“In the first six months of 2024, Hidroelectrica’s results were influenced by the decrease in electricity selling prices, as well as the quantity of electricity sold, leading implicitly to a decrease in revenue from energy sales. A significant contribution of the results of the second quarter of 2024 to the decreases recorded in the first 6 six months is observed, driven in particular by the entry into force, at the beginning of the second quarter (1 April 2024), of the changes to the MACEE mechanism, which led to periods of significant fluctuations in market conditions (prices and quantities traded). This period of market adjustment to the new conditions and regulations overlapped over a dry period, the hydrological conditions limiting the Company’s production capacity”, the report reads.
Summary of H1 2024 Management Board Report:
Hidroelectrica Group records a decrease in operational and financial results for the first six months of 2024 compared to the same period in 2023, with a slight increase compared to the approved budget. The Group’s operating margin and net margin decreased by 10% and 8%, respectively, compared to the similar period in 2023, mainly due to the decrease in electricity production, the quantity of electricity sold, as well as the decrease in electricity selling prices (both locally and in the interconnected European market).
• H1 2024 results mirrors the expectations set forth in the approved 2024 Budget, being slightly above them, with an upward trend recorded in the last part of the second quarter
• Electricity production decreased by 22% compared to the same period of the last year
• Revenue decreased by 26% compared to the same period of 2023
• Operating margin of 59%, decreased by 10% compared to the same period of last year
• Net margin of 52%, decreased by 8% compared to the same period of of 2023
• Net profit decreased by 32%, from RON 3,946 million to RON 2,690 million
• Earnings per share decreased by 32%, from 8.80 RON/share to 5.98 RON/share.
Generation Energy Sold (Net)
The energy produced and sold (net production) experienced a slight decrease of approximately 22% in the first half of 2024 compared to the same period in the previous year, with a quantity of 8,293 GWh recorded from January to June 2024. The decrease was mainly due to the hydrological conditions recorded in the second quarter of 2024, when the average value of the Danube flow (5,585 cubic meters/s) decreased by approx. 25% compared to the same period of 2023 (7,491 cubic meters/s).
Wholesale Revenue
Compared to the first half of 2023, the revenues related to transactions concluded on the wholesale market in the period January-June 2024 were impacted by a number of factors determined in particular by the reduction in the flow of Danube, which led to a quantitative decrease in the energy delivered to the networks, as well as by the decrease in the SPOT price (especially in the period February-April 2024), in conjunction with the amendment of the legislation on voluntary trading through MACEE as of April 2024.
Thus, revenues recorded on wholesale markets in the first half of 2024 decreased by 38% compared to the same period in 2023. This decrease was driven by several factors: (1) the SPOT price dropped between January and June 2024 compared to the same period in 2023 (approximately 30%) and (2) remained below the legal reference price for MACEE transactions in the first four months of 2024; (3)
consequently, the suppliers, through OPCOM, did not take over the entire quantity allocated to Hidroelectrica at the annual auction in December 2023 for delivery in 2024 through MACEE.
Supply Revenue related to active energy
The revenues from the electricity supply activity decreased by 32%, to RON 1,130 million revenues in the first six months of 2024, from RON 1,660 million revenues in the same period of 2023. This decrease is due to both the decline in the selling price of electricity and the reduction in the volumes supplied in the first six months of 2024 compared to the first six months of 2023.
Transferred costs (pass trough)
The transfer costs related to the supply of electricity increased by 4%, to RON 723 million in the first six months of 2024, from RON 694 million in the same period of 2023. The increase in these costs is primarily due to successive increases in regulated tariffs, in April 2023 and in January 2024 and June 2024 (only part of the regulated tariffs), growth negatively influenced by the decrease in supplied volumes.
Balancing Revenues
Revenues from Balancing increased by 123%, to RON 450 million in the first six months of 2024, from RON 202 million in the same period of 2023. The increase is caused by the increase in volumes of energy sold on Balancing Market to 285 GWh from 151 GWh, as well as by the increase in the price on the Balancing Market to 1,580 RON / MWh from 1,336 RON / MWh in the first semester of 2024 compared to the same period in 2023.
H2O shares have gained 9% so far in 2024, dividends included, as per calculations by Ziarul Financiar (ZF) daily. The company has a market capitalization of RON55.3 billion. Hidroelectrica is 80%-owned by the Romanian State, 11% by private pension funds and the remaining shares are distributed among other investors.