In Q1 2024, Hidroelectrica recorded a revenue decrease of 22% YoY, an EBITDA decline of 21%, and a net income of RON 1.3bn, a 23% decrease YoY.
Hidroelectrica, the largest renewable energy producer in Romania, and one of the largest listed companies on the Bucharest Stock Exchange published its Q1 2024 results. By the end of Q1, total revenue declined by 22% YoY to RON 2.54bn, as a result of both the lower electricity price, but also due to lower volume sold. As such, net generation energy sold amounted to 4.4k GWh, decreasing by 3% YoY, while the external acquisitions decreased by 58% YoY, to 179 GWh. As a result, total energy sales decreased by 8% YoY to 4.48k GWh. Hidroelectrica notes that the decline came primarily due to the hydrological conditions in March 2024, during which the average flow of the Danube decreased by app. 15% compared to the same period in 2023.
On the other hand, Wholesale Revenue decreased by 30% YoY to RON 1.26bn, as a result of both lower wholesale energy sold, which declined by 6% YoY to RON 2.9bn, while the wholesale price recorded an even more significant decrease of 26% YoY, and amounted to RON 437/MWh. The energy price decrease came due to the situation in the market. The lower amount of quantities sold came as a result of the suppliers’ decision to enroll in the single procurement mechanism, which reduced their demand for quantities of energy that could be acquired through MACEE, where the procurement price of RON 450/MWh became higher than the price on the Day-Ahead Market. Due to this, the SPOT price in Q1 decreased by 42% YoY.
Moving on, Supply Revenue decreased by 24% YoY to RON 622m, as a result of the decrease in the selling price of electricity (-15% YoY, to RON 471/MWh) but also due to the lower volumes supplied (-11% YoY, to RON 1.3k GWh). Transferred costs (pass through) amounted to RON 380m, up 14% YoY, due to the rise in the regulated tariffs, but this could have ended up higher if the larger volumes which were expected to be sold were sold.
Balancing revenues grew by 23% YoY to RON 144m, due to a 5% increase in the quantity of electricity, to RON 94 GWh, and a 17% increase in the balancing price, to RON 1,535/GWh. Finally, other revenues from customer contracts declined by 50% YoY to RON 61m. Hidroelectrica notes that as it is the Balancing Responsible Party on the market, this was influenced by the behaviour of all participants in the electricity market regarding the management of imbalances.
Hidroelectrica revenue composition breakdown (Q1 2024 vs. Q1 2023, RONm)
Source: Hidroelectrica, InterCapital Research
Moving on to operating expenses, they amounted to RON 1.05bn, decreasing by 19% YoY. The decrease came primarily due to the fact that Q1 2023 was affected by tax for electricity producers, which amounted to RON 231m in Q1 2023 and wasn’t present in Q1 2024. Also, electricity purchased expenses amounted to RON 160m in Q1 2023. It decreased to RON 11m in Q1 2024, mainly due to the covering of the electricity needs for the supply segment from the electricity generation segment. On the other hand, the largest increase was recorded by transport and distribution of electricity, which grew by 38% YoY to RON 344m, as a result of the successive increase in the regulated tariffs starting 1 April 2023 and 1 January 2024, respectively.
Employee benefits expenses also grew, by 11% YoY to RON 176m, due to wage inflation. Finally, green certificate expenses increased by 54% YoY to RON 57m. This increase came due to several reasons; firstly, in Q1 2023, Hidroelectrica benefited from the stock of green certificates following the merger of Hidroelectrica with Crucea, leading to a decrease in the volume that had to be purchased for the supply activity. This wasn’t present in Q1 2024, and as such an increase was recorded, despite the lower amount of energy delivered. Secondly, the Company generated 8.6k green certificates (GC) from hydropower plants in Q1 2024, a 1% increase YoY, and 71.5k GC from wind power plants, a 6% decrease YoY. The average purchase price in both quarters was roughly the same (app. RON 145/GC), and taking all of this into account, the Company obtained RON 11.7m of GC in Q1 2024.
Hidroelectrica operating expenses composition breakdown (Q1 2024 vs. Q1 2023, RONm)
Source: Hidroelectrica, InterCapital Research
As a result of all of these developments, Hidroelectrica’s EBITDA amounted to RON 1.73bn, decreasing by 21% YoY, but due to EBITDA’s slightly lower decline (as a result of declining OPEX besides revenue), EBITDA margin improved by 1.5 p.p. to 68.3% in Q1 2024. The net financial result slightly improved, by 4% YoY to RON 79.8m, because of the faster fin. income growth (+13% YoY to RON 98.8m) than fin. expenses increase (+75% YoY to RON 18.9m). Finally, net income amounted to RON 1.3bn, decreasing by 23% YoY, and implying a net income margin of 52.3%, decreasing by 0.4 p.p. YoY.
Hidroelectrica key financials (Q1 2024 vs. Q1 2023, RONm)
Source: Hidroelectrica, InterCapital Research
In terms of CAPEX, in total it amounted to RON 35m in Q1 2024, growing by 3% YoY, mainly as a result of higher Development Project CAPEX, which grew by 17% YoY to RON 14m. This is further broken down into RON 10m of ongoing investments, and RON 4m of new investments. On the other hand, Maintenance CAPEX declined by 38% YoY to RON 5m.
