Release Date: September 11, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Polska Grupa Energetyczna SA (PGPKY, Financial) reported a 9% increase in recurring EBITDA for Q2 2024, reaching PLN2.3 billion.
- The company observed a 5% increase in energy generation year-on-year, driven by higher energy consumption and decreased imports.
- Significant progress was made in key investment projects, including offshore wind farms like Baltica 2, with expectations for financing closure and final investment decisions this year.
- The company is actively pursuing energy storage projects, including a large-scale 263 MW energy storage project in Zarnowiec.
- Moody's maintained Polska Grupa Energetyczna SA's rating at BAA1 with a stable outlook, highlighting the company's diversified structure and stability in consolidated results.
Negative Points
- The company experienced a decrease in retail sales, particularly in the second quarter, due to lower sales volumes in tariffs for big businesses.
- There was a significant decrease in heat sales by 21%, attributed to higher temperatures and weather conditions.
- Polska Grupa Energetyczna SA faces challenges in securing long-term debt financing due to its ownership of carbon assets, impacting its investment capabilities.
- The company reported a negative impact on EBITDA from conventional energy generation, with coal assets generating negative EBITDA.
- There is uncertainty regarding the future of coal assets and the potential divestment, which affects the company's ability to plan future capital expenditures and financing strategies.
Q & A Highlights
Q: Is it possible to have a write-off from receivables from PKP Cargo?
A: The receivables from PKP Cargo at the end of the first half of the year amounted to PLN206 million. A provision for overdue receivables and interest notes totaling PLN143 million has been established. Further impairment write-offs are expected to be limited. Current payables are being paid regularly due to legal requirements. - Przemyslaw Jastrzebski, Vice President of the Management Board for Finance
Q: What is the company's position on the auction prices for offshore wind projects?
A: The company believes that the current maximum price set for auctions is too low, which could risk the auctions not taking place. They argue for a higher price due to increased costs in offshore wind farm operations and inflation in key component prices. The company emphasizes the importance of a stable sequence of events to develop offshore wind farms effectively. - Maciej Gorski, Vice-President of the Management Board for Operations
Q: What are the outcomes of the PwC analysis on carving out coal assets?
A: The analysis is ongoing, and the deadline has been extended. The company is in dialogue with stakeholders, including the Ministry of State Assets and Polish Power Grid. They hope to develop general directions by the third quarter and flesh out concepts in the fourth quarter. - Maciej Gorski, Vice-President of the Management Board for Operations
Q: What is the impact of the balancing market reform on the company's financials?
A: The reform's impact was not significant in the second quarter but is expected to be more visible in the third quarter. It will positively affect the conventional energy segment's EBITDA, with little own costs involved. - Piotr Sudol, Managing Director of Finance
Q: How does the company plan to address the issue of carbon assets affecting financing capabilities?
A: The company is clear about the need to separate carbon assets to improve financing conditions. If not resolved, it may limit investment ambitions and affect long-term projects. They are in dialogue with financial institutions and stakeholders to address this issue. - Maciej Gorski, Vice-President of the Management Board for Operations
Q: What is the company's strategy regarding gas projects and the capacity market?
A: The company is in dialogue with Polish Power Grid to define new potential gas projects. They are considering gas as a transition fuel and are focused on maintaining economic profitability. The capacity market is crucial for covering fixed costs of new gas units. - Maciej Gorski, Vice-President of the Management Board for Operations
Q: What are the plans for the Baltica 3 offshore wind project?
A: The company is reviewing CapEx assumptions and reconfiguring the project to improve profitability. They are in discussions with suppliers and analyzing maintenance costs to enhance project economics. - Maciej Gorski, Vice-President of the Management Board for Operations
Q: How does the company view the potential extension of the capacity market?
A: The company is assessing the criteria for applying for capacity payments. They are not certain if it will be a 1-to-1 extension but are preparing to meet the criteria for new deals. - Piotr Sudol, Managing Director of Finance
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
