Helen Group’s interim report January–March 2023: Investing in clean energy in the continuously uncertain operating environment
January–March 2023
- Net sales grew by 43 per cent year on year, totalling EUR 727 million (EUR 508 million).
- Operating profit increased to EUR 67 million (EUR 45 million), or 9.2 per cent (8.8 per cent) of net sales.
- Electricity sales fell by 3 per cent to 1,451 GWh (1,500 GWh).
- Electricity distribution in Helsinki decreased by 5 per cent and was 1,166 GWh (1,227 GWh).
- Heat sales fell by 4 per cent to 2,434 GWh (2,536 GWh).
- Cooling sales increased by 29 per cent to 31 GWh (24 GWh).
Helen Group’s key figures
| EUR million | Q1/2023 | Q1/2022 | Q1–Q4/2022 |
|---|---|---|---|
| Net sales | 727 | 508 | 1,785 |
| Operating profit | 67 | 45 | 142 |
| Operating profit, % | 9.2% | 8.8% | 8.0% |
| Profit before taxes | 69 | 37 | 119 |
| Investments | 74 | 31 | 562 |
| Equity ratio | 57% | 69% | 58% |
| Return on capital employed (ROCE) (12 months) | 2% | 2% | 4% |
| Employees | 727 | 974 | 701 |
| Balance sheet total | 3,980 | 3,136 | 3,751 |
CEO Olli Sirkka comments
2023 started largely in the same atmosphere in which the exceptionally turbulent year 2022 ended. Our operating environment has changed fundamentally and it is difficult to predict the future. The operating environment now features new variables and geopolitical links, which require us to constantly keep a keen eye on the environment.
When I started working as Helen’s CEO in January, the market prices of energy commodities and electricity took a downward turn for the first time in a long while. Prices are extremely sensitive to changes and high market volatility is here to stay.
To adapt to the changed situation, we decided to continue the production use of the Salmisaari B power plant for the duration of the heating season 2024–2025. The purpose of the decision is to safeguard the security of energy supply and deliveries. However, it does not affect our goal of achieving carbon-neutral energy production in 2030.
Despite the unstable operating environment, our business operations are on a solid foundation and, during the first quarter, we continued investments in carbon-neutral energy production as planned. We announced that we will build a new industrial-scale air-to-water heat pump plant in the Salmisaari power plant area. The plant will produce renewable district heat and district cooling. Simultaneously, we are making preparations for the shutdown of the Hanasaari B power plant, in operation since 1974. This will reduce our carbon dioxide emissions by 40 per cent.
To alleviate the challenging situation created for our customers by the steep rise in the electricity market prices last year, we introduced the Helen Smart Electricity Guarantee electricity contract that offers price stability. We also reduced the prices in electricity contracts that are valid until further notice when the electricity market prices took a downward turn early in the year. The number of our customers remained stable and our net sales grew to EUR 727 million as a result of high market prices. Our operating profit was 9.2 per cent of net sales, which is slightly higher than in the corresponding period last year.
Significant events in January–March
- On 16 January, Olli Sirkka started in the position of Helen’s CEO. Juha-Pekka Weckström, who was the CEO until the end of 2022, moved on to new tasks outside the company.
- We introduced the Helen Smart Electricity Guarantee electricity contract, offering price stability, to alleviate the challenging situation created for our customers by the steep rise in the electricity market prices last year.
- We decided on a significant, 48-per-cent price reduction for electricity contracts that are valid until further notice. The price reduction is based on the fall in electricity procurement costs.
- We decided to continue the production use of the Salmisaari B power plant for the duration of the heating season 2024–2025 to safeguard the security of energy supply and deliveries.
- We made the decision to build an industrial-scale air-to-water heat pump plant in the Salmisaari power plant area. The plant will produce renewable district heat and district cooling. The total value of the investment is EUR 13.5 million.
- We decided to build a 10-megawatt solar farm in Lohja. When completed, the solar farm will be one of the largest in Finland, producing 10 GWh of renewable electricity per year.
- Our first solar farm started production in Nurmijärvi. The farm consists of approximately 2,800 solar panels and its total capacity is 1.5 megawatts.
- We announced our participation in the BalticSeaH2 project, the goal of which is to create a cross-border hydrogen valley in the Baltic Sea region.
Significant events after the review period
- On 1 April 2023, we shut down the coal-fired power plant in Hanasaari, reducing our carbon dioxide emissions by 40 per cent. From now on, our heat production is increasingly based on sustainable forms of energy production, such as the utilisation of renewable biomass and different types of waste and environmental heat. We produce electricity with hydro, wind, solar and nuclear power, for instance.
Outlook
Investments in the production of carbon-neutral heat and electricity are becoming a reality, especially when the numerous wind power projects will be completed in the next few years. Our production structure is shifting more intensively from combined heat and power generation to separate production, in which the main electricity production forms are wind, solar, hydro and nuclear power. We are replacing current heat production with diverse technological solutions, such as electric boilers, air-to-water heat pumps, heat recovery and various geothermal heat solutions.
The role of solar power has already grown in our business operations and our goal is to make further investments in solar energy. The important role of hydrogen in the carbon-neutral society of the future will grow further and we will promote our hydrogen partnerships. In addition, we continue studying the role of small modular reactors (SMRs) as one of the energy sources of the future.
To improve the customer experience, we invest especially in digital customer encounters and the digitalisation of the Solution Business. We develop our digital services that support customers in smart energy use and we want to play our part in increasing energy awareness in society.
The mild winter and the windy weather kept the electricity market prices low early this year. The start of regular electricity generation at the Olkiluoto 3 nuclear power plant will increase the supply of electricity. Furthermore, electricity consumption usually decreases as the summer approaches. The situation of the electricity retail market has become easier as the market prices have fallen and the collateral requirements related to the business operations are more moderate.
Despite the slight calming down of the energy market, we expect general instability and unpredictability to continue. The changed conditions are keeping the price sensitivity in the market on a high level. Political regulation is also a source of uncertainty for the energy-sector operators, which increases the sector risk and impairs investment prospects. We predict that the windfall tax, among other things, will significantly reduce the Group’s performance and cashflow. The discussion on higher biofuel taxation also creates uncertainty regarding the future. Predicting the company’s performance development is very uncertain due to the fluctuation of the market prices of electricity. We predict that the financial result for the current year will be lower than last year.