TAURON Group: EBITDA of PLN 1.2 billion and net profit of PLN 525 million in Q1 2019

• Sales revenue up 15 percent year on year (to PLN 5.3 billion)
• EBITDA at PLN 1.2 billion, EBITDA margin: 22.8 percent
• Capital expenditures of PLN 727 million (up 20 percent year on year). Higher capex in the following segments: Distribution (PLN 351 million) and Generation (PLN 236 million)
• Work progress on the 910 MW unit construction project in Jaworzno: above 90 percent
• Long term rating at ”BBB" with a stable outlook affirmed by Fitch rating agency
• Net debt to EBITDA[1] ratio at 2.74x

(all consolidated Q1 2019 data)

– TAURON Group posted very good financial results that beat market expectations in the first quarter of 2019  – says Filip Grzegorczyk, President of the Management Board (CEO) of TAURON Polska Energia. – Our largest investment project, the 910 MW generating unit in Jaworzno, is at the final stage of its implementation. As of the end of the first quarter the work progress on this project exceeded 90 percent. The unit will comply with the stringent environment protection standards and will allow for the decommissioning of our oldest generating units. I would also like to emphasize that in Q1 we connected to our distribution grid 2.5 thousand renewable energy sources with the total capacity close to 35 MW, i.e. more than twice as many as a year ago – adds Filip Grzegorczyk.

– The Group’s financial position is stable. We have guaranteed financing of PLN 4.6 billion. Our financial and liquidity position was evaluated by Fitch rating agency that affirmed the long term rating of ”BBB" with a stable outlook – says Marek Wadowski, Vice President of the Management Board for finance (CFO) of TAURON Polska Energia.

Operating data

TAURON Group produced 3.8 TWh of electricity in the first quarter of 2019, i.e. 3 percent less than in the same period of last year (3.9 TWh). The decline of the electricity production volume was a consequence of the adopted production and trading strategy, as well as the high electricity generation from the wind sources.

Heat production came in at 4.8 PJ, while heat supply reached 6.8 PJ. The drop of the heat production and heat supply was affected by the higher outdoor temperatures and the lower consumer demand for heat related thereto.

TAURON Group reported a 1 percent increase of the electricity distribution volume. The number of customers connected to the grid went up by 66 thousand (to 5.6 million). The rise of the volume of electricity delivered to the final consumers was a consequence of favorable economic conditions and the higher electricity consumption by the industrial consumers.

The retail electricity supply came in at 8.9 TWh in the first quarter of 2019 and it was 4 percent lower year on year than in the same period of 2018.

Commercial coal production reached 1.3 million tons, which meant an 11 percent drop year on year. It was a consequence of difficult geological conditions at Janina Coal Mine and a delay of the commissioning and start-up of one of the coal faces at Sobieski Coal Mine.

49 percent of the Generation segment subsidiaries’ demand for hard coal required to produce electricity and heat was satisfied with the coal coming from TAURON Group’s own coal mines in the first quarter of 2019.

Financial results

TAURON Group’s revenue rose to PLN 5.3 billion in the first quarter of 2019, i.e. by 15 percent year on year. The increase of the sales revenue was, first of all, a consequence of obtaining higher electricity sales prices.  

TAURON Group generated EBITDA of PLN 1.2 billion (a drop by 9 percent year on year). The biggest contribution to the Group’s total EBITDA was made by the Distribution segment (56 percent), with its EBITDA coming in at PLN 681 million and posting an 8 percent increase year on year. The second most significant segment in this respect was the Generation segment (a 32 percent contribution to the Group’s EBITDA). This segment’s EBITDA stood at PLN 387 million. The decline of the Group’s EBITDA year on year was primarily due to the dissolving - in the first quarter of 2018 – of the provision related to employee benefits in the amount of PLN 230 million, which had a positive impact on the financial results for that period.  

TAURON Group’s net profit attributable to the shareholders of the parent company reached PLN 524 million (a drop by 18 percent year on year).

Investments

TAURON Group's capital expenditures came in at PLN 727 million in the first quarter of 2019 and they were higher by 20 percent as compared to the outlays incurred in 2018 (PLN 606 million). The growth of the capital expenditures was primarily a result of the higher outlays in the following segments: Distribution (an increase by PLN 82 million) and Mining (a rise by PLN 42 million). In the Distribution segment, with its total capex standing at PLN 351 million, the largest funds were spent on upgrading (refurbishing) the distribution grid (PLN 200 million) and installing new connections to the grid (PLN 126 million). Meanwhile the Generation segment’s capital expenditures (PLN 236 million) were primarily related to the construction of the 910 MW power generating unit in Jaworzno.

Debt and financing

Net financial liabilities rose to PLN 10.2 billion in the first quarter of 2019, i.e. by 8 percent as compared to the level as of the end of 2018. The net debt (excluding the debt under the subordinated bonds issued in the amount of PLN 1.96 billion) to EBITDA ratio stood at 2.74x at the end of the first quarter. TAURON Group’s financial position is good, which was affirmed by Fitch Ratings agency maintaining the long term outlook of ”BBB" with a stable outlook.

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