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Enea posts higher financial and operational results in Q1 2022

In Q1 2022 the Enea Group generated financial and operating results in line with expectations. Sales revenue climbed 43% and the Group’s EBITDA was up by more than 14% versus the corresponding period of last year. Net profit in the reporting period grew 33.5% y/y. In Q1 2022 Enea kicked off the successfully conducted rights offering whereby it brought in more than PLN 750 million to execute investment projects in distribution. 

  • In Q1 2022, the Enea Group generated an EBITDA of PLN 1.16 billion and sales revenue of more than PLN 7.2 billion.
  • The Group’s net profit was close to PLN 548 million.
  • The sales volume of electricity and natural gas was 6.2 TWh.
  • The Group generated 6.5 TWh of electricity.
  • In Piła the new cogeneration installation in Miejska Energetyka Cieplna (an Enea Group company) was commissioned in Piła. As of January 2022, it has been providing heat and electricity to the city’s inhabitants.
  • Enea conducted a rights offering to raise its share capital. By issuing new shares the company has obtained funds to make it possible to earmark more than PLN 750 million to underwrite the distribution segment’s investment budget.

In Q1 2022, the Enea Group generated an EBITDA of PLN 1.06 billion (up PLN 132 million y/y, or 14%). Sales revenues climbed 43% versus the corresponding period of last year to PLN 7.2 billion. Net profit in the reporting period grew 33.5% to nearly PLN 548 million. The Net Debt / EBITDA ratio stood at a safe level of 0.72. The Group spent PLN 494 million on investments from January to March 2022.

The Group recorded robust performance in each area of its business. The mining area generated EBITDA of PLN 620 million (growth of PLN 253 million y/y). A significant increase in EBITDA was posted in the System Power Plants Segment (up PLN 192 million). This was driven by the higher margin on generation and the increase in revenue on the capacity market, offset however by the simultaneous drop in the trading and balancing market margin. The RES Segment posted EBITDA growth y/y of more than PLN 40 million, while the Heat Segment saw growth of PLN 20 million y/y. In the period under discussion the Enea Group generated 6.5 TWh of electricity, reporting production volume growth of 6.7% y/y. The greater availability of the conventional power units in the Połaniec Power Plant was one of the contributing factors. Generation from renewable sources rose 7% y/y to 558 GWh. This growth was linked to wind conditions and the larger availability of the Green Unit. The sales of heat fell slightly by 0.5% y/y to 2.6 PJ.

In January 2022 the Enea Group commissioned a new cogeneration source. The MEC Piła installation based on three gas engines and solar collectors will produce 140,567 GJ of heat and nearly 42 MWh of electricity a year. Incorporating a modern cogeneration plant in the system in Piła translated into reducing coal consumption by approximately 7.5 thousand tons per annum. The investment cost nearly PLN 50 million.

The Enea Group is gradually and steadfastly discontinuing generation from conventional coal sources in favor of renewable and low emission sources of energy in accordance with its Development Strategy updated in December 2021. The newly-established SPV doing business as Enea Elkogaz will replace the generation capacity of 200 MW power units on the premises of the Kozienice Power Plant with natural gas combustion technology. CCGT power units will be a low emission source of energy strengthening energy security and supporting the generation of energy from RES during the transition phase.

The EBITDA generated in the distribution segment was PLN 310.5 million versus PLN 369 million in Q1 2021. The following factors contributed to this result: the lower margin on licensed activity, higher operating expenses and the lower result on other operating activities. Enea Operator delivered nearly 5.3 TWh of distribution services to 2.7 million end users. At the end of Q1 2022 nearly 125 thousand renewable sources, including micro installations were connected to Enea Operator’s distribution grid.

The distribution company is steadily executing its investment program to modernize the grid to strengthen the security of energy supply, develop the smart grid and renewable power generation. In Q1 2022 more important investments for the safety and development of Zielona Góra and Bydgoszcz were commissioned. The Group also completed tests on five prototype electricity storage units operating on different technologies. These tests were conducted in Bydgoszcz, Zielona Góra, Gubin, Pogorzelica and Opalenica. These tests demonstrated which plant, depending on the specific nature of the grid offers the optimum fulfillment of the grid operator’s expectations.

EBITDA in the sales (supply) segment was - PLN 86 million. The PLN 133 million decline y/y is mainly due to lower realized margins on the retail market and the change in provisioning related to onerous contracts, partially offset by the improved result on the remeasurement of CO2 contracts. A provision was set up in December of 2020 for the settlement made by the company acting as the offtaker of last resort for the distribution fee rebate for the electricity supplied to the grid by prosumers. One year later this provision was raised to PLN 250.1 million to reflect the impact exerted by the company’s expected future losses in connection with the performance of comprehensive contracts signed with prosumers in accordance with the amended Act on Renewable Energy Sources. In Q1 2022, the use of a portion of the provision totaling PLN 2.6 million was recognized and the remeasurement of this provision totaling PLN 53.6 million was recognized in expenses.

In the period under analysis total revenue from the sales of electricity and natural gas in Q1 2022 grew by PLN 993 million, or 55.5% versus the corresponding period of 2021. The sales volume of electricity and natural gas was down by 1.8% to 6.2 TWh. The slight decrease was caused by a change to the customer portfolio. In the business customer segment, the Group posted a decline in the sales volume of natural gas (212 GWh y/y) and a simultaneous increase in the sales volume of electricity (148 GWh y/y). In the household segment, a slight increase was posted in the sales volume of natural gas and a decline in the sales volume of electricity by 53 GWh.

LW Bogdanka’s revenue increased 30.1% in Q1 2022 to PLN 731.8 million versus PLN 562.4 million a year ago. EBITDA was PLN 276.5 million, operating profit was PLN 179.7 million and net profit was PLN 143.2 million.

The production of commercial coal in the period under discussion was 2.8 million tons with sales of 2.7 million tons.

COMMENTS ON THE ENEA GROUP’S PERFORMANCE IN Q1 2022:

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

In Q1 2022 the Enea Group improved its financial and operational results by generating a higher net profit, higher sales revenue and higher EBITDA y/y. The Group’s financial standing is stable. The Net Debt / EBITDA ratio stood at a safe level of 0.72. In connection with the Enea Group’s transition we have specific strategic objectives, and we are implementing our execution plan. By 2042 we would like to earmark more than PLN 68 billion for investments, with PLN 42.5 billion of that in the distribution segment and PLN 13.8 billion to develop renewable energy sources. Enea’s efficiently conducted new rights issue enabled us to obtain more than PLN 750 million for the execution of our investment plans in the distribution segment. These funds will support the development and modernization of the distribution grid, especially in terms of the rapid development of RES and distributed generation as well as the installation of remote readable meters”, said Rafał Mucha, Vice-President of the Enea Management Board for Financial Matters.

Lech Żak, Enea’s Vice-President for Strategy and Development:

“The Enea Group, the second largest player on the electricity generation market has ambitions of not just investing and developing projects based on renewable energy sources but also creating new solutions to utilize the energy it generates in an optimum and effective manner. That is why the Group has made such a large commitment to research and development projects and collaborating with the world of science and business. In Q1 2022, Enea Operator, the distribution company, completed tests on five prototype energy storage units thereby expanding its competences in the effective utilization of new technologies in its operations as a DSO. Developing energy storage projects to augment the quality and security of electricity supply and efficiency in the usage of the renewable energy sources connected to the low voltage power grid is one of the key avenues for the Enea Group’s transition as stated in our Development Strategy”, said Lech Żak, Enea’s Vice-President for Strategy and Development.

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

Every year we plan our output in accordance with our strategy. We do not react emotionally to market swings. In the long-term this could destabilize the Company’s safe, stable and effective functioning. We are maximizing output while aligning it to our capabilities. However, we are not capable of ramping up output from one day to the next to fill the gap left by Russian coal because mining sector investments are long-term in nature. Just as up till now, we plan to continue being a stable supplier of raw material to commercial power plants”, said Artur Wasil, President of the Lubelski Węgiel Bogdanka Management Board.

 

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