First three months 2023 interim report: strong results despite lower power prices
AB “Ignitis grupė” (hereinafter – the Group) publishes its first three months 2023 interim report, which is attached to this notice, and announces that the Group’s YoY Adjusted EBITDA increased by 34.6% and amounted to EUR 149.9 million. This was mainly driven by the Reserve Capacities segment, where the Group utilised an option to earn additional return in the market on top of the regulated return by fixing positive forward clean spark spread. Customers & Solutions segment result, which turned positive due to better B2B performance, also contributed to the overall result. However, electricity B2C activities continued to be loss-making (EUR -16.4 million). Green Generation segment remained the largest contributor to Adjusted EBITDA (46.7% of the Group’s Adjusted EBITDA) with flat YoY result despite lower power prices.
The Group’s YoY Investments almost doubled and reached EUR 120.8 million, out of which 76.3% were directed to Lithuania. Overall growth was driven by Investments in new Green Generation segment’s projects and higher Investments in the Networks segment.
Compared to the end of 2022, the Group’s leverage metrics improved, following by a decrease in Net Debt. Net Debt decreased by 22.7% (from EUR 986.9 million to EUR 762.9 million), mainly due to positive FCF, which was influenced by higher EBITDA and a decrease in NWC (EUR 314.8 million as of 31 March 2023 compared to EUR 443.3 million as of 31 December 2022). In turn, it led to a significant improvement of FFO/Net Debt ratio to 76.1% (from 49.1% for 2022).
Business development
Since the beginning of 2023, our Green Generation Portfolio increased to 5.3 GW (from 5.1 GW) as a result of greenfield capacity additions of around 0.2 GW. Our Secured capacity also grew to 1.7 GW (from 1.6 GW) as a result of an FID made in our Kruonis PSHP expansion project (110 MW) and Tauragė solar project (22 MW) in Lithuania reaching the construction phase.
A few projects in our Portfolio reached significant milestones:
- Kruonis PSHP expansion (110 MW) project, for which an FID in April 2023 was made, reached a construction phase;
- hot tests have begun in Vilnius CHP biomass unit (73 MWe, 169 MWth);
- Mažeikiai WF (63 MW) supplied the first power to the grid;
- Tauragė solar project (22 MW) reached a construction phase;
- Jonava solar project (252 MW) in Lithuania reached an advanced development stage;
- Moray West offshore wind project (882 MW) has reached a financial close.
On the Lithuanian offshore wind development front, we are participating in the spring’s auction, which started on 30 March 2023, for the first 700 MW project with our partner Ocean Winds.
The implementation of other Portfolio projects is progressing as planned with no significant changes since Q4 2022.
On the Networks side, we successfully continued network maintenance and expansion works, including the smart meter roll-out. In 3M 2023, the total number of installed smart meters reached around 340 thousand (out of 1.1–1.2 million smart meters to be installed). Our target of finalizing the mass roll-out process by the end of 2025 remains unchanged despite the disruption in the production of smart meters and, thus, affecting the project by having the smart meters delivered in smaller quantities than planned and/or within a longer timeframe.
Sustainability
To strengthen the competences and oversight of occupational health and safety, which is one of the top Group’s priority this year, as well as sustainability related topics, in April 2023 the competences as well as composition of the Risk Management and Sustainability Committee was expanded. The committee was joined by 2 new independent members, Ana Riva and Wolf Willems, who are now responsible for the oversight of risk management and occupational health and safety as well as sustainability.
Also, after the reporting period, in April 2023, Sustainalytics improved the Group’s ESG Risk Rating to ‘low’ from ‘medium’ ESG risk level (the score improved from 20.4 to 19.9). It places the Group in the top 12% rank among utility peers.
Shareholder returns and 2023 outlook
In line with the Dividend Policy, a dividend of EUR 0.624 per share, corresponding to EUR 45.2 million, was confirmed for the second half of 2022 and paid out in April 2023.
Following strong 3M 2023 performance, we reiterate our Adjusted EBITDA guidance of EUR 430–480 million for 2023.
Key financial indicators (APM1)
| EUR, millions | 3M 2023 | 3M 2022 |
| EBITDA | 195.3 | 91.6 |
| Adjusted EBITDA | 149.9 | 111.4 |
| Green Generation | 70.0 | 70.0 |
| Networks | 48.7 | 45.1 |
| Reserve Capacities2 | 28.6 | 4.9 |
| Customers & Solutions | 0.9 | (9.7) |
| Other3 | 1.7 | 1.1 |
| Adjusted EBITDA margin | 17.0% | 11.0% |
| Net profit | 127.2 | 46.8 |
| Adjusted net profit | 88.7 | 61.1 |
| Investments4 | 120.8 | 62.0 |
| FFO | 185.5 | 89.3 |
| FCF4 | 208.0 | (157.2) |
| ROE LTM5 | 18.4% | 8.6% |
| Adjusted ROE LTM5 | 13.9% | 10.0% |
| ROCE LTM5 | 16.7% | 7.1% |
| Adjusted ROCE LTM5 | 12.1% | 8.8% |
| EPS (Basic) | 1.76 | 0.64 |
| 31 Mar 2023 | 31 Dec 2022 | |
| Net debt | 762.9 | 986.9 |
| Net working capital | 314.8 | 443.3 |
| Net debt/Adjusted EBITDA LTM, times | 1.50 | 2.10 |
| FFO LTM/Net debt | 76.1% | 49.1% |
1 All, except net profit are Alternative Performance Measures (APMs). Formulas of the financial indicators are available on our website.
2 During 3M 2023 the Group has changed the name of the segment from Flexible Generation to Reserve Capacities to better represent segment activities and Group strategy objectives – the main activities of this segment include utilisation of reserve capacities to ensure reliability and security of power system (option to generate electricity in the market during low renewables generation / positive clean spark spread periods).
3 Other – other activities and eliminations (consolidation adjustments and related party transactions), including financial results of the parent company. More information is available in section ‘8 Parent company’s financial statements’ in our 3M 2023 interim report.
4 The Investments formula has been adjusted retrospectively from the beginning of 2022 by including prepayments for non-current assets. Such presentation shows the amount of Investments made during the year more accurately since the number of advance payments grew significantly with the increase of renewable energy project pipeline. This adjustment also had an impact on the reported FCF figure. For the updated formula, see definitions of ‘Alternative performance measures’ used by the Group, available on our website.
5 Due to changes in IAS, a part of financial indicators were recalculated retrospectively for the year 2021 (for more information, see our Annual report 2022, part ‘ 6.1 Consolidated financial statements’, note ‘6 Restatement of comparative figures due to changes in the accounting policy’). Due to the adjustment, the LTM indicator for the year 2022 was recalculated retrospectively.
Earnings call
In relation to the announcement of the first three months 2023 interim report, an earnings call will be held on Tuesday, 23 May 2023, at 1:00 pm Vilnius / 11:00 am London time.
To join the earnings call, please register at: https://edge.media-server.com/mmc/p/jhwy9zy7
It will be also possible to join the earnings call by phone. To access the dial-in details please register here. After completing the registration, you will receive dial-in details on screen and via email. You will be able to dial in using the provided numbers and the unique pin or by selecting ‘Call me’ option and providing your phone details for the system to connect you in automatically as the earnings call starts.
All questions can be directed in advance to the Group’s IR, after registering for the earnings call or live during the call.
Presentation slides will be available prior to the call:
https://ignitisgrupe.lt/en/reports-and-presentations
The interim report, including fact sheet (in Excel), will be available for download at:
https://ignitisgrupe.lt/en/reports-and-presentations
For additional information, please contact:
Communications
Artūras Ketlerius
+370 620 76076
arturas.ketlerius@ignitis.lt
Investor Relations
Ainė Riffel-Grinkevičienė
+370 643 14925
aine.riffel-grinkeviciene@ignitis.lt
Attachment
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