PNE AG
XETRA:PNE3
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PNE AG
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Ladies and gentlemen, thank you for standing by. Welcome, and thank you for joining the PNE AG Q3 Report 2022. [Operator Instructions].
I would now like to turn the conference over to Markus Lesser, CEO. Please go ahead, sir.
Good morning, everyone, also from my side, too. Thank you for joining us today in this conference call on the results of the first half year -- of the first 9 months in 2022.
Before I start with the presentation, I would like to share with you an outline of the presentation and the procedure of today's call. As usual, I will start with an overview of the operational and strategic highlights of the first 9 months of 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's 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 have made very good progress during the first 9 months of 2022. We have sold 9-megawatt wind farm in France, and we have completed 3 wind farms in Germany and 1 in Poland. In addition, we had projects with a capacity of 224 megawatts under construction at the end of Q3. The operating performance was clearly marked by our Power Generation segment, driven by the higher installed base, the improved wind yields and the higher power prices. The total output in power generation increased significantly. This also shows that our strategy to build up our own IPP portfolio is already paying off.
Ladies and gentlemen, please hold the line, the conference will resume shortly. Thank you.
Ladies and gentlemen, we have lost the connection with the moderator, please hold, the conference will resume shortly. Thank you.
[Technical Difficulty]
Hello. This is Markus Lesser speaking again. For some reasons, I can't understand we have a technical issue here. I'm not sure when -- I was really through this presentation. So I don't know, I heard it maybe started in the beginning that we get a problem. So from this point of view, I will repeat some of the outcomes. I think it must have been after the financial data. From that point of view, I'm starting again from this point, I'm sorry for this. And I have to excuse this disturbance.
So then I'll start with Page 6, expansion of the generation power portfolio continues, 112 megawatts in operation under construction and through tender. And this target, this 112 megawatts [Technical Difficulty].
So we are very close to the power generation target of 500 megawatts, which we want to have next year under construction or in operation. We have to remind that we expect that the -- until year-end or around about year-end, 95 megawatts of further wind projects, which we want to get permission. So therefore, we are coming very, very close to the 500 megawatts.
For 283 megawatts of onshore wind projects in operation end of 9 months and further 102 megawatts are under construction, 27 megawatts, 3 projects went successful through the tender in September, and there we will start the construction very soon.
So interesting is that the hidden reserves acclimated by us in the portfolio of EUR 145.4 million in total, that's a new high. Yes, we could build up our power generation portfolio. And at the same time, we could increase our project pipeline significantly. And I think this is remarkable. The project pipeline grows by 77% on a year-on-year basis, reached 11.4 gigawatt -- gigawatt peak, which is an increase by 5 gigawatts around about. And the total -- in the pipeline of the PV, we could see an increased -- we could fivefold increase the pipeline to 4,000 megawatt peak.
So on the other side, we see the wind onshore area, and we have more than 1.1 gigawatt in the permitting phase. This is remarkable, and this shows that we stick -- still on a high level even when we have sales ongoing or we made sales of projects -- we sold projects and on the other side, we see, especially in projects in the permitting phase in Germany and France with more than 800 megawatts, a high level of projects which are coming closer to be finalized and where we can start construction or we can sell it.
We had good increase in Germany, the pipeline, and we have just right now in this year, 49 megawatts already, completed 3 projects in this respect. Additionally, we could complete the construction of the wind farm Krzecin in Poland. And we have still the projects in Kuslin and Hultema under construction. Yes, the pipeline increased -- of PV increased around about fivefold. This shows the potential of our network, which we have already win, but also the deal of Korea, where we could bring a pipeline of 1.8 gigawatt peak into the portfolio's house that we can see now.
The financial, financials are mainly driven by the strong power generation. As I mentioned before, the EBITDA is up to 66% on a year-on-year basis as the total output could increase by 13%. It's mainly driven by the results of power generation and the project sale in French -- in France and also the services business. Remarkable for the positive financial results is the impact of the change of the interest rates, especially the swaps and the subsequent measurements of liabilities to credit institutions increased financial results significantly.
Let's have a look to the segments. What we can see is when we start with electricity generation, the power generation strongly increased and the EBITDA increased to EUR 42.9 million out of this area, which means close to 300% increase on a year-on-year basis. The services grew by -- output by around about 20% and an EBITDA around about 15%, which is -- which shows the impact of the internationalization of our business.
The project development output is lower, a little bit lower, minus 20%, the EBITDA is at minus 6.3%, but we don't see that as a big issue due to the fact that we expect further permissions of 95 megawatts in our projects in the next time. And additionally, we see project sales, especially in Romania and in South Africa, where we expect further payments until year-end.
The balance sheet shows a further increase. We're coming close to EUR 900 million. And I think that the numbers are showing the big construction and the build out of our portfolio -- of our power generation portfolio and the pipeline of our development project. Interesting is the liquidity. I would like to give some comments on this because it is very interesting. We are a business model where we can see the projects upcoming. And that gives us the chance to prepay and to order project parts and early advance to secure delivery times and costs and prices.
So this is due to the -- so this will be lower due to the prepayment of transformer stations and cable works. We will avoid the higher prices or longer delivery times. For example, that's why we need the cash now for that. For example, we already are ordering 9 transformer stations for the next 9 projects, for example, or around about 670-kilometer cable works we are prepared to order for the next projects. So that -- it is everything in line and with that we have the cost under control.
Yes. Noncurrent debt is increasing. The corporate bond is EUR 55 million. I talked about this already. The liability of banks is increasing. These are mainly project financing, nonrecourse. I think interesting is that the current liabilities is also nonrecourse this -- that we have very low debt in terms of -- on the corporate.
So related to the outlook of the financial year 2022, we stick with our guidance confirmed. We confirmed EBITDA of EUR 20 million to EUR 30 million. We have especially -- we have the situation that the interventions planned by the EU commission and the German governments to skim off the windfall projects and not have been defined yet. We see further opportunities in the market. It's a dynamic market, who have a good idea how to purchase in the right manner and how to sell power in the right manner is now, has now an advantage, and that's what we are prepared for. And therefore, we see -- have a positive outlook.
Portfolio is built up very fast. We have a very fast project pipeline, and we have a high volume of projects in the committing phase, which will give us a great potential and a good visibility to go forward. We'll wait for the finalization of some sales processes, and we expect higher amount of projects, which will -- should be permitted in the next upcoming months.
Yes, at the end, I would like to highlight that we have an upcoming event next week. Capital Market Day, we would like to give you an outlook of our strategy until 2027. You are happily invited, and I would be happy to meet you there personally. Thank you very much.
[Operator Instructions] The first question is from Karsten Von Blumenthal with First Berlin Equity Research.
This is Karsten Von Blumenthal from First Berlin. You mentioned that you have currently 102-megawatt under construction for the own plant portfolio. How many megawatts do you try to complete this year?
Yes. Hello, Karsten. We have a situation that we have some delays of finalization of projects due to some sensor, which is missing in wind turbines. So it's -- we now would like to finalize in total projects until end of this year of 35 megawatts for our own portfolio, round about -- 36 megawatts round about for our own portfolio. And we have other projects ongoing where we have a short delay. And we have another 3.4 -- 3.5 megawatt projects for third parties, which we would like to finalize as well in Germany.
Okay. And this 36 megawatt you mentioned, that is in addition to what you have already finalized this year?
It's additionally 283 megawatts we have finalized -- we have now in our portfolio, exactly.
Okay. You mentioned that it is currently not entirely clear how the so-called windfall profit taxation of the government will look like. But recent information according to [indiscernible] says that it could be roughly feed-in tariff plus safety margin of 30-megawatt. So it could happen that this will eat into your power production profits. And have you got an idea when this tax could start?
If this tax started at September, which was 1st of September, it has an impact of round about EUR 2 million to EUR 3 million. If it is a longer time and maybe March, then we have a low 2-digit million effect. And that's why we are -- we stick with our guidance and I think we have -- can do it only in a proper way when we know exactly what are the numbers and what are the requirements we have to expect.
Well, at least recent information says that we will not have a retroactive taxation, but that it will start in December, but obviously, it's not yet decided. So we have to wait for this. Could you elaborate on how many megawatts or megawatt hours you have secured in your own plant portfolio via PPAs for this year, next year and beyond?
Yes. We have -- let's see, round about 50% we have secured in next year and round about 25%, 30% for the year after. So this is round about the amount which we have with stable contracts.
All right. You mentioned that you would like to sell the projects in Romania and South Africa. Could you briefly elaborate on these projects? What kind of projects? How many megawatts we talk about?
Yes. We talk about the projects -- so what we have to expect further, we have -- we will finalize the project Kuslin in Poland, where we get payments, and we get in South Africa, the milestone payments if we participated in the tender. We sold this project already, but we get milestone payments if we final -- if we have -- if we win the tender. So our customers in September, this is an amount of lower 1-digit million.
So -- and then secondly, we have the Romania PV. We talk about a sale of 160-megawatt peak project. And maybe additionally, we talk about selling three further projects, but this is something where we are in deep negotiations, and we wait. We hope we get it done until end of the year. So I think in total, you can say in South Africa, we talk about mid-1-digit million, and the amount in Romania is around about higher 1-digit million.
The next question is from Guido Hoymann with Metzler.
Actually, most of my questions have been asked, but maybe, again, on the cost side and the passing of increased development costs. So is there actually a time period where tariffs or PPAs have already been locked in, but the material costs are not fixed yet. So is there this sort of risk?
No. No. Usually, we do the PPA when we have a project finalized or we have the project under construction where we have all costs clear. So there is no -- and we have no liability to give a certain amount of power to the third party. So they take what we produce.
Okay. Okay. And regarding, let's say, the price development, in particular for PPAs. Did you close recently some PPAs? And did they follow rather, let's say, a cost-plus approach there? Or did they mirror the sharp rise of electricity prices -- of wholesale electricity prices? Or how can you find these days an appropriate PPA price? What is the determinant and how do you see this to progress?
Yes. So at the end, we try to fix this kind of contract that we said, okay, we want to fix it by 50%. In the recent days, you will not get any -- the contracts are very rare now. For special amount of time, they have been very -- a lot of people and companies wanted to have this kind of PPAs. So in the moment, they wait and see what is -- regarding the energy prices, where will they go to. The outlook shows that they are going a little bit down. But nevertheless, some of the companies have to live with and want to live with a number they can calculate with. And therefore, there is still PPA expectations in the market.
And we try to look to get the best balance between long-term and short-term project -- spot market. We take advantage of much higher power purchase prices and on the other side, on the contracts. And now we will see what the ministers would say related to the windfall profits. At the end, we took -- in our planning, we took a part of this increased energy prices into consideration when we gave our guideline for this year. On the other side, we see that these energy prices have been higher, and we want to take advantage of this in exactly this kind of balance of risk and opportunities.
Okay. Maybe last but not least, so can we actually expect a positive EBIT for the project development segment for the full year? And I guess, you gave some...
Yes.
The next question is from Holger Steffen with SMC Research.
Only a few of my questions are left now. One additional question about your electricity generation. The wind conditions were below average in Q3. What's the development in Q4 so far?
Do you mean the related project development?
No electricity generation, the wind conditions in Q4.
Yes, the wind conditions are lower. This year, we are now in the -- we have the situations that we are at minus 11% in this moment. This shows that we have a wind yield expectation for this year. Now we have the high wind month where we have high wind yields in front of us. So it's exactly now, November, December, January, February, and we will see how this works, and we will see how to wind yield is at the end of the year. I have to tell you the more changes of weather, the better the wind. I know it's not good for you, but it's good for us in this respect. From that point of view, we expect an increase in this respect of the output in production.
Okay. Maybe at last, we can take a first look at 2023. When we presume taxation of windfall profits, maybe lower electricity prices and higher cost of materials, do you think an improvement of EBITDA will be possible next year?
Yes. I think so due to the fact that we increased our generation portfolio step by step. Out of this, we see also increased output and increased EBITDA, yes. So this will -- so we talk now about, let's say, 260 megawatts, which had been -- or maybe we started at, I think, around about 230 megawatts -- 220 megawatts at the year-end. So on average, we somewhere, let's say, 240 megawatts, which made this result. And next year, we will have, at the end of the year, maybe 1/3 more. So -- and this means that the EBITDA will increase in any case. So -- and when you speak about the margin potential, the margin potential decreases a little bit. It comes to a normal way, more and more to a normal way, but still on a high level in energy prices, but the margin potential is still high.
[Operator Instructions] There are no further questions at this time. I hand back to Markus Lesser for closing comments.
Thank you very much for your patience. And sorry again for this technical disturbance. I hope to see you on the 17th of November. Bye, and have a good day.
Ladies and gentlemen, the conference is now concluded, and you may disconnect your telephone. Thank you for joining, and have a pleasant day. Bye.