Enea Group’s stable performance in a challenging environment – summary of 3Q 2024

During the first three quarters of 2024, the Enea Group’s EBITDA reached PLN 5.33 billion, up 55% year-on-year. Net profit spiked significantly to nearly PLN 3 billion. The Group improved its EBITDA in three of four key business segments: generation, distribution and trade. Consistent implementation of the investment plan is building the Group’s value.

• The Enea Group’s EBITDA stood at PLN 5.33 billion, up 55% year-on-year. Revenue from sales and other income totaled PLN 24.2 billion and was down by nearly 33% y/y.
• The Group recorded a 46% increase in electricity generation from RES (+94 GWh).
• Electricity generation from conventional sources decreased by more than 8% y/y, to 13.1 TWh.
• During the first three quarters of 2024, the Group spent PLN 2.06 billion on investments.
• Final work is underway on preparing the Enea Group’s strategy and growth plan for the coming years.   

The highest EBITDA of nearly PLN 2.7 billion was recorded in the Generation Area (up nearly PLN 926 million year-on-year). The increase in EBITDA in the System Power Plants Segment was driven primarily by an increase in the trading margin, greater revenues from the Capacity Market and the Balancing Capacity, while the result of the generation concession declined. The RES Segment saw a decrease in EBITDA due to the realization of a lower margin on the Green Unit (as a result of lower electricity prices, with a decrease in the unit cost of biomass). The Heat Segment also posted a decline in EBITDA, caused by a lower unit margin on heat accompanied by an increase in fixed costs. In the Generation Area, the base effect of the corresponding period of 2023 associated with the costs incurred for the contribution to the Price Difference Fund was significant.

In the first three quarters of 2024, the Group generated over 14.7 TWh of electricity. Generation from renewable sources was 299 GWh, up nearly 46% y/y. Sales of heat in the Generation Area dwindled by 11.5% y/y to nearly 4 PJ (petajoules). 

The Distribution Area posted EBITDA of over PLN 1.7 billion (up PLN 437 million y/y). This is was a consequence of a higher margin realized on the concession business with a simultaneous increase in operating expenses. In the period under analysis in 2024, Enea Operator delivered nearly 14.9 TWh of distribution services to over 2.8 million end users in western and northwestern Poland.

The Trading Area achieved EBITDA of PLN 232 million (up nearly PLN 299 million y/y). This was mainly due to the effect of higher margins on the retail market coupled with the simultaneous decline in revenue on compensation payments. The volume of sales of electricity and gaseous fuel increased by nearly 1.6 TWh, or 9%, year-on-year. The increase was caused by a change in the customer portfolio. In the business customer segment, the Group posted an increase in the volume of sales of electricity y/y by nearly 15% (+1.9 TWh), while the household segment saw an increase of 4% (+137 GWh).

In the first three quarters of 2024, the Group’s total revenue from sales of electricity and gaseous fuel fell nearly 12% y/y (PLN -1.4 billion), reflecting the decline in electricity prices in the wholesale market.

In the Mining Area, Bogdanka posted more than PLN 2.6 billion in consolidated revenue from sales in the first three quarters of 2024. The Group’s EBITDA was PLN 539.3 million, while operating and net results were burdened by an impairment loss. The impairment loss suppressed the operating result (which stood at PLN -945 million) and the net result (PLN -756.1 million), but did not affect EBITDA or the company’s liquidity position.

In Q3 2024 alone, revenue from sales increased 7.6% year-on-year. EBITDA improved by 96.7%, operating profit by 449.3% and net profit by 392.1%.

Implementation of the investment plan in all business areas

The Enea Group’s capital expenditures in the first three quarters of 2024 totaled PLN 2.06 billion. The largest portion, PLN 1.04 billion, was spent on investments in the Distribution Area, including on connecting new customers and new sources and on upgrading and expanding distribution networks. At the end of Q3 2024, the number of renewable energy sources connected to Enea Operator’s network was 188 thousand installations with a total capacity of nearly 6.9 GW.

Capital expenditures on RES planned for 2024 are overwhelmingly (90%) focused on the construction of new capacity. Currently, the Group has construction work underway on new RES generation installations for a total capacity of 41.6 MW (for comparison, the Group’s current total capacity is 490.2 MW). Later this year, the Enea Group’s RES generation portfolio will see the addition of the Darżyno I (2 MW), Dygowo I (8 MW) and Jastrowie II (8 MW) photovoltaic plants. The construction of the Bejsce wind farm, whose total installed capacity will be 19.8 MW, is underway. The farm will begin operation in 2025. 

In the Generation Area, upgrades and overhauls of conventional units also form an important part of the investment plan, to secure reliability of electricity and heat supply to the Group’s customers. A key project is the adaptation of coal units 2-7 at the Połaniec Power Plant to increased biomass co-firing to meet emission requirements imposed by the Capacity Market after 1 July 2025. Meanwhile, a project to build CCGT units is underway at Kozienice.          

Digital transition – implementation of CSIRE

The Enea Group is working hard on adapting its customer service systems and processes to the solutions of the Central Energy Market Information System (CSIRE). Digitization and automation of processes is a challenge involving the whole organization. The Group recently reached a milestone in the achievement of this strategic project by completing the secure integration of its IT systems, thereby confirming the organization’s readiness for technical communication with CSIRE. The next step will be the adaptation of the billing system. Approximately 25 business processes will be integrated to cover nearly 3 million Enea customers across Poland. Organizational changes will also be part of the Group’s preparation for the implementation of CSIRE. CSIRE will introduce new solutions in the power sector that will benefit all market participants, including Enea’s customers.           

COMMENTS ON THE ENEA GROUP’S PERFORMANCE AFTER THE FIRST THREE QUARTERS OF 2024:

Grzegorz Kinelski, CEO of Enea: 

“We are operating in a challenging and volatile market and regulatory environment. We want to be fully prepared for the achievement of our ambitious goals that will help us meet the challenges and actively participate in the sector’s transition endeavors. Advanced work on the delineation of the Group’s growth strategy is nearing completion.

The performance we demonstrated during the first three quarters of 2024 attests to the Group’s stable position. The net debt/EBITDA LTM ratio was 0.02, compared to 0.48 in the corresponding period of 2023. The Group’s EBITDA was close to 5.33 billion, while the reporting period’s net profit was close to PLN 3 billion. This means that both figures increased year-on-year. The increase in EBITDA was posted by the generation, distribution and trading areas.

We are continuing the project to build CCGT units at the Kozienice Power Plant. This is one of our investment priorities,” said Grzegorz Kinelski, CEO of Enea.

Artur Wasilewski, Vice-President of the LW Bogdanka Management Board for Economic and Financial Matters:

“Our Q3 2024 financial performance demonstrates the company’s strength and ability to adapt to tough market conditions. Despite challenges such as the declining demand for coal, lower commodity prices, increasing production costs and wage pressures, LW Bogdanka posted very good results during the period. The greatest successes were achieved at the level of operating performance – our EBIT more than tripled to nearly PLN 187 million and our net profit quadrupled to PLN 151.8 million, confirming the effectiveness of the company’s cost optimization efforts and cooperation with key customers. Despite the challenging market environment, these measures enabled us to maintain our position as an efficiency leader in the Polish mining industry. At the same time, we were able to flexibly adapt our output to current market needs. Our operating and net performance in the first three quarters of the year was burdened by an asset impairment loss, which was of a non-recurring nature and did not affect the company’s EBITDA or liquidity position,” said Artur Wasilewski, Vice-President of the LW Bogdanka Management Board for Economic and Financial Matters.