PGE Q1 Profit Drops 20% Amid Lower Power Margins and Surge in Emission Costs
Financial Performance and Key Drivers in Q1
May 26 (Reuters) - Poland's biggest utility PGE reported lower first-quarter net profit as weaker power sales margins and higher carbon emission costs outweighed stronger heating demand and output from new gas units.
Net Profit and Revenue Highlights
The company said net profit fell by nearly a fifth from a year earlier, while retail margin earnings from electricity sales dropped to 234 million zlotys ($64 million) from 621 million zlotys as caps on household tariffs stopped it from fully passing on higher wholesale power costs.
- The state-controlled company's net profit fell to 1.94 billion zlotys from 2.42 billion zlotys reported a year earlier
- Reported earnings before interest, taxes, depreciation and amortisation (EBITDA) dropped 5% to 4.08 billion zlotys
Electricity Generation and Heating Demand
PGE's net electricity generation grew 3% to 16.49 terawatt hours, driven by lower outdoor temperatures that boosted heat generation by 13%.
Margins and Segment Performance
- Lower wholesale and retail electricity sales margins heavily weighed on the results, particularly in the supply segment, where core profit fell 51% to 365 million zlotys
Emission Costs and Impact on Earnings
- Rising emission costs also pressured earnings. In the district heating segment, CO2 costs surged by 203 million zlotys to 1.05 billion zlotys due to a 14% increase in emissions
Coal Energy Segment Results
- The coal energy segment saw its core profit fall 39% to 249 million zlotys, hit by a 344 million zlotys negative change in provisions for onerous contracts and lower lignite output
Additional Information
($1 = 3.6434 zlotys)
(Reporting by Rafal Nowak in Gdansk; Editing by Matt Scuffham)
