Enea Group’s robust financial and operating performance in H1 2021 – growth in revenue and electricity output

In H1 2021, the Enea Group generated PLN 9.8 billion in revenue from sales and PLN 736 million in net profit, which was an improvement compared to the corresponding period of last year. The Group increased by nearly 16% the volume of energy output and the sales volume of electricity and gaseous fuel to retail customers. The net debt/EBITDA ratio decreased to 1.07 (having improved by 33%). The Group keeps adjusting its operating model through its involvement in the development of Poland’s renewable energy sector and in the transformation of the power industry.

• In H1 2021, the Enea Group recorded robust financial and operating performance. Compared to the same period of last year, revenue from sales and other income improved by nearly 9.8%.

• The Group’s EBITDA stood at PLN 1.7 billion.
• Both the value of sales of electricity and gaseous fuel to retail customers and the volume of electricity output increased by nearly 16% y/y.
• The number of renewable energy sources (including micro-installations) connected to Enea Operator’s grid keeps increasing steadily. In the reporting period, nearly 18 thousand such sources were hooked up, putting their total as at the end of H1 2021 at over 80 thousand, with a combined installed capacity of 2.3 GW.
• Enea entered into a joint agreement with the State Treasury and the country’s key utility companies (PGE, Tauron, Energa) regarding cooperation in the spin-off of coal-fired generation assets. The document provides for the integration of such assets within the National Energy Security Agency (NABE).
• The Group steadily develops the concept of smart grids in north-western Poland and solidifies the operational security of the distribution grid in connection with the rapid growth of the prosumer energy generation segment. Enea Operator is testing prototype energy storage facilities on its own grid.

During the first six months of 2021, the Enea Group generated PLN 1.7 billion in EBITDA. Revenue from sales improved by 9.8% y/y, having reached PLN 9.8 billion. Net profit for the reporting period stood at PLN 736 million. In H1 2021, the Enea Group earmarked PLN 728 million for investments.

The highest EBITDA of PLN 687 million was earned in the distribution area (up by PLN 9 million y/y), driven predominantly by the higher margin on licensed activities. Sales of distribution services to end users reached nearly 10.2 TWh, up by 7.4% y/y, with a simultaneous 1.5% increase in the number of customers. In the period under analysis, nearly 18 thousand renewable energy sources (including micro-installations) were hooked up to Enea Operator’s grid. In total, over 80 thousand renewable energy sources with a combined installed capacity of 2.3 GW were connected to the distribution grid at the end of H1 2021.

In the generation area, an EBITDA of PLN 655 million was earned, compared to PLN 872 million in H1 2020. This result was affected by lower margins on generation and trading and on the Balancing Market. The volume of electricity output increased by 15.7% to nearly 12.1 TWh. In the Heat Segment and the RES Segment, EBITDA improved by PLN 20 million and PLN 35 million y/y, respectively. The Group generated 1.2 TWh of energy from renewable sources. Sales of heat reached 3,914 TJ, up by 23% y/y.  

The trading area posted an EBITDA of 9 million, driven by the following factors: revaluation of FX forward contracts in EUR (hedging the currency risk related to EUA futures contracts), movement in provisions related to onerous contracts, increase in the costs of environmental obligations, with a simultaneous deeper drop in electricity purchase prices on the wholesale market than the decrease in the selling prices of electricity on the retail market and the increase in the volume of energy sold.

During the first six months of 2021, the volume of sales of electricity and gaseous fuel to retail customers stood at 12.2 TWh, up by 15.9% compared to H1 2020. This increase was attributable to sales in the business and household customer segments. In the trading area, the Group also posted a 13.4% increase in total revenue from sales of electricity and gaseous fuel to retail customers compared to H1 2020.

In H1 2021, the consolidated revenue of Lubelski Węgiel Bogdanka was PLN 1.05 billion (up by 23.3%), EBITDA was PLN 329.8 million (up by 49.2%), operating profit stood at PLN 116.2 million (up by 132.9%) and net profit at PLN 91.4 million (up by 149.1%).

Bogdanka maintained its market position, having achieved a high share of over 28% in the total volume of coal sales to the commercial energy sector. The overall share in total steam coal sales was at 22.4%.

In the area of the Group’s operations, that is in north-western Poland, the concept of smart grids is gradually developed. Investment projects involving the installation of grid automation systems have been completed, among other places, in the center of Poznań and in the Szczecin, Stargard and Goleniów areas. These projects have contributed to more efficient grid management and have improved the security of electricity supplies.

In Bydgoszcz, Zielona Góra, Gubin, Pogorzelica and Opalenica, prototype energy storage facilities have been launched, each based on a different technology. They will enable a more efficient use of renewable energy sources as well as strengthen the security and quality of energy supplies. The testing of these installations in practice will contribute to the development of an effective method of energy storage at the low-voltage level, which is especially important in the era of the rapid growth in prosumer micro-installations. Enea Operator, in collaboration with Szczecin’s universities and colleges, has become involved in the innovative research project H2eBuffer. The objective of the project is to build a system for energy storage and stabilization of the power grid, powered by environmentally friendly hydrogen obtained in renewable energy installations. The project will also contribute to the development of the renewable energy sector, including the prosumer branch.

 A new cogeneration heat source is being built in Piła, intended for joint operation a RES installation. The investment project being executed by MEC Piła, worth over PLN 48 million, has entered the stage of the installation of components that will generate heat and electricity for Piła’s residents. Gas-fired engines with generators have already been delivered to the construction site. The unit will have a total of 8.50 MW of electric power and 8.36 MW of thermal power, while the use of three gas-fired engines will help reduce CO₂ emissions and smog pollution.

 COMMENTS ON THE ENEA GROUP’S PERFORMANCE IN H1 2021:

Paweł Szczeszek, President of the Enea Management Board:

“The Enea Group is getting ready for the pursuit the objective of reasonable and effective transformation of the Polish energy sector while maintaining energy security. The July agreement with the State Treasury and other utility companies on cooperation in the spin-off of coal-fired generation assets is part of the Group’s development towards a conglomerate based on renewable and zero-emission energy sources. We see our future as a utility company with an increasing share in the total green energy market and as one of the most significant players on the energy market in Poland owing to our involvement in the development of the renewable energy sector, as has been evidenced by the letter of intent signed at the beginning of 2021 regarding strategic cooperation in offshore wind farm projects. With such a rapid growth of renewable energy sources, especially prosumer installations, the stabilization of the national power system has become a crucial issue. In the Enea Group, we are already testing solutions based on energy storage facilities installed on the grid, which are intended to enable us to control installations, especially photovoltaic ones, while improving the safety, quality and reliability of electricity supplies,” said Paweł Szczeszek, President of the Enea Management Board.

 Rafał Mucha, Vice-President of the Enea Management Board for Financial Matters:

“In H1 2021, the Enea Group recorded robust financial and, in line with expectations, also operating performance. Owing to the full but reasonable utilization of the potential of our entire Group, we have been able to effectively accomplish our tasks in the current demanding market environment. The Group recorded a nearly 10% increase in revenue from sales with a simultaneous increase by nearly 16% y/y in both the value of sales of electricity and gaseous fuel to retail customers and the volume of electricity output. The Group’s EBITDA and net profit reached PLN 1.7 billion and PLN 736 million, respectively. It is also worth noting that the net debt/EBITDA ratio improved (by 33% y/y) to 1.07. It was a good half-year for the whole Enea Group despite the challenging market conditions existing throughout this period,” said Rafał Mucha, Vice-President of the Enea Management Board for Financial Matters.

Tomasz Siwak, Vice-President of the Enea Management Board for Commercial Matters:

“Our performance in the area of electricity sales in the first half of this year improved significantly compared to the same period of last year. In turn, the lower EBITDA of the whole trading segment was a consequence of the increasing price pressure for emission allowances. This trend has been affecting the performance of the whole power sector. We are gradually developing our product offering, acquiring new customers and increasing the volume of electricity and gaseous fuel sales by 16%,” said Tomasz Siwak, Vice-President of the Enea Management Board for Commercial Matters.

 Artur Wasil, President of the Lubelski Węgiel Bogdanka S.A. Management Board: 

“The first half of this year was marked by an increased demand for coal due to the colder winter and the effect of recovery on the market driven by the economy’s rebound following the pandemic. Accordingly, our priority during this period was to optimize the layout and schedule of the longwall excavations. We achieved this owing to the hard work and dedication of all our employees,” said Artur Wasil, President of the Lubelski Węgiel Bogdanka S.A. Management Board.