-month EURIBOR increased by 1.17 percentage points to 3.86%. As of 31 December 2023, 33.3% of the loans drawn down by Enefit Green were hedged with interest rate swaps.
Dividend proposal
In coordination with the supervisory board, the management board proposes that in 2024 the company pay the shareholders a dividend of €27.7m (€0.105 per share) from retained earnings, which is equivalent to 49.7% of the group’s unaudited net profit for 2023.
Condensed consolidated interim income statement
| € thousand | Q4 2023 | Q4 2022 | 2023 | 2022 | |
| Revenue | 61,157 | 76,380 | 205,757 | 233,280 | |
| Renewable energy support and other income | 5,745 | 6,372 | 24,307 | 23,735 | |
| Change in inventories of finished goods and work-in-progress | (1,056) | (1,304) | 2,210 | 3,303 | |
| Raw materials, consumables and services used | (28,944) | (30,486) | (100,330) | (85,954) | |
| Payroll expenses | (2,782) | (2,470) | (10,807) | (9,111) | |
| Depreciation, amortisation and impairment | (10,819) | (8,848) | (40,559) | (37,777) | |
| Other operating expenses | (4,520) | (2,688) | (15,237) | (10,411) | |
| OPERATING PROFIT | 18,781 | 36,956 | 65,341 | 117,065 | |
| Finance income | 1,134 | 240 | 1,960 | 337 | |
| Finance costs | (1,481) | (1,688) | (1,858) | (2,342) | |
| Net finance costs | (347) | (1,448) | 102 | (2,005) | |
| Profit (loss) from associates under the equity method | (20) | 27 | 66 | 714 | |
| PROFIT BEFORE TAX | 18,414 | 35,535 | 65,509 | 115,774 | |
| Corporate Income Tax Expense | 690 | (126) | (9,716) | (5,567) | |
| PROFIT FOR THE PERIOD | 19,104 | 35,409 | 55,793 | 110,207 | |
| Basic and diluted earnings per share | |||||
| Weighted average number of shares, thousand | 264,276 | 264,276 | 264,276 | 264,276 | |
| Basic earnings per share, € | 0.072 | 0.13 | 0.21 | 0.42 | |
| Diluted earnings per share, € | 0.072 | 0.13 | 0.21 | 0.42 |
Condensed consolidated interim statement of financial position
| € thousand | 31 Dec 2023 | 31 Dec 2022 |
| ASSETS | ||
| Non-current assets | ||
| Property, plant and equipment | 1,027,057 | 776,870 |
| Intangible assets | 59,891 | 60,382 |
| Right-of-use assets | 9,097 | 4,239 |
| Prepayments | 55,148 | 19,412 |
| Deferred tax assets | 2,013 | 1,321 |
| Investments in associates | 548 | 506 |
| Derivative financial instruments | 5,054 | 11 277 |
| Long-term receivables | 40 | |
| Total non-current assets | 1,158,808 | 874,047 |
| Current assets | ||
| Inventories | 3,180 | 14,227 |
| Assets of a company held for sale | 15,370 | |
| Trade and other receivables and prepayments | 55,082 | 41,091 |
| Cash and cash equivalents | 65,677 | 131,456 |
| Derivative financial instruments | 3,806 | 3,349 |
| Total current assets | 143,115 | 190,123 |
| Total assets | 1,301,923 | 1,064,170 |
| € thousand | 31 Dec 2023 | 31 Dec 2022 |
| EQUITY | ||
| Equity and reserves attributable to equity holder of the parent | ||
| Share capital | 264,276 | 264,276 |
| Share premium | 60,351 | 60,351 |
| Statutory reserve capital | 5,556 | 3,259 |
| Other reserves | 163,451 | 166,419 |
| Foreign currency translation reserve | (162) | (762) |
| Retained earnings | 223,718 | 225,190 |
| Total equity | 717,190 | 718,733 |
| LIABILITIES | ||
| Non-current liabilities | ||
| Borrowings | 454,272 | 255,755 |
| Goverment grants | 3,102 | 7,115 |
| Non-derivative contract liability | 12,412 | 18,086 |
| Deferred tax liabilities | 12,497 | 12,326 |
| Other non-current liabilities | 5,239 | 3,000 |
| Provisions | 8 | 9 |
| Total non-current liabilities | 487,530 | 296,291 |
| Current liabilities | ||
| Borrowings | 28,159 | 23,808 |
| Trade and other payables | 58,412 | 20,215 |
| Liabilities of a company held for sale | 4,952 | 0 |
| Provisions | 6 | 2 |
| Non-derivative contract liability | 5,674 | 5,121 |
| Total current liabilities | 97,203 | 49,146 |
| Total liabilities | 584,733 | 345,437 |
| Total equity and liabilities | 1,301,923 | 1,064,170 |
Additional information:
Sven Kunsing
Head of Financial Communication
investor@enefitgreen.ee
https://enefitgreen.ee/investorile/
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