FINGRID GROUP – MANAGEMENT’S REVIEW 1.1.−30.9.2021
October 29 2021 - 4:00AM
FINGRID GROUP – MANAGEMENT’S REVIEW 1.1.−30.9.2021
Fingrid Oyj
Stock Exchange Release 29 October 2021 at 11:00 EET
FINGRID GROUP – MANAGEMENT’S REVIEW
1.1.−30.9.2021
Fingrid follows a six-month reporting period as referred to in
the Securities Markets Act and publishes Management Reviews for the
first three and nine months of the year; the Management Reviews
contain key information illustrating the company’s financial and
other development.
The information presented in the Management’s Review relates to
the Fingrid Group’s performance in January-September and the
corresponding period of 2020, unless otherwise indicated. The
figures presented here have been drawn up in accordance with
International Financial Reporting Standards (IFRS). The
Management’s Review is not an interim report in accordance with the
IAS 34 standard. The figures are unaudited.
- The weather conditions early on in the year and higher
electricity consumption have increased the grid transmission
income. The high price of electricity and large area price
differences have, in turn, increased imbalance power income and
costs, and especially cross-border transmission with Russia and
related income. Operatively, the year has proceeded in line with
expectations.
- Turnover during the period under review amounted to EUR 690.8
(481.5) million and operating profit, excluding the change in the
fair value of derivatives, amounted to EUR 114.3 (76.1)
million.
- The company’s profitability and liquidity remained at a good
level.
Review by the President & CEO: Strong economic
result – biggest ever investment portfolio
The increase in electricity consumption in the first quarters of
the year increased grid transmission income in relation to the
comparison period. The price of electricity has been unusually
high, which has raised imbalance power prices and Fingrid’s
turnover. The higher price of imbalance power is also, similarly,
reflected in the higher imbalance power costs. Electricity imports
from Russia to Finland increased as a consequence of the increase
in electricity prices, which increased the cross-border
transmission income. All in all, the company’s turnover and result
improved clearly compared to the corresponding period of 2020.
We will raise the electricity transmission fees in the main grid
by an average of two per cent in 2022. This increase is based
especially on the surge in market-based reserve costs. Reserves
ensure the power system’s balance of electricity production and
consumption. Our objective is to remain among the most affordable
transmission system operators in Europe, and thus also do our part
in offering a competitive advantage to Finnish companies.
Our investment portfolio is larger than ever. The company has
more than 50 substation projects and numerous transmission line
projects underway. These investments enable up to 4,500 megawatts
of wind power connections. Several major investment decisions were
also made during the period under review. The transmission
reliability of the main grid has been excellent throughout the
period under review, although it was not possible to avoid all
disturbances to customers.
Developing the electricity market took a step forward when the
government issued a new decree in August on the electricity supply
settlement and measurement. The Nordic electricity markets will
transfer to a single balance model as of the start of November. In
the single balance model, a separate balance will no longer be
calculated for electricity production and consumption for the
Balance Responsible Party. The decree also provides more detailed
provisions on the changes brought about by the introduction of the
centralised information exchange system for the electricity retail
market, i.e. Datahub, on electricity supply settlement. Fingrid’s
Datahub project is progressing well and will go live in February
2022.
Our customers have been happy with our activities. Smooth,
trust-based co-operation between different parties is more
important than ever in the massive transformation of the power
system. The latest Great Place to Work survey results confirm that
Fingrid’s personnel are strongly committed to the company, and to
the goals of Finnish society.
Key figures
€M |
1−9/21 |
1−9/20 |
change % |
1−12/20 |
Turnover |
690.8 |
481.5 |
43.5 |
682.5 |
Operating
profit* |
114.3 |
76.1 |
50.4 |
115.4 |
Profit before
taxes |
139.3 |
69.4 |
100.6 |
113.3 |
Profit for the period |
111.3 |
56.8 |
96.0 |
94.0 |
Capital expenditure, gross |
142.0 |
104.0 |
36.5 |
169.7 |
Net cash flow
from operations** |
155.0 |
126.2 |
22.8 |
139.9 |
Interest-bearing
net debt |
1,032.8 |
1,059.4 |
-2.5 |
1,049.0 |
Balance sheet total |
2,348.3 |
2,164.8 |
8.5 |
2,306.8 |
Equity ratio % |
25.9 |
27.5 |
|
27.4 |
* Operating profit excluding the change in the fair value of
derivatives |
**
Net cash flow from operations, after capital expenditure |
- The turnover rose due to an increase in electricity
consumption, which directly impacts grid service income, and due to
more expensive imbalance power resulting from the higher
electricity price. The latter can also be seen in the higher
imbalance power costs.
- The Group’s operating profit, excluding the change in the fair
value of derivatives, increased as grid service income,
cross-border transmission income and balancing power income grew.
Reserve and ICT costs rose somewhat. Profit for the period was
increased by the significant positive change in the fair value of
electricity derivatives hedging the loss power procurement.
- The net cash flow from operations was increased by the
congestion income from the cross-border transmission connections,
EUR 129.3 (98.3) million in total. This income will be fully used
in the next few years for investments aimed at improving the
transmission connections to prevent any congestion.
Main business events
- Electricity consumption started to grow in Finland. Between
January-September, electricity consumption in Finland totalled 62.0
(59.3) terawatt hours. In the same period, Fingrid transmitted a
total of 53.3 (50.2) terawatt hours in its grid, representing 79.0
(77.9) per cent of the total electricity transmission in Finland.
During this period, the electricity Fingrid transmitted to its
customers amounted to 47.8 (45.0) terawatt hours, which represents
77.0 (75.8) per cent of Finland’s total consumption.
- Fingrid’s transmission reliability rate in January–September
was 99.99997 (99.99994) per cent. Between January-September, the
main grid had one major disturbance. A tower fell along Fingrid’s
Porvoo-Anttila 110-kilovolt transmission line connection on 23
August 2021, causing significant harm for Fingrid’s customers.
- Fingrid has more than 50 substation projects and numerous
transmission line projects underway. During the period under
review, new investment decisions were made to modernise the Rauma,
Seinäjoki and Uusnivala (Nivala) substations. In transmission line
projects, a decision was made to invest in the modernisation of the
110-kilovolt transmission line between Hämeenlahti in Jyväskylä and
Hännilä in Joroinen, which has reached the end of its service life.
At the same time, the Kauppila substation will be modernised. Among
the ongoing transmission line projects, the most important is the
extensive construction project of the 400-kilovolt Forest Line
between Petäjävesi and Oulu and the related Oulujoki construction
project. The environmental impact assessment (EIA) for the
400-kilovolt Lake Line from Oulu to Lappeenranta has been completed
and the project is moving into general planning.
- Developing the electricity market took a step forward when the
government issued a new decree on 12 August 2021 on the electricity
supply settlement and measurement. The decree provides for the
adoption of the 15-min imbalance settlement period (ISP) and the
single balance model in the power market. Additionally, it issues
more detailed provisions on the changes brought about by the
introduction of the centralised information exchange system for the
electricity retail market, i.e. Datahub, on electricity supply
settlement, which concern the entire industry. Fingrid’s Datahub
project is proceeding according to plan and the Datahub will go
live in February 2022.
- In the customer satisfaction survey, the net promoter score
(cNPS) fell slightly year-on-year and is now 41 (45).
Events after the review period
- In October, Fingrid announced that
the company will raise the electricity transmission fees in the
main grid by an average of two per cent in 2022. This increase is
based especially on the increase in market-based reserve costs.
Fingrid has managed to maintain its cost-efficiency. Based on the
latest European comparison, Fingrid’s transmission fees are the
second most affordable in a peer group of some 20 countries.
The company has not changed its earnings guidance from
what is stated in the half-year report of 27 July
2021.
Further information:Jukka
Ruusunen, President & CEO, Fingrid Oyjtel.
+358 30 395 5140 or +358 40 593 8428
Jan Montell, Chief Financial
Officer, Fingrid Oyjtel. +358 30 395 5213 or +358 40 592 4419
Fingrid is Finland’s transmission system operator. We secure
reliable electricity for our customers and society cost
effectively, and we shape the clean, market-oriented power system
of the future.
Fingrid delivers. Responsibly. www.fingrid.fi
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