TAURON Group: EBITDA of PLN 3 billion in Q3 2019

• Sales revenue up 15 percent year on year (to PLN 15.3 billion)
• EBITDA at PLN 3.0 billion
• Stable electricity distribution and retail supply volumes
• Purchase of five wind farms with 180 MW total capacity
• Capital expenditure up 12 percent (to PLN 2.7 billion). Largest capex in the following segments: Distribution (PLN 1.3 billion) and Generation (PLN 972 million)
• Expanding the scope of works of the 910 MW Jaworzno project to improve the technical and environmental parameters and optimize the unit’s operation. Work progress of the project: 96 percent.
• Safe level of net debt[1]/EBITDA ratio: 2.83x

(all consolidated Q1-Q3 2019 data)

– The first important step in the implementation of TAURON's Green Turn is behind us. In the third quarter we bought five wind farms with total capacity of 180 MW, which will increase our annual electricity production from renewable energy sources by approx. 450 GWh. Thanks to this transaction, we have doubled our capacity installed in wind-based sources. We are currently working on further projects that will allow us to achieve our strategic goals, including a significant increase in the share of renewable energy sources in TAURON Group’s energy mix – says Filip Grzegorczyk, President of the Management Board (CEO) of TAURON Polska Energia.

– In three quarters of 2019, we recorded similar to last year's EBITDA result, which amounted to PLN three billion. It is worth mentioning that in subsequent periods the Group's results will be strengthened by revenues generated by the purchased wind farms and – from 2020 – the profit generated by the new unit in Jaworzno – says Marek Wadowski, Vice President of the Management Board of TAURON Polska Energia for Finance (CFO). – I am glad that we have once again found ourselves among the leaders of communication with the capital market. In this year's edition of "The Best Annual Report" contest we received the "The Best of the Best" award for the third time, a special award for the best integrated report and an honorable mention for the best statement on application of corporate governance – adds Marek Wadowski.

Operating data

In the three quarters of 2019 TAURON Group generated 10.4 TWh of electricity vs. 11.9 TWh a year ago. Change in the generation volume was a consequence of the pursued trading strategy.   

Generation from renewable sources reached almost 1 TWh which was an increase by 41 percent vs. last year (0.69 TWh). The increase resulted from favorable wind and hydrogeological conditions as well as higher generation from biomass fired units.  

Heat supply after three quarters of 2019 came in at 9.6 PJ and was similar to the same period of last year.

Over 9 months of 2019 the volume of electricity distributed by TAURON Group came in at 38.7 TWh which means that in a year’s perspective there was no significant change in the electricity distribution volume. In the third quarter of 2019 the number of Distribution segment’s customers topped 5.6 million.

In the three quarters of 2019 TAURON Group’s retail electricity supply was 25 TWh compared to 25.4 TWh a year ago.

Production of commercial coal reached 2.94 million tons and was 19 percent lower year over year due to difficult geological conditions at the Sobieski and Brzeszcze mines. The volume of coal sales in three quarters of 2019 was 2.96 million tons which means a 16 percent drop compared to the same period of 2018 resulting from lower production level.   

47 percent of the Generation segment subsidiaries’ demand for coal required to produce electricity and heat came from the Group’s own coal mines in the three quarters of 2019.

Financial results

In the three quarters of 2019 TAURON Group’s sales revenue came in at PLN 15.3 million which was a 15 percent increase year on year. The increase was possible thanks to higher electricity sales revenue (higher prices on the wholesale and retail markets).

EBITDA generated by TAURON Group in the analyzed period topped PLN 3.0 billion. The largest contribution to TAURON Group’s EBITDA was made by: Distribution segment (66 percent) with EBITDA at PLN 2 billion and Generation segment (22 percent) with EBITDA at PLN 666 million. 

In a year’s perspective, net profit attributable to shareholders of the parent company was stable and amounted to PLN 854 million.

After three quarters of 2019 the EBITDA margin and the net profit margin reached 19.8 and 5.6 percent respectively.

Investments

TAURON Group’s capital expenditures in three quarters of 2019 came in at PLN 2.74 billion which was 12 percent more vs. capital expenditures incurred over the same period of last year (PLN 2.4 billion). The increase was primarily a consequence of higher outlays in the Distribution segment (increase by PLN 144 million), Mining segment (increase by PLN 89 million) and Generation segment (increase by PLN 63 million).   

Total capex in the Distribution segment amounted to PLN 1.33 billion and the largest expenditures were spent on upgrades and replacement of distribution grid (PLN 754 million) and installing new connections (PLN 487 million). 

In the Generation segment the largest expenditures were related to the construction of the 910 MW unit in Jaworzno (PLN 513 million). Work progress on the construction of this unit is 96 percent and its commissioning is scheduled on 31 January 2020.  

Debt and financing

In terms of liquidity TAURON Group’s position is stable and the Group has guaranteed financing up to the amount of PLN 3.8 billion. In the three quarters of 2019 net financial liabilities rose by 13 percent year over year. Net debt to EBITDA is at a safe level of 2.83x.   

[1] Excluding the debt under the subordinated bonds issued in the amount of PLN 1.96 billion