The Company’s consolidated EBITDA for the first half of 2016 came to PLN 3.1 billion. The 26% decline in comparison with 2015 mainly results from a lower availability of lignite-based assets (comprehensive modernisation of units in Bełchatów), leading to a lower volume intended for sale, coupled with lower electricity prices realised on the wholesale market.
“In the first half of 2016, PGE Group operated on a market that exerted strong pressure on operating results because of the conditions on commodity markets – both raw materials and electricity. According to leading rating agencies, PGE remains Poland’s most credible energy group on the capital and credit markets and one of the leaders in the region,” said Emil Wojtowicz, CFO of PGE Polska Grupa Energetyczna.
The conventional energy segment was the largest contributor to the Group’s EBITDA in the first half-year, with PLN 1.6 billion. The distribution segment finished the first half of 2016 with a result in excess of PLN 1.1 billion. The combined wholesale and retail segments generated PLN 208 million, similar to the renewable energy segment, which was weighed by the lower prices of green certificates and brought in PLN 205 million. Net profit to equity came to PLN 546 million.
Decisions regarding the Company’s dividend were made in the second quarter. At the request of the majority shareholder, the general meeting approved a payout of PLN 0.25 per share.
The second quarter also brought changes in the regulatory environment, which constituted a direct reason for the Group to conduct impairment tests in the renewables segment. The impairment loss on wind assets, which reached PLN 783 million, is of a non-cash nature and largely concerns wind farms that are already operational in PGE’s portfolio.
Net electricity output in the first half of 2016 was 25.4 TWh, down 8% from the previous year. Lignite-based production declined by 13% y/y to 16.9 TWh. This is a result of a lower availability of lignite-based units at Bełchatów power plant, which is currently undergoing a comprehensive modernisation programme. Hard coal-based production reached 5.8 TWh (up 4% y/y). Wind energy output increased by 33% y/y to 0.5 TWh. This resulted from delivery of 218 MW of wind assets in the fourth quarter of 2015. Electricity distribution volume reached 16.9 TWh and was 3% higher than in the first half of the previous year due to higher demand. Retail volumes also increased year-on-year, by 11%, to 21.4 TWh.
Capital expenditures in the first half of 2016 amounted to PLN 3.7 billion, up 11% from the previous year. Of this amount, PLN 2.4 billion was deployed to new projects.
“PGE Group is consistently executing its investment programme, focusing on three key construction sites. Our flagship project – the construction of two energy units at Opole power plant – has passed the 50% completion mark. We have also cemented a symbolic cornerstone in one of the foundations for an engine room at a unit in Turów. The production of key machinery at the unit is progressing according to plan; earth works and foundation works are also ongoing. Construction of a gas-and-steam unit in Gorzów has reached its final phase – the unit is scheduled to go online in this year’s fourth quarter,” said Ryszard Wasiłek, vice president of PGE Polska Grupa Energetyczna’s management board, responsible for development.
Alongside the construction of new capacities, the Group is executing a comprehensive modernisation programme for existing units, including at Bełchatów and Turów power plants. These projects are intended to increase the production units’ lifecycle as well as increase their efficiency and output, allowing the Group to lower emissions in electricity production.
PGE Group is awaiting the final arrangements regarding the shape of the capacity market in Poland. According to the proposed schedule, legislative work on this project should be completed by the end of this year. According to PGE, solutions involving payments for both electricity and available capacities are the most optimal from the viewpoint of system stability and reliability.
PGE’s management board expects capital expenditures to be slightly lower in 2016 than in the previous year, and underscores that the Company is very well prepared to further pursue its strategic investment objectives thanks to operating cash flows and a secured external financing base.
Commentary to the published results by Henryk Baranowski, CEO of PGE Polska Grupa Energetyczna: https://youtu.be/nitEkA1-0y4