Release Date: November 13, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Ignitis Group AB (STU:IGV0, Financial) expanded its green capacity portfolio by adding around 600 megawatts, reaching a total of 7.7 gigawatts.
- The company achieved significant milestones, including the first power supply to the grid from the second Silesia and KelmÄ— farms and the final investment decision on the Tume solar farm.
- Ignitis Group AB (STU:IGV0) increased its adjusted EBITDA by 15% to EUR 397 million, maintaining a strong balance sheet with a BBB+ credit rating from S&P.
- The green share of generation amounted to 83.6%, and scope two emissions were reduced by 34.5%, reflecting strong sustainability efforts.
- The company proposed a dividend of EUR 0.663 per share for the first half of 2024, in line with its dividend policy.
Negative Points
- Despite a 31% year-over-year surge in green capacity for electricity production, EBITDA growth was modest at 2.4%, impacted by increased operational expenses.
- Market-based total emissions increased by 19.7% year-over-year, primarily due to biogenic emissions from the Vilnius CHP biomass unit.
- Free cash flow was negative, amounting to minus EUR 124.5 million, as investments exceeded adjusted EBITDA and changes in working capital.
- The company's net debt increased by 10% to EUR 1.4 billion by the end of Q3 2024.
- The investment guidance was updated to EUR 750 million to EUR 900 million due to timing effects, indicating potential delays in project payments.
Q & A Highlights
Q: In Q3, green capacity for electricity production surged by 31% year-over-year, and revenue grew by 13.7% year-over-year, while EBITDA was up by just 2.4%. Could you provide more details on the modest EBITDA development during that period?
A: The trend on EBITDA is positive. The difference in growth rates is due to OpEx, which includes one-off expenses related to project financing and increased OpEx from hiring new personnel for ongoing projects. - Jonas Rimavicius, CFO
Q: Did Ignitis have to purchase more electricity from the market to fulfill its PPA commitments in Q3?
A: We secure around 60-70% of wind or solar plant generation with baseload agreements, providing a substantial buffer. This quarter, there was no deviation from historical levels of buying additional power. - Jonas Rimavicius, CFO
Q: Did Ignitis experience any impact from wind profile discounts in the market when selling electricity?
A: We observed larger capture discounts in the market, which was expected. However, in Poland, especially for projects with CfD tariffs, capture rate discounts were lower than anticipated, positively impacting our portfolio. - Jonas Rimavicius, CFO
Q: Can you indicate the average prices at which new PPAs are being signed?
A: We signed a sizable external PPA this quarter, but cannot disclose the exact level due to agreement conditions. We continue to sign PPAs that meet our return requirements. - Jonas Rimavicius, CFO
Q: With bond yields trending down and power prices stabilizing, is there higher interest in assetization yields from potential investors?
A: We have no updates on assetization plans. We will communicate to the market only when binding agreements are signed. - Jonas Rimavicius, CFO
Q: Considering the revised investment CapEx for this year, can we expect a higher dividend growth rate than the anticipated 3% per year?
A: We remain committed to our dividend policy, which ensures at least a 3% growth rate annually. - Jonas Rimavicius, CFO
Q: Could you provide guidance on the potential investment range for 2025?
A: We will communicate our guidance with the annual results early next year. The current strategic plan suggests a similar investment level as in 2024. - Jonas Rimavicius, CFO
Q: Given the negative free cash flow for 2023 and 2024, do you expect to reach neutral or positive free cash flow by 2030?
A: 2030 is a reasonable target for positive free cash flow. We aim to balance our investment program, dividend policy, and credit metrics, ensuring shareholder and creditor satisfaction. - Jonas Rimavicius, CFO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
