OREANDA-NEWS. February 02, 2010. In the first nine months of the 2009/10 financial year, Eesti Energia’s operating income amounted to 470 million euros, operating profit was 90 million euros and net profit 76 million euros. Lower fixed costs have had a positive impact on Eesti Energia’s results, while economic downturn and the resulting decrease in volumes of electricity sold have had a negative effect, reported the press-centre of Eesti Energia.

When commenting the results for the nine months of FY 2009/2010, Eesti Energia Chief Financial Officer Margus Kaasik noted that the profitability of the Group increased even as revenues decreased. “Domestic market sales of electricity have dropped consistently in the ongoing financial year, by an average of 8 per cent a month. To preserve the efficiency and profitability of the Group, we had to take strong measures to cut costs and streamline operations,” said Kaasik. The Group’s fixed costs decreased by 16.2% compared to the first nine months of FY 2008/09. Main changes took place in the expenses on repair and maintenance of equipment and systems, workforce expenses and transport-related expenses. Lower generation volumes have also brought about lower variable costs for the Group, of which the most significant is a decrease in the expense of CO2 emissions allowances.

Kaasik said that export of electricity to neighbouring countries also exerted a positive impact on Eesti Energia’s financial results. “Export of electricity to Finland and Latvia helps to compensate for lower domestic market sales and revenue and allows us to invest into Estonia’s distribution networks and local generation.” Eesti Energia has invested a total of 1 048 million euros in the last six financial years, which is an average of 175 million euros per year. “In the current challenging financial year, we have invested 154 million euros in nine months,” said Kaasik.

Capital expenditure in the Retail division amounted to 49.3 million euros, of which 48.7 million euros was invested to distribution network connections and increasing the operating reliability of the distribution network. Electricity and Heat Generation division invested 64 million euros, of which 30 million euros was invested in Narva Elektrijaamad (including 16 million euros for the installation of sulphur cleaning equipment) and 12 million euros in Aulepa Wind Farm. The Fuels division performed 34 million euros of capital expenditure, with the largest share being investments into building the Enefit technology-based oil production plant (15 million euros).

Eesti Energia’s domestic market sales fell 8 per cent in the first nine months of FY 2009/10, amounting to 4,950 gigawatt-hours (GWh) of electricity. In the first nine months of the current financial year, Eesti Energia has sold 2,923 GWh of electricity to business customers, which is 12.3 per cent less than in the same period a year ago. Furthermore, Eesti Energia has sold 1,163 GWh of electricity to the residential customers in the nine months, which is 0.2 per cent less than last financial year.

Eesti Energia’s sales to network operators reached 863 GWh, representing a year-on-year decrease of 2.4 per cent. Eesti Energia’s sales of heat amounted to 700 GWh in the first nine months of FY 2009/10, a drop of 30.6 per cent from the same period in the previous financial year. The primary reason for the lower sales was the decrease in Iru Power Plant’s sales.

Eesti Energia’s electricity export volume in the nine months amounted to 1,450 GWh. Lower price on the Nordic power exchange Nord Pool reduced sales to Finland by 547 GWh. However, the latter has been compensated by increased sales to Latvia, which grew by 299 GWh.

Sales to the customers on the open Latvian market also showed strong growth and amounted to 270 GWh in the nine months, which is 182 GWh more than in the first nine months of the previous financial year. The number of large customers in Latvia of the Eesti Energia subsidiary Enefit also continues to grow – as of December 2009, Enefit had 116 large accounts, which is 59 more than a year ago.

One of the major events in the first nine months of FY 2009/10 was the opening of Aulepa Wind Park, the most powerful wind-park in the Baltic States. This constitutes Eesti Energia’s first major investment in renewable energy generation. The project had a total cost of nearly 58 million euros and it was financed solely by Eesti Energia. The capacity of Aulepa Wind Park is 39 megawatts (MW), with the annual output amounting to approximately 100 GWh, ca 1.3% of final consumption in Estonia.

One of the most important events in Electricity and Heat Generation division was launching the tender for establishing up to two new power-generating oil shale fired units at Narva Elektrijaamad. Design and construction of the first new energy generation unit on the territory of Narva Elektrijaamad by 2015 will be Eesti Energia’s largest investment in the near future. Eesti Energia expects to make a final investment decision by the end of year 2010.

Starting in September 2009, the two new units at Eesti Energia Narva Elektrijaamad launched combustion, together with oil shale, of up to ten per cent biomass content.

One of the most important events in the Fuels division was the launch of the construction of the new Enefit technology-based oil production plant and the agreements signed with Outotec and Siemens to build components for the plant. New oil plant will be ready in 2011 and will use more environmentally friendly, reliable and higher-unit-capacity Enefit technology.

Sales of Eesti Energia’s other products and services continued to expand. The number of users of mobile Internet service KOU passed the 25,000 mark. Almost 1,700 customers have joined Green Energy and respective electricity sales volume reached 25 GWh. In addition, Eesti Energia started offering electrician services, energy labeling for buildings, energy audits and thermal inspections.

In total, Eesti Energia’s paid out 87 million euros in dividends over the first nine months – the whole net profit for FY 2008/09. Dividends were paid out in September 2009 (21 million euros) and November (66 million euros).

Eesti Energia Group’s financial results represent the consolidated results of its subsidiaries engaged in fuels production, heat and power generation, distribution and sales as well as other services. Eesti Energia’s financial year began on 1 April 2009 and will end on 31 March of this year.

Financial results and the company’s operating environment will be described in greater detail in the nine-month interim report, which will be available on the Eesti Energia website from 29 January 2010.