EPSO-G group earned 65.2 million euros in revenue in Q1 2019

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VILNIUS. The state-owned group of energy transmission and exchange companies EPSO-G earned 65.9 million euros in revenue in the first three months of 2019, as it has focused on continuing the implementation of strategic synchronization and gas market integration projects. This is 3.2 percent more compared to the same period last year.

The revenue growth was slowed by lower demand for power transmission and natural gas transportation because of warmer weather – the average temperature was higher by three degrees. This directly affected the first quarter earnings.

‘In the first three months of the year our operation was stable and reliable, we maintained a fast pace  in implementing the strategic projects of national importance. We have secured funding from the European Union for the power transmission grid enhancement and upgrading projects to be carried out in the first stage of synchronisation.

At the time we are at the final stage of procurement that will allow us to start the construction of the gas pipeline with Poland (GIPL) on time. Although the negotiation with Latvia, Estonia and Finland on the joint gas market is still underway, Lithuania’s stance is unambiguous – we are consistent proponents of the joint gas market. We have made large investments in the required infrastructure; therefore, we must ensure that the joint gas market is created under conditions favourable for all sides, including Lithuanian consumers.

Positive changes can be seen in the biomass, timber and natural gas trading markets – since the regulated energy producers became free participants of the natural gas market, in the first three months of this year alone the trading volume on the GET Baltic gas exchange exceeded the volume of the whole 2018 without an increase in operating costs. Biomass trading in Denmark is accelerating as well. We earned the first revenue in the Finnish market. Having started out contracting work in Germany, this year we have been one of only a few businesses that managed to avoid seasonal shortage of work, it did not affect Tetas operations,’ EPSO-G CEO Rolandas Zukas commented the Q1 operating results.

Service demand and quality

In the first quarter of this year, 2,713 million kilowatt hours (kWh) of electricity were transferred by high voltage transmission networks for the needs of the country’s population and businesses. This is 2.3 percent less compared to the same period last year. The distribution network operator (Energijos skirstymo operatorius AB) transferred to the consumers 2,491 GWh of electricity, i.e. 2.5 percent less. Other consumers directly connected to the transmission grid received 222 GWh of electricity or 0.8 percent less.

During this period, 7,549 GWh of natural gas were transported to the Lithuanian consumers. This is 5.9 percent less compared to 8,024 GWh in the same period last year. Such a reduction in the demand for gas transportation services resulted from significantly lower demand for natural gas in the heating sector due to warm winter.

During the reporting period, 7,982 GWh of natural gas (in 2018 Q1 – 8,957 GWh) were transferred to the Kaliningrad Region of the Russian Federation. 68 GWh of natural gas (in 2018 Q1 – 112 GWh) were transferred to the Republic of Latvia through the Kiemėnai gas metering station.

The power transmission grid and connections operated reliably – during the first three months of 2019, the NordBalt link with Sweden was 100 percent accessible to the market (in 2018 Q1 – 92 percent). The LitPol Link with Poland operated almost without any malfunctions (its market accessibility was 99.98 percent). The gas transmission grid was 100 percent accessible to the system’s users.

Revenue and costs

In the first three months of 2019 compared to the same period last year, the EPSO-G group’s revenue from the transmission of electricity increased by 2.3 percent to 18.5 million euros and amounted to 28 percent of the group’s total revenue. This was due to 4.8 percent higher average actual regulated price for electricity transmission. The regulated electricity transmission price was increased as of the start of the year due to easement compensation, auto-transformer relocation costs, and an increase in purchasing costs for own needs in connection with the increased energy price.

Revenue from natural gas transportation services in the first three months of 2019 amounted to 13.3 million euros or 20.2 percent of all the EPSO-G group revenue. The revenue was mostly affected by reduced amount of services provided in Lithuania and the neighbouring countries. Also, due to lower variation in temperature the transmission system users ordered fewer short-term transmission capacities that are more expensive and transported gas using cheaper pre-ordered long-term capacities.

Group’s operating costs during the first three months of 2019 amounted to 56.2 million euros. Not taking into account the increased expenses for energy resources and reduced depreciation costs, the total level of costs did not change significantly compared to the same period in 2018, i.e. the costs were higher by 0.6 million euros.

Operating result

The earnings of the EPSO-G companies for the three months of 2019 were 7.4 million euros, i.e. 17.4 percent lower compared to the same period last year when the earnings were 8.9 million euros. This was mainly affected by a lower demand for energy transmission services and the lower amount of transferred power and gas due to warmer weather.

The group’s operating profit before tax, interest, depreciation and amortisation (EBITDA) during the first three months of 2019 amounted to EUR 17.5 million. Compared to the same period last year, EBITDA decreased by 16.4 percent. EBITDA margin in the first quarter of 2018 was 26.6 percent (in 2018 Q1 – 32.9 percent).

Last updated: 20-05-2019