Unaudited results of Latvenergo Group for the first quarter of 2019
May 31, 2019
Today, 31 May, the unaudited condensed consolidated interim financial statements of Latvenergo Group for the first three months of 2019 are published.
In general, the performance of Latvenergo Group in the first quarter of 2019 was influenced by global and regional factors that determined higher electricity prices. Prices remain affected by low water levels at Scandinavian reservoirs as well as by rising costs of energy sources and CO2 emission allowance prices. Implementing strategic development in new business areas, in 2019 Latvenergo Group started operations in the natural gas market for Latvian households and actively worked in the solar panel segment.
In Q1 2019, Latvenergo Group’s revenue amounts to EUR 251.4 million, which is 3% less than in the same period last year. EBITDA* of the Group is EUR 83.2 million, which is 24% less than in the previous year.
In Q1 2019, Latvenergo Group generated 1,347 GWh of electricity. The amount of electricity generated at the Daugava Hydropower Plants (HPPs) in the first three months of 2019, compared to the respective period last year, decreased by 40% and reached 605 GWh; this was affected by a lower water inflow in the Daugava River. According to the data of the Latvian Environment, Geology and Meteorology Centre, the average water inflow in the Daugava River in Q1 this year was only 467 m3/s, whereas in the same period last year it was 832 m3/s. The electricity output by Latvenergo AS combined heat and power plants (CHPPs) was 727 GWh in Q1 2019, which is 20% less than in the same period last year. The amount of thermal energy generated by the CHPPs in Q1 2019 was 939 GWh, which is 22% less than in the respective period a year ago, and it was influenced by warmer weather conditions during the heating season. The data of the Central Statistical Bureau show that the average air temperature in Riga in Q1 2019 was +0.5 C°, whereas in the respective period last year it was –2.4 C°.
In the reporting period, a total of 1,795 GWh of electricity was sold to retail customers in the Baltics. Although electricity consumption in the Baltics decreased by 2.5%in Q1 2019, the amount of electricity sold to retail customers by Latvenergo Group increased by 1.7%. The overall amount of retail electricity trade outside Latvia reached 656 GWh. In February 2019, Latvenergo Group started retail trade of natural gas in the segment of household customers, and by the end of Q1 2019 its total portfolio of natural gas customers increased by more than 400. At the end of the reporting period, Latvenergo Group’s natural gas customer portfolio comprised approximately 900 customers and the amount of natural gas sold to them reached 104 GWh. In Q1 2019, the amount of gas consumed by the Group for own use and sold to customers amounted to 2,115 GWh, making Latvenergo Group the second largest natural gas consumer in the Baltic states.
Retail activities involving other services also continued in the Baltic states during the reporting period.The number of solar panel agreements concluded is substantially higher than a year ago, which was driven by the successful sales of solar panels in Lithuania and Estonia. In the first 3 months of 2019, solar panels were installed for 26 customers.
Latvenergo Group’s revenue in Q1 2019 has decreased by 3% and amounts to EUR 251.4 million. Group's EBITDA is 24% less than the previous year, reachingEUR83.2 million, while the Group’s profit is EUR 38.4 million. The results have been mostly impacted by the 40% smaller electricity output at the Daugava HPPs.
The total amount of Latvenergo Group’s investments in Q1 2019 is 34% higher compared to the same period last year and amounts to EUR 44.3 million. The amount invested in power network assets represented 86% of the total investment in the reporting period.The most important investment projects of Latvenergo Group related to power network assets are:
- The Kurzeme Ring project, which significantly increases the security of energy supply in Kurzeme region and Latvia as a whole, allowing further integration of the Baltics into the Nordic electricity market. The amount invested in theproject by 31 March 2019 isEUR 213.6 million.
- The Third Estonia–Latvia power transmission network interconnection project, which bears major significance for the future electricity transmission infrastructure of the whole Baltic region. On 16 May 2019, after the end of the reporting period, the first poles were erected in Rūjiena Municipality, marking the start of the next stage of the project implementation, involving the construction of a new 330 kV power line from Riga CHPP-2 to the Kilingi-Nõmme substation in Estonia.The amount invested in theproject by 31 March 2019 isEUR9.9 million.
Contributing to environmentally friendly projects, EUR 3 million was invested in the Daugava HPPs hydropower unit reconstruction in the first 3 months of 2019.
On 19 March 2019, the international credit rating agency Moody’s reconfirmed the credit rating for Latvenergo AS: Baa2 with a stable outlook. Despite global and regional operational environment factors, such as an increase in prices of electricity, natural gas and CO2 emission allowances, which had a negative impact on the financial results of Latvenergo Group in 2018, the rating has been unchangeably stable for several years in a row, confirming consistency within the operations and financial soundness of Latvenergo Group.
The next interim financial statements of Latvenergo Group for 2019 will be published on 30 August and 29 November. Unaudited condensed consolidated interim financial statements of Latvenergo Group for the first 3 months of 2019 are available in the section Investors/ Reports.
*earnings before interest, corporate income tax, share of profit or loss of associated companies, depreciation and amortisation and impairment of intangible and fixed assets. The list of formulas is available on page 22 of the Report