ESO H1 2018 results: the impact of wholesale electricity prices and higher investment


Energijos Skirstymo Operatorius AB (hereinafter – the Company), identification code 304151376, registered office placed at Aguonu str. 24, Vilnius, Republic of Lithuania. The total number of registered ordinary shares issued by company is 894 630 333; ISIN code LT0000130023.

Electricity and gas distribution company Energijos Skirstymo Operatorius (ESO), which is a part of the largest Lithuania’s energy group Lietuvos Energija, completed the first half of the year 2018 with the results reflecting the increase of electricity prices on the exchange. Without considering the one-off factors of regulated activity, the Company's profitability indicators increased, as well as its investments in order to increase reliability of the distribution network.

„The average wholesale electricity price as per Lithuania price area on the Nord Pool electricity exchange has reached 43.7 EUR/MWh and was nearly 26.8% higher than during the same period of 2017. As a result of a higher electricity price in the segment of public electricity supply, expenses of purchasing electricity rose by around EUR 26.1 million compared to the same period of the previous year.This also had a negative effect on the Company‘s EBITDA indicator, which declined compared to the previous year, however will not make a significant long term influence.“ – says Member of the Board of ESO and Finance and Administration Service Director, Acting Chief Executive Officer Augustas Dragūnas. According to him, under the currently effective regulatory framework, higher than projected electricity expenses of the current period will be compensated to the Company in the upcoming periods, however it will make an influence on the electricity public supply prices of the future periods. Aiming to provide a more reliable comparison of the Company‘s performance during different periods and without taking into consideration deviations between actual and regulated revenue and impact of one-off factors, ESO’s adjusted EBITDA totalled EUR 84.2 million and increased by EUR 9.0 million or 11.9% in January-June 2018 compared to the same period of the previous year.

During the first six months of this year investments made by the Company increased up to 53.4% from the same period of the previous year and totalled EUR 113.7 million. As a usual practice, a major part of investments, which totalled EUR 56.7 million, was allocated for the renewal, modernisation and higher resistance of the electricity distribution network. Investments designated for the expansion of the electricity and natural gas distribution network amounted to EUR 50.1 million.

„It is pleasing that investments made in several recent years deliver the desired outcome – reliability indicators of the electricity distribution network continue to improve and the system average interruption frequency index (SAIFI) per customer declined 0.11 time or 18.1% this year.“, – said A. Dragūnas.

Key indicators:

• Company’s income during 2018 January-June, remained stable and was amounted to EUR 309 million, when last year during the same period it was EUR 307.8 million. Slight 0.4% change was driven by rising distribution of energy for customers and lower prices for public electricity supply and natural gas distribution. Stable income is driven by the ever-increasing residents and business energy needs.

• The cost of electricity, natural gas and related services during the six months of this year amounted to EUR 213.4 million and were 14.2 percent higher than the corresponding time in 2017. The biggest impact was felt due to prevailing relatively high electricity acquisition cost in Scandinavia and the Baltic region.

• The increased cost of electricity, natural gas and related services has also led to a decrease in net profit of the company. In the first quarter of this year, it amounted to EUR 17.8 million while at the same time last year it was EUR 46.3 million.

• During January-June 2018, ESO earned EUR 84.2 million of adjusted profit before interest, taxes, depreciation and amortisation (adjusted EBITDA*) – 11.9% more than at the same time in 2017, when the indicator was EUR 75.3 million.

• During the six months of this year, ESO's investments in electricity and gas distribution networks amounted to EUR 113.7 million – 53.4% more than during the same time last year when it invested EUR 74.1 million.

• In the first half of the year, ESO has secured its customers more reliable electricity supply. With the influence of natural phenomena ("force majeure"), system average interruption duration index (SAIDI) during the six months of 2018 for one user was 31.29 minutes and compared to the same time of 2017, it decreased by as much as 32.5 minutes (in 2017 six-month period, SAIDI made 63.79 minutes). The system average interruption frequency index (SAIFI) with the effect of "force majeure" during the first half of 2018 was 0.49 times – 0.11 times less than in 2017 six-month period, when it was 0.60 times.

*The Company’s EBITDA are reported after the adjustments made by management by eliminating the impact of one-off factors. These adjustments are made aiming to disclose the results of the Company’s operating activities after the elimination of the impact of non-typical, one-off factors or factors that are not directly related to the current reporting period. All adjustments made by management are disclosed in the Company’s interim and annual reports.

For more information:

Tomas Kavaliauskas

Representative for Public Relations       

Mob. +370 617 51616

El. p. tomas.kavaliauskas@eso.lt 

Attachment


Attachments

ESO FS IIQ 2018_EN