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Ignitis Grupe, the largest renewable energy developer in the Baltics, reported its financial performance for the first nine months of 2025, showcasing a modest increase in adjusted EBITDA despite a decline in net profit. The company's stock experienced a slight decrease of 0.48% following the earnings announcement, reflecting a cautious market reaction. Ignitis highlighted its strategic focus on selective green capacity investments, which influenced its revised investment guidance.
Key Takeaways
- Adjusted EBITDA increased by 2% year-over-year to EUR 405.1 million.
- Net profit decreased by 17% year-over-year to EUR 177.6 million.
- Installed capacity rose by 0.7 gigawatts, reaching 2.1 gigawatts.
- The company is focusing on selective investments, revising its 2025 investment guidance.
Company Performance
Ignitis Grupe demonstrated resilience in its third-quarter performance, with a slight increase in adjusted EBITDA despite a notable drop in net profit. The company continues to expand its renewable energy projects across the Baltic and Polish markets, reinforcing its market leadership. However, the decline in net profit and increased net debt highlight ongoing financial pressures.
Financial Highlights
- Revenue: Not disclosed
- Adjusted EBITDA: EUR 405.1 million (+2% YoY)
- Adjusted Net Profit: EUR 177.6 million (-17% YoY)
- Total Investments: EUR 529.9 million
- Net Debt: EUR 1.8 billion (+11%)
Outlook & Guidance
Ignitis Grupe provided a cautious outlook, with adjusted EBITDA expected to range between EUR 510 million and EUR 540 million for 2025. The company revised its investment guidance to EUR 700 million to EUR 800 million, reflecting a more selective approach to green capacity investments. The strategic focus remains on expanding renewable energy projects, including the development of the Kroonias North offshore wind project.
Executive Commentary
"We increased our installed capacity by 0.7 gigawatts to 2.1 gigawatts," stated Darius, a senior executive, emphasizing the company's commitment to expanding its renewable energy footprint. Jonas, a financial executive, noted, "Our adjusted EBITDA grew by 2% year-over-year and reached EUR 405.1 million," highlighting the company's stable financial performance.
Risks and Challenges
- Declining net profit may impact future financial stability.
- Increased net debt could strain financial resources.
- Selective investment approach may limit growth opportunities.
- Regulatory changes in key markets could affect operations.
- Market competition in renewable energy remains intense.
Q&A
During the earnings call, analysts inquired about the public debate surrounding the Kroonias North project. The company assured stakeholders that an independent assessment by Wood Mackenzie confirmed a robust implementation approach. Additionally, questions about the lowered investment guidance were addressed, with executives explaining the strategic shift towards more selective project investments.
Full transcript - Ignitis Grupe AB (IGN1L) Q3 2025:
Moderator/Operator, Ignitis Group: Good afternoon and welcome to Ignitis Group's earnings call for the first nine months of 2025. Today, we will provide an overview of our operational and financial performance for the reporting period. Following the presentation, we will open the floor for a question-and-answer session. Before we begin, please note that today's presentation contains forward-looking statements. These statements reflect current assumptions and expectations of our management team and are subject to risks and uncertainties. Actual results may differ materially from those expressed or implied. I will now hand over to the management team to start the presentation.
Darius, Senior Executive/Management, Ignitis Group: Good afternoon, everyone, and thank you for joining us today. In the first nine months of 2025, we delivered strong financial and operational results with key highlights as follows. First, our adjusted EBITDA reached EUR 405.1 million, representing a 2% year-over-year increase. Second, our installed capacity increased by 0.7 gigawatts to 2.1 gigawatts, reflecting our focus on driving strategic growth. Third, we maintained a robust balance sheet with the net debt-to-adjusted EBITDA ratio standing at 3.33 times. Our strong financial position also confirmed by S&P Global ratings, which reaffirmed our BBB+ credit rating with a stable outlook. Lastly, in line with our dividend policy for the first half of this year, we paid a dividend of EUR 68.30 per share, corresponding to EUR 49.4 million. We will now take a closer look at the progress made in each business segment. First, the progress of our largest business segment, green capacity portfolio development.
We increased our installed capacity by 0.7 gigawatts to 2.1 gigawatts. This growth is attributed to six projects reaching commercial operation dates. By technology, we added 450.5 megawatts of onshore wind and 263 megawatts of solar. By country, 313.7 megawatts of the new capacity was installed in Lithuania, 239 megawatts in Latvia, and 160.8 megawatts in Poland. Completed projects include Kelmė Wind Farm, the largest onshore wind farm in the Baltics, the second, Silesia Wind Farm, one of the largest onshore wind farms in Poland, and the largest solar farm cluster in Latvia, comprising Varme, the first and second Stelpe solar farms. We also increased our secured capacity by 0.3 gigawatts to 3.4 gigawatts, following three final investment decisions made for battery energy storage system projects in Lithuania, with a total capacity of 291 megawatts. It includes projects in Kelmė, Kruonis, and Mažeikiai.
With a combined investment of around EUR 130 million, these projects are expected to reach COD in 2027. Further on, in Q3 of 2025, we secured EUR 318 million long-term financing for the 314-megawatt Kelmė wind farm from European Investment Bank, Swedbank, European Bank for Reconstruction and Development, and Nordic Investment Bank. This is the largest debt financing transaction ever concluded by us, marking an important milestone. We also submitted a bid for the 700-megawatt Lithuanian offshore wind project with state support. However, as the tender required at least two participants and only one bid was submitted, the tender did not take place. Additionally, we took over full control of Kroonias North offshore wind project in Lithuania after acquiring a 49% stake from OceanWinds. We continue developing the project independently to obtain a construction permit in 2027.
Finally, our Kelmė and Kruonis battery energy storage system projects were awarded state aid of EUR 12.6 million. In the networks business segment, we achieved our goal of installing over 1.2 million smart meters by 2026. Also, the regulator has adopted the resolution setting Regulated Asset Base at EUR 1.9 billion, with an average cost of capital at 5.74%, and an additional tariff component at EUR 51.8 million for 2026. In the reserve capacities business segment, a capital overhaul of Unit 7 and Elektrėnai complex was commenced, with the completion scheduled by mid-2026. In our customers and solutions business segment, in the last quarter, we added 178 new EV charging points, bringing the total to 1,558 across the Baltics. Also, we submitted comments to the public consultation initiated by the Lithuanian Ministry of Energy regarding the prosumer model update.
This change is aimed to improve loss-making prosumer supply activities, with implementation targeted from 1 April 2026. However, the timeline is subject to the European Commission approval. Now, I would now like to highlight the key developments in our sustainability performance. During the reporting period, our net electricity generated increased by 60.9% to 3 terawatt-hours. We increased generation from green capacities assets driven by new assets launched: Kelmė Wind Farm, the second Silesia Wind Farm, and Vilnius CHP biomass unit. However, our green share of generation decreased by 17.6 percentage points to 66.0% due to the proportionally higher electricity generation at Elektrėnai complex. Looking at our greenhouse gas emissions, it amounted to 3.48 million tons of carbon dioxide equivalent, representing a 22.5% year-over-year increase. This increase was primarily driven by a 92.1% increase in scope 1 emissions, largely due to the new services provided by Elektrėnai complex.
Scope 2 emissions stayed at a relatively similar level, with a 0.9% decrease, and scope 3 emissions increased by 14.4%, reflecting higher electricity sales, especially in Poland. Finally, on our safety, we recorded no fatal accidents. Our total recordable injury rate stands at 0.97 for employees and 0.71 for contractors. With the strategic performance overview concluded, I will now hand over to Jonas for the financial results.
Jonas, Financial Executive, Ignitis Group: Thank you, Darius. Let me start with the financial highlights of the first nine months of 2025. Adjusted EBITDA grew by 2% year-over-year and reached EUR 405.1 million, driven by strong results in green capacities and networks. Adjusted net profit decreased by 17% and amounted to EUR 177.6 million, mainly due to higher depreciation and amortization expenses, as well as lower financial activity results. Our investments amounted to EUR 529.9 million, with 51% allocated to the networks and 41% directed to green capacities. However, as six projects reached COD, total investments decreased compared to the first nine months of 2024. Return on capital employed decreased by 2.2 percentage points to 8.1%, mainly due to the lower result of the customers and solutions segment. Despite an 11% increase in our net debt, our leverage metrics remained strong, with the FFO to net debt ratio at 23.4% and net debt-to-adjusted EBITDA at 3.3 times.
Our robust balance sheet was also reaffirmed by S&P Global, with a BBB+ credit rating and a stable outlook. Finally, in line with our dividend policy, we distributed a dividend of EUR 68.30 per share for the first half of 2025 in October, marking a 3% increase compared to the previous year, in line with the dividend policy. We will now take a closer look at each of our key performance indicators, starting with adjusted EBITDA. Firstly, green capacities EBITDA grew by 19% to EUR 215.4 million, driven by new assets launched and new services provided. Secondly, networks EBITDA grew by 16% and reached EUR 192.8 million, mainly due to higher regulated asset base as a result of continued investments into our electricity network and a higher weighted average cost of capital set by the regulator. Thirdly, reserve capacities EBITDA decreased by 5% to EUR 34.7 million, mainly due to lower captured gross profit margin.
Finally, our customers and solutions EBITDA was negative EUR 43 million. The year-over-year decrease was driven by lower natural gas B2B supply results and the adverse effect of prosumers under the current net metering scheme. Next, let's take a look at the EBITDA results of each segment in more detail. Beginning with green capacities, it remains the largest contributor to the group's adjusted EBITDA, contributing for 53% of the total. The main drivers behind the 19% year-over-year increase were, firstly, the launch of new assets, including Silesia 2 wind farm in Poland, Kelmė wind farm in Lithuania, Stelpe and Varme, solar farms in Latvia. Secondly, stronger performance from flexible assets and newly introduced balancing capacity services.
Turning to the networks segment, the growth in networks adjusted EBITDA was supported by a higher regulated asset base, which grew by 13% from EUR 1.6 billion to EUR 1.8 billion, driven by continued investments into the electricity network and an increase in WACC set by the regulator, which increased from 5.1% in 2024 to 5.8% in 2025. For 2026, the regulator has already set RAP at EUR 1.9 billion, representing a 6% increase, and WACC at 5.74%, which is at a similar level as in 2025. Moving on to the reserve capacity segment, EBITDA of the segment decreased by 5% year-over-year, driven by regulatory activities. Finally, customers and solutions adjusted EBITDA amounted to negative EUR 43 million. Both electricity and natural gas supply results have declined year-over-year. On the electricity side, the decrease was mainly due to prosumers under the current net metering scheme and a negative effect from increased imbalance prices.
On the natural gas side, B2B supply result was lower, mainly because of more favorable margins secured in 2024. After reviewing the key factors behind our business segment EBITDA, let's move on to discuss our investment activities. In the first nine months of 2025, our investments amounted to EUR 529.9 million. 51% of investments were made in the networks and 41% in the green capacity segment. Year-over-year, investments declined by 9%, driven by lower investments in green capacities, as six projects reached COD. Green capacities investments decreased by 35% to EUR 219 million. In the first nine months of 2025, our main investments took place in solar, onshore wind, and hydropump storage projects. In the networks segment, we invested EUR 271.6 million, which is 25% more than last year.
The growth was primarily driven by higher investments in electricity grid expansion through new connection points and upgrades, as well as higher costs to connect new customers as they are located more remotely. Next, our free cash flow, it stood at negative EUR 122.6 million, relatively flat year-over-year. Turning to the leverage metrics, our net debt increased by 11% and amounted to EUR 1.8 billion at the end of Q3 of 2025. Our key rating metric, FFO to net debt, decreased to 23.4% but remains above the threshold required to maintain a BBB+ credit rating. Net debt-to-adjusted EBITDA rose slightly from 3.1 to 3.3 times. Finally, our guidance for 2025, following our performance in the first nine months of the year, we narrow our full-year 2025 adjusted EBITDA guidance to between EUR 510-EUR 540 million and update our investment guidance to between EUR 700-EUR 800 million.
There have been no changes in the directional guidance for adjusted EBITDA by segment, nor in the main drivers behind it. With that, I will hand over to Darius to summarize our presentation.
Darius, Senior Executive/Management, Ignitis Group: Thank you, Jonas. To sum up, over the first nine months of 2025, we delivered strong financial and operational results with key highlights as follows. First, our adjusted EBITDA reached EUR 405.1 million, representing a 2% year-over-year increase. Second, our installed capacity increased by 0.7 gigawatts to 2.1 gigawatts, reflecting our focus on driving strategic growth. Third, we maintained a robust balance sheet with the net debt-to-adjusted EBITDA ratio standing at 3.33 times. Our strong financial position also confirmed by S&P Global ratings, which reaffirmed our BBB+ credit rating with a stable outlook. Lastly, in line with our dividend policy, for the first half of this year, we paid a dividend of EUR 68.3 per share, corresponding to EUR 49.4 million. Lastly, for 2025, we expect adjusted EBITDA to be in the range of EUR 510-540 million and investments in the range of EUR 700-800 million.
With that, I would like to thank you for your attention and joining us today.
Moderator/Operator, Ignitis Group: We will now begin the Q&A session. To submit a question through the webcast, please click the Ask a Question button on the right-hand side of the screen. If you have dialed in and would like to ask a question, please press star five on your phone. Our first question is, how do you see the public debate surrounding the Kroonias North project's development?
Darius, Senior Executive/Management, Ignitis Group: Given that Kroonias North is the first offshore wind project being developed in Lithuania, we appreciate the interest in it. The group's supervisory board, in addition to its regular oversight activities, conducted an additional assessment of Kroonias North's development. For that purpose, they engaged independent experts from Wood Mackenzie to assess the project's timeline, investment assumptions, and risk management practices against global and European offshore wind industry benchmarks. The assessment concluded that the multiple implementation scenarios adopted by the project team represent a robust approach aligned with the industry standards, that the investments made to date are reasonable and below benchmark levels, and that the group has a strong risk governance framework consistent with the market practices.
Moderator/Operator, Ignitis Group: The next question is, why was investment guidance for 2025 lowered?
Darius, Senior Executive/Management, Ignitis Group: Yes. We have decreased the top range of our guidance from EUR 900 million to EUR 800 million, and that essentially reflects our approach in being more selective on the green capacities investment side. We are simply being more selective and doing only the best projects that we have in our portfolio.
Moderator/Operator, Ignitis Group: Thank you. As there are no further questions, we will wait for a minute. As there are no further questions, this concludes our earnings call. Thank you for joining us today. If you have any further questions, please reach out to our investor relations team. Thank you and stay.
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