PNE AG
XETRA:PNE3
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PNE AG
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Dear ladies and gentlemen, welcome to the analyst conference call of PNE AG. At our customer's request, this conference will be recorded. [Operator Instructions] May I now hand you over to Markus Lesser, CEO, who will lead you through the conference. Please go ahead.
Yes. Good morning, everyone, also from my side. Thank you for joining us today in this conference call on the results of the first quarter of 2022. As usual, before I start with the presentation, I would like to share with you an outline of the presentation and the procedures of today's call. As usual, I will start with an overview of the operational and strategic highlights of the first quarter 2022.
After that, I will comment on our financial figures. I will conclude my presentation with our outlook for the remainder of the year. As always, we will then open the line for the sell-side analysts only. All other participants will stay in listen-only mode, as it is our company procedure for years.
As usual, our slides that I will use can be found on our Investor Relations website. Having said this, I would like to draw your attention to Slide 3. In operational terms, we made a very dynamic start to the fiscal year 2022. In Q1, we have sold a 9 megawatt wind farm. In addition, we have projects with a capacity of 267 (sic) [ 276 ] megawatt under construction at the end of Q1.
The operating performance in Q1 was clearly marked by our Power Generation segment, driven by the higher installed base, the improved wind yields and the high power prices, the total output in power generation increased significantly. This also shows that our strategy to build our own IPP portfolio is already paying off.
We also made further progress regarding the expansion of our own generation portfolio. We were able to start construction of another wind farm with around 28 megawatts. At the end of Q1, we had 233 megawatt in operation and around 132 megawatt under construction for our own portfolio, that means around about 365 megawatts we have already covered and become closer and closer to our target of 500 megawatts under construction or in operation end of next year.
In April, another wind farm was put into operation, and the portfolio was increased to 252 megawatts in operation. Our project pipelines were increased in Q1 again by 939 megawatt/megawatt peak, megawatt peak is for PV projects reserved, compared to Q1 2021 year-over-year and by 285 megawatt/megawatt peak compared to the end of 2021, so quarter-over-quarter.
Now our pipeline of wind and PV projects stand of more than 7.2 gigawatt/gigawatt peak. Also, the volume of orders we manage in operation management was significantly increased to over 2,200 megawatts.
Looking at the financials, I want to highlight that we could achieve the best Q1 EBITDA in company history. We are the project developer, we usually had been not that happy to look only to Q1 and Q2 and the quarterly results. But we see that just right now more and more the influence of our IPP portfolio is coming up. And we see that these results are now showing more constant. And so the EBITDA increased by 151% year-over-year to EUR 15.8 million.
As said, the results were mainly driven by the strong performance of the power generation, which was impacted by the higher installed base, the improved wind yields and the high power prices. Total output decreased compared to the high number of the previous year, which, however, was expected as fully on target. In light of the strong performance, also our cash position and equity improved further.
If you look to the next slide, you see, as I mentioned already, close to 365 megawatts in operation under construction or through tender for our own portfolio. This shows that we are coming closer to our target. Another wind farm was put in operation, 19.4 megawatts in April. And what I can say just right now, a couple of weeks ago we got permission for another 19.8 megawatt project, whereby 6.6 megawatt is a service project for others, which was part of the deal. So 170 gigawatt hours of green energy was produced in Q1, which means that 100 tonnes of CO2 saved with our own portfolio. And the hidden reserves accumulated in the portfolio of about EUR 130 million in total.
If we look to the project pipeline, again, we could increase the project pipeline. If you see the wind onshore project pipeline we talked about now, 5,778 megawatts opposite to 5,588 megawatts in the first quarter of 2021. Remarkable is that we have a record level of projects in the permitting phase not only in Germany and France with 812 megawatts also overall of the pipeline of 1,140 gigawatts -- megawatts.
So this shows that we have huge and steadily increasing amount of projects, which can be finalized in a mid-time run. In France, as I said already, we sold the 9 megawatts project and I'm sure it's still under construction.
In Poland, projects Krzecin and Kuslin are under construction, which were sold last year, and Hultema is still under construction in Sweden. Looking to the PV pipeline, we see a strong growth. If we see the quarter 1 of 2021, we had 674 megawatt peak and now we talk about 1,423 megawatt peak, which is a remarkable increase of 749 megawatt peak on a year-on-year basis.
So we can also see that we have a lot of synergies with the wind development, and this helps us to increase furthermore the pipeline. As you could see in the last year and at the end of last year, we could sell some of these projects and so you see that we have a value in this pipeline as well.
If we look to the financial figures. Again, remarkable, 151% on a year-on-year basis, driven by power generation, the increase to EUR 15.8 billion, which led to a net income of EUR 10 million. However, we have to say that the financial results are positively impacted by the valuation of interest rate swaps of EUR 6.6 million. This is part of the truce as well.
So the operation performance and earnings are mainly driven by results from power generation, project sale in France, and the usual business in services and the internal sales related to buildup of our own generation portfolio, which is our usual business.
If we see the segments. So we see that the project development output decreases in the year-on-year in comparison to EUR 15.9 million, which is absolutely in plan as well as the EBITDA decreases to minus EUR 2.4 million. We will see when the next project will be shifted into the pipeline, in our IPP pipeline, and we have the first phase, which we expect more in the next quarter, and then we will see a much higher amount.
We expect, especially at the end of the year, a lot of permissions in Germany, and we think that this will change this view significantly. Service output close to EUR 5.2 million, which is 6.7% above the number of last year.
The EBITDA decreased, but this is normal. We had to invest in our foreign business. And between we are now [indiscernible] where we got additional business, and we are now at 2,200 megawatts, so a strong increase in this portfolio. We make services for our customers and this is a good success.
Power generation output increased to EUR 21.1 million. So all these numbers is before consolidation, and the EBITDA increases to EUR 18.8 million.
So if we look to the balance sheet, the balance sheet increased again from EUR 827 million to EUR 856 million. Remarkable is that we have a high cash position of EUR 168.1 million. So we can say, with the financial instruments we have just right now in place, we are satisfied at the moment and we are positive to invest in our portfolio and have every financial capabilities together.
The equity ratio is at 27.1%, still high. And you see, again, we have liabilities to banks, we've liabilities for leasing contracts. And if you see the liabilities to banks of EUR 347.1 million in the noncurrent debt and the current liabilities of EUR 221 million, we see always that this is nonrecourse.
And on the other side, we have liabilities from leasing contracts, which is across IFRS necessary, of EUR 108.7 million, which is increasing furthermore with each project we take in our portfolio.
Yes, having said this, we have a positive outlook for fiscal year 2022. Let me say some general remarks. We see heavily increasing prices in wind turbines and EPC. Also, we see, on the other side, higher power prices, which helps to cover this price increases, and we see the strong willingness of the politics to sort power grid energy. The Ukrainian war also shows that there is an uncertainty in the market also for the future. We try to secure the high power prices also for longer years. We are limited usually for 1 or 2 years. So we don't get longer contracts, but we try to fix them because it's for a part of the wind portfolio.
So there is a mixed picture. But anyway, with our business model, we have a high resistance against these different ways of measures and influences. So therefore, we are positive, we have a guidance of EBITDA of EUR 20 million to EUR 30 million. We stick with that. Now you could say, why not increasing if you are having now EUR 15.8 million EBITDA? I can only tell you that we have to invest in our portfolio, which will have an influence on the EBITDA in the future.
Also, this is related to some sales, which we have not in our pocket just right now: Panama, United States, U.K., South Africa, the result out of tenders. And on the other side, we don't know how much the wind is blowing in these regions. So therefore, we stay careful. And we will see what we get at the end of the year. We stick with this guidance of EUR 20 million to EUR 30 million.
We've built out a portfolio. As I said before, we expect in autumn, winter more projects, which will come through a permitting process, and we have an increased portfolio -- we have an increased volume in permitting phases of projects and we increased in all segments of our business.
So therefore, we are positive for this year. And that's how I want to conclude my presentation. Thank you for your attention. Ladies and gentlemen, we are now open for questions.
[Operator Instructions] We have the first question, it's from Karsten Von Blumenthal, First Berlin.
This is Karsten. Congratulations to the good Q1 results. When I look into the sector, I see that all the large turbine producers have issued profit warnings as material prices go up. And my question is, do you fear that this wave will or the certain delay also hit the project developers?
Yes. From my point of view, it is very clear, mainly it is driven by transport costs; and secondly, it is driven by increasing steel costs and other costs which is related to raw materials. But I would say that the biggest cost driver is transportation. And this is something which can change in the future. At the moment, all projects we are having under construction are completely settled and we have no deviation from our plans.
For future projects, we expect higher costs. This is in the range of 10% to 20%. What we see there in the moment what is announced. But we see on the other side that the politics want to increase renewables. So in the short run, we have to see what is happening. But nevertheless, on the other side, well, one point is, for example, in the EEG, they don't decrease the maximum prices for the tender, which would be on a regulatory basis what they would do usually. So they want to make it successful so that we have no tariff change to expect.
On the other side, also, we have this higher power prices. And the power prices, we will see how long the duration will be. We make a mixture of getting it partly covered through long-lasting contracts, which are long-lasting means 1 to 2 years, and on the swap market, we try to get the best out of it for the other half of the projects here.
So what we can see that we get additional EBIT on watts through this effect. So it's a mixture. And how we can handle this in the future? We will see when we look to the predictions of the power prices. But in the moment, we don't see the effects too much for us as project developer and as a producer.
All right. You mentioned the stronger support from regulation and politics. So all in all, are you happy with the Easter package of Mr. Habeck so far? Or do you see things where you are not satisfied?
I think, in general, we are -- this was the first part. The second part will be in the summer, where we have an exchange of EEG to expect. In any case, they want to support more green energy, more wind energy. And this is, first of all, very good. You can see it in the decision that now, by law, the renewable energy becomes an industry, which is in the highest interest of the government, which gives us a special role in addition on cost, for example, yes?
So it gives us a higher level than other things. And this is one remarkable sentence and one remarkable point. All other issues are, first of all, minor issues, which help in some cases. And now we will see what will come up in the summer package.
All right. You have not talked about your offshore business because currently this is not so important, but the German government plans massive increase in offshore expansion. Do you plan to participate in this in the medium term? And if so, how?
In the moment, we look for opportunities, but there is no direct plan to invest there due to the fact that we have a public tender to expect with high prices for stepping in into the operation of wind farms. This is not really our business. We are more a project developer.
And on the other side, if we want to step in, then we want to step in where we see that we have opportunities in this market in a good way. So just right now, Germany is not our focus in that respect. So we will see what will come up, how the conditions are of the tenders and what we can do. But just right now, we are more reluctant, and we are not pushing, this is not in our plan just right now.
You have probably also seen that WPD has sold its offshore business to Global Infrastructure Partners. Is this something of an option for PNE, too?
No, not yet. We still see the opportunities in the offshore market worldwide. And we see that we have an experienced team. If you look carefully to how much teams really develop projects in the world with the exception of China, I would say we are one of the 12 companies who have developed projects, the rest have purchased projects, rarely developed, yes?
And so therefore, we think that we can contribute from that and will make our business out of that in the future as well. And how we want to step in, in operation or whatever, it is more or less opportunity driven.
All right. One last question from my side. If I understood you right, in Germany, you have 135 megawatt under construction, but only 112 are for the own plant portfolio. So there is a difference, if I understood you right. And so you want to sell a project you're currently constructing, to the market?
Yes. Sometimes we -- for example, if we have a repowering project, it is common that you have a deal with the former owners that will take a part of the new project. So for example, now we have a project where we have around about 19 megawatts -- 19.8 megawatts where we got the permission now and one machine is for the former owners and 2 or 3 for us, depends on how. And this is the situation. That's what we have to face several times. So then one machine is then sold and one -- or in this case, 3 machines are for us.
The next question is by Holger Steffen of SMC Research.
I have only one additional question regarding your electricity generation. As mentioned, we saw very favorable conditions in the first quarter. Maybe you can give us an idea now, which EBITDA result we could expect in the segment electricity generation in the full year if the wind conditions will meet the historical average in the period from April to December?
Yes. So in any case, we have our plan, yes? So what we think what we have to deliver in terms of kilowatt hours, yes, at the end of the year. And we calculate always that we get a special percentage of the usual winds, so there are predictions.
And what we can see that we have now this situation that, for example, January, when you see the time from October to March, then you have talked about usually in that time about 70% of the wind you can get and the results you can get out of the year. So if you have weak months in that time, it is always difficult, yes.
So in this case, we have good January, which was slightly above the average, a very good February, where we are very high over the estimations, and a low March. So this all the results to an amount that we are slightly above the 100% expectations in the wind yield. And so the second point is that we always get new machines on board, yes, in the portfolio. So it's not that easy to say what is related to which portfolio, which part of the portfolio is the second part.
The third part is that we have a situation that the energy prices are related to spot mark prices sometimes. So there is a wide variation just right now. I'll give you an example. We have a tariff usually where we talk about between, let's say, somewhere between EUR 0.054 to EUR 0.065 depending on the location, if it is a high wind speed or a low wind speed location there, we have a correlation factor EEG.
And energy spot market prices usually have been around EUR 0.045 or something like that. And now we talk about between EUR 0.010 and EUR 0.019 per kilowatt hours depending sometimes on the day. So it's remarkable, and it's not predictable. We don't know how long we will have the situation.
That's why we say, okay, half of the portfolio, we will take on board with longer contracts for 2022, maybe for 2023. And if we can get also later, but just right now, 2023 contracts are longest we can get. It depends on the traders on the other side where we have contracts with. So this is the situation. So therefore, it is not in the moment, not manageable to give a prediction for the whole year. I can tell you only how the situation is.
And yes, we expect higher incomes in the part of power production. How high? I can't say just right now because there's so much volatility. But we think we will be above plan, yes.
Okay, I see. Let me try it in another way. Maybe you could tell us which electricity production you expect from the existing portfolio for the 9 months from April to December if the conditions meet the historical average?
I think in terms of gigawatt hours, what did we have last year -- we had last year, I think about 340 gigawatt hours -- 295 gigawatt hours, exactly 295 gigawatt hours. And I think the projects we get in maybe another 10, 15 in the moment, which comes over the whole year, so we come in the direction of 310, 320 gigawatt hours, yes?
And you can add then maybe in average somewhere, I don't know, that depends on the market. It's somewhere in between. Yes. So that's what we have to calculate. And just right now, something where you have to take your estimations, I can't say. I don't want to say just right now where we are in this respect and what we expect in this respect because it is not predictable just right now.
Every number I give you, it is a number which will have shadow from the -- can be changed immediately. If tomorrow, the Ukraine war stops, then immediately, we have other estimations, yes.
[Operator Instructions] There are no further questions for the moment and so I hand back to you.
So from my side, thank you very much for your interest, and we hear us latest next quarter. Maybe you come to our AGM next week and listen to that. And hope to see you soon also maybe personally. See you. Bye. Have a good day.
Ladies and gentlemen, thank you for your attendance. This call has been concluded. You may disconnect.