- Adjusted EBITDA of Ignitis Group in 9M 2021 was 31.0% higher compared to 9M 2020 and reached EUR 214.5 million.
- Adjusted EBITDA grew in all business segments, and Green Generation installed capacity expansion was its main driver.
- Robust 9M 2021 financial results allow us to reiterate the Adjusted EBITDA guidance of EUR 300–310 million for 2021.
Adjusted EBITDA of the international energy company Ignitis Group in 9M 2021 was 31% higher compared to analogous period last year and reached EUR 214.5 million. Adjusted EBITDA grew in all business segments, and Green Generation installed capacity expansion was its main driver.
The growth in Green Generation segment was driven by higher electricity generation due to the launch of Kaunas CHP and Vilnius CHP WtE unit.
The Adjusted EBITDA growth was also affected by better results from Kaunas HPP, mostly due to higher electricity market price. Further on, Customers & Solutions also grew due to temporary positive effect on natural gas performance as a result of natural gas inventory revaluation due to increasing natural gas prices in the market. The latter is likely to switch direction if natural gas prices normalize.
Finally, higher distributed volumes effect in the Networks segment, driven by higher consumption compared to 2020, was also a supporting factor, adding to the Group’s Adjusted EBITDA (after recalculated numbers for 9M 2020 due to Networks Methodology update). Worth noting, the elevated distributed volumes effect will level off over the course of this year.
“Our 9M 2021 performance continues to be a testament to the Group’s resilient business model, even during the most turbulent of times. While all segments contributed to the overall performance of the Group, Green Generation capacity additions remained the key drivers. Green Generation capacity additions and project development will remain in the spotlight for us when working towards sustainable expansion set out in the Group’s strategy”, said Darius Maikštėnas, CEO at Ignitis Group.
Outlook for 2021
Considering our robust 9M 2021 financial results, Ignitis Group reiterates Adjusted EBITDA guidance of EUR 300–310 million for 2021 . The negative effect of changes in the Networks Methodology update is offset by better-than-expected results of the electricity generation asset portfolio in the Green Generation and Flexible Generation segments mainly due to higher electricity market prices as well as better-than-expected results in the Customers & Solutions segment due to the temporary positive impact of natural gas inventory revaluation driven by increasing natural gas prices.
Shareholder return
The Extraordinary General Meeting of Shareholders approved the dividend of EUR 43.75 million in dividends (or EUR 0.589 dividend per share) for the first half of 2021. The dividend was distributed in October 2021.
Strategy delivery
During the reporting period, the Group increased its Green Generation installed capacity by 19 MW to 1,120 MW, compared to 9M 2020, as a result of the launch of Vilnius CHP’s WtE unit (19 MWe, 60 MWth) in March 2021.
Additionally, in Q3 2021 Ignitis Group’s Green Generation pipeline increased by around 160 MW due to the conditional acquisition of 3 early-stage wind farm development projects in Latvia. After the reporting period we further expanded our Green Generation portfolio in Poland by signing a conditional SPA to acquire up to 80 MW solar development projects (Polish solar portfolio II).
All projects are fully on track with exceptions of Pomerania WF (94 MW) and Polish solar portfolio I (up to 170 MW). In Pomerania WF, due to COVID-19 and other typical development project risks, we are experiencing around an 8-month COD delay (from Q1 2021). Currently it generates electricity on a merchant basis as we are still waiting for the regulator to process its applications for a generation licence and the CfD (mostly COVID-19 related delay). In the Polish solar portfolio I, we continue agreement renegotiations with the developer (Sun Investment Group) as no projects were awarded a CfD tariff in the last two auctions.
In the Networks segment, Ignitis Group concluded an agreement with a supplier, which will be responsible for the smart metering infrastructure, and set a framework to comply with all highest market standards, including cybersecurity related, which resulted in the rescheduling of the project end date to 2025 (from 2023).
In 9M 2021, the Group’s investments amounted to EUR 131.0 million and were lower by 51.6% compared to 9M 2020. It was mainly driven by lower investments in Vilnius CHP, mostly due to WtE unit’s COD in March 2021, Kaunas CHP – it was launched in August 2020, and Pomerania WF – it is approaching commercial operation date. That said, the decrease was partly offset by higher investments in the Networks segment.
Sustainability
In Q3 2021, Ignitis Group submitted for the first time the CDP climate change questionnaire, which will serve as an additional comprehensive disclosure of its environmental performance as well as the alignment of its strategy and risk management with climate-related issues.
As a result of the efforts to move towards ESG excellence, the Group is now ranked as a leader among global industry peers rated by MSCI. The Group received an ESG rating of ‘AA’, placing us two notches above the utility sector average. The rating was upgraded from ‘A’ (on a scale of ‘CCC’–‘AAA’) in July 2021. This is in large part due to the recognition of the Group’s continuous commitment to climate action, expansion of renewable energy portfolio, and the streamlining of key social and governance practices.
After the reporting period, the Group’s greenhouse gas (GHG) emission reduction targets were validated by the Science Based Targets initiative (SBTi). The Group is the first Lithuanian capital company to be validated by SBTi.
Furthermore, for the third year in a row, the parent company received the highest possible ‘A+’ rating in the Good Corporate Governance Index. The company was recognised as a leader in two categories – large SOEs as well as a sustainability.
Corporate governance
There were significant changes on the Group’s corporate governance front. First, in Q3 2021, the term of the former Supervisory Board has ended. As a result, after the reporting period, on 26 October 2021, new members of the Supervisory Board were elected by the General Meeting of Shareholders for a four-year term. The majority of the newly elected Supervisory Board members are independent, including the Chair. In terms of diversity, 4 out of 7 of them are women, 3 members worked in the previous term of Supervisory Board, thus ensuring continuity, and 5 out of 7 members have international experience. Further on, the Supervisory Board committees were formed, and the remaining candidates were submitted to the General Meeting of Shareholders for their election to the Audit Committee. Finally, after the reporting period, the selection process for a new term of the Management Board has been initiated.
Key financial indicators (APM) for the 9M 20211,2
|
EUR, millions |
9M 2021 |
9M 2020 |
Change |
|
EBITDA |
249.6 |
229.4 |
20.2 |
|
Adjusted EBITDA |
214.5 |
163.8 |
50.7 |
|
Adjusted EBITDA margin |
19.0% |
20.4% |
(1.4 pp) |
|
Net profit |
94.4 |
108.3 |
(13.9) |
|
Adjusted net profit |
83.7 |
50.6 |
33.1 |
|
Investments |
131.0 |
270.9 |
(139.9) |
|
FCF |
21.6 |
39.5 |
(17.9) |
|
ROE LTM |
9.7% |
9.3% |
0.4 pp |
|
Adjusted ROE LTM |
7.4% |
6.2% |
1.2 pp |
|
ROCE LTM |
8.9% |
7.0% |
1.9 pp |
|
Adjusted ROCE LTM |
6.8% |
4.9% |
1.9 pp |
|
|
2021.09.30 |
2020.12.31 |
Change |
|
Net debt/Adjusted EBITDA LTM, times |
2.11 |
2.47 |
(0.36) |
|
FFO LTM/Net debt |
51.0% |
52.1% |
(1.1 pp) |
1 All, except net profit are Alternative Performance Measures. Formulas of the Group’s financial indicators are available on the Group’s website (link).
2 Due to Networks Methodology update, all adjusted financial indicators were recalculated retrospectively for the year 2020 (for more information, see First nine months 2021 Interim report section ‘Results by business segment’ part ‘Networks Methodology update’). Negative impact of the Networks Methodology update on Adjusted EBITDA for the period of 9M 2021 amounts to EUR -35.0 million and for the respective period of 2020 – EUR -35.2 million.
Earnings call
In relation to the announcement of the interim report, an earnings call will be held on 30 November 2021 at 11:00 am Vilnius / 9:00 am London.
To join the earnings call please register at: https://edge.media-server.com/mmc/p/q84o35ah
Alternatively, you can join the earnings call through the dial in numbers below:
Lithuania, Vilnius: +370 5 214 0081
The United Kingdom, London: +44 20 7192 8338
The United States, New York: +1 (646) 7413-167
Event Passcode: 8299707
All questions can be directed in advance to the Group’s IR, when registering for the earnings call or live during the call.
Presentation slides will be available prior to the conference call:
https://old.ignitisgrupe.lt/en/reports-and-presentations
The interim report is available for download at: