Spausdinti

Results of Lietuvos Energijos Gamyba for the first six months of 2017: active moves in strategy implementation

Spausdinti

30/8/2017

At the end of the first-half of 2017 it’s almost a year Lietuvos Energijos Gamyba has been focusing on implementing the updated strategy of the Company. The Company’s sales revenue of the January-June period of 2017 are EUR 63.31 million and are 8 percent smaller than the revenue of the January-June period of 2016 (EUR 69.15 million).

Decreased power production had the biggest impact on the decrease of Company’s income. In total, the Company’s power plants produced 14% less power from January to June 2017 than from January to June 2016: 549 GWh and 636 GWh respectively.

This year, an early spring flood and rains at the beginning of summer filled Nemunas, so more water flowed through the units of the Kaunas Algirdas Brazauskas' Hydroelectric Power Plant. From January to June 2017, this power plant produced 241 GW of power, i.e. 19% more than from January to June 2016 (203 GWh).

Increased power production in Kaunas contributed to improving the Company's profitability indicators. Another factor that had a significant impact on the change of the Company’s EBITDA was the fact that the Company’s income from unregulated activity of 2017 is no longer decreased due to commercial production profit adjustment and the activity inspection of 2010-2012. These decisions of the National Commission for Energy Control and Prices, according to which income from the funds of public service obligations (PSO) and power reserve securing services was decreased, lowered the EBITDA indicator from January to June 2016 by approximately EUR 11.1 million.

The Company’s profit of the January-June period of 2017, excluding interest, taxes, depreciation and amortization (EBITDA) reaches EUR 27.08 million and is 25 percent bigger than the profit of January-June period of 2016 (EUR 21.66 million).

From January to June 2017, the Elektrėnai complex produced 79 GW of power, i.e. 51% less than from January to June 2016 (163 GWh). The main reason for decreased production is recent decrease of power prices on the wholesale market. From January to June 2015, in the Lithuanian prices area of the Nord Pool market, power cost EUR 37.8/MWh, from January to June 2016, it cost EUR 36.2/MWh, and from January to June 2017, it cost EUR 34.5/MWh on average.

So, when there is an option to import cheaper power, gas facilities of the Elektrėnai complex have fewer opportunities to produce competitive power, but they reliably ensure the reserve necessary for the system. “We switch on the combined cycle unit, which is one third more efficient than the old ones, after a considerable increase of prices on the market. Then, by producing a relatively large amount of power, it may contribute to their stabilisation. From January to June 2017, the CCU was switched on 10 times (from January to June 2016, it was switched on 30 times) and worked smoothly,” says Eglė Čiužaitė, Chairperson of the Board and CEO at Lietuvos Energijos Gamyba, to emphasise the reliability of the device ensuring the safety of the power system.

Since the difference between the day and the night prices is decreasing, 16% less power produced by the Kruonis Pumped Storage Hydroelectric Plant was sold on the market (from January to June 2016, 271 GWh were produced, and 228 GWh from January to June 2017); however, the quantity of sold regulatory power more than doubled (the service is needed for balancing the power surplus / shortage in the energy system). Another system service provided by this power plant, the secondary reserve power, was needed seven times from January to June 2017. From January to June 2016, this service, which is intended for ensuring the safety of the power supply, was activated as many as 40 times.

According to E. Čiužaitė, one of the most important events in the Company in the first half of 2017 is related to this power plant: the feasibility analysis of the expansion of the Kruonis PSHP by installing the fifth hydropower unit was completed. The expansion of the power plant is important for ensuring sufficient power capacities and competitive energy in Lithuania in the future, so the expansion project is included in the list of the main planned works in the energy sector.

The Company’s net profit of the January-June period of 2017 reaches EUR 10.28 million and is 42 percent smaller than the net profit of January-June period of 2016 (EUR 17.79 million).

The change of the net profit of the company (if the results of January-June 2017 and January-June 2016 are compared) continues to reflect one-off effects: at the beginning of 2016, the sale of a part of the Company’s business was accounted for, which increased the net profit result by EUR 16.6 million. If this factor is eliminated from the results of 2016, the net profit of January-June 2017 would exceed the result of January-June 2016 almost nine times (EUR 1.2 million).

“I am happy that if we compare the operating results and the financial results of 2017 with the results of 2016, as early as after the first six months we can see positive developments in increasing the efficiency of cost management and the Company’s profitability,” says the head of Lietuvos Energijos Gamyba.
 

LEG interim financial statements and interim report for 6 months of 2017: link

Link to the presentation of LEG results for 6 months of 2017 in the webinar hosted by Eglė Čiužaitė: link