PGE Polska Grupa Energetyczna (PGE) Q2 2024 earnings summary

Executive summary

• Q2 2024 net profit reached PLN 1.138 billion, up 16% year-over-year, with recurring EBITDA at PLN 2.3 billion and reported EBITDA at PLN 2.6 billion; H1 2024 net profit was PLN 2.089 billion, slightly down from H1 2023.

• Energy consumption rose 3% year-over-year in Q2 2024, with domestic generation up 5% and renewables (wind and solar) generation up 2.7%, while coal-based generation declined 6% and lignite rose 7%.

• The Group prioritized transformation projects, especially offshore wind (Baltica 2, 3, 1), energy storage, and decarbonization of heating, with significant CapEx allocated to these areas.

• Distribution volumes rose 1% to 9.4 TWh in Q2 2024, while sales to end users fell 8% to 7.9 TWh; heat sales declined 21% due to warmer weather.

• PGE's diversified structure provided stability amid market and regulatory volatility.

Financial highlights

• Q2 2024 recurring EBITDA was PLN 2.3 billion, up 9% year-over-year, with reported EBITDA at PLN 2.6 billion, up PLN 159 million from Q2 2023; H1 2024 EBITDA was PLN 5.14 billion, down from PLN 5.87 billion in H1 2023.

• Net profit reached PLN 1.138 billion in Q2 2024 (up 16% YoY), and PLN 2.089 billion in H1 2024 (down from PLN 2.171 billion YoY).

• Investment outlays in Q2 2024 totaled over PLN 2.6 billion, up 11% year-over-year, mainly in renewables, distribution, and heating; H1 2024 capex was PLN 4.7 billion.

• Net debt at end-June 2024 was PLN 9.99 billion, with a net debt/EBITDA ratio of 2.15; net economic financial debt stood at PLN 20.1 billion.

• Net cash from operating activities was PLN 6.1 billion in H1 2024, up from PLN 339 million in H1 2023.

Outlook and guidance

• 2024 EBITDA outlook for renewables has improved due to increased installed capacity and legislative changes, while conventional generation and heating are expected to see EBITDA declines due to lower energy prices.

• Distribution segment is expected to benefit from higher efficiency, investment program effectiveness, and higher WACC (11.75%).

• Uncertainty around coal asset separation and capacity market reforms may impact future investment and financing; the coal asset spin-off process is ongoing with a new concept under development.

• The Group expects continued high volatility in macroeconomic, market, and regulatory conditions.