Release Date: April 16, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Polska Grupa Energetyczna SA (FRA:6PG) managed to improve profitability despite declining revenues, achieving a recurring EBITDA of almost PLN 11 million.
• The company successfully launched new gas-powered units, replacing older coal units, which contributes to lower emissions and increased flexibility in energy generation.
• Significant progress was made in the development of offshore wind energy, with a major investment project in Baltica, supported by substantial EU and commercial bank funding.
• The company reduced its economic debt by over PLN 4 billion, partly due to a decrease in emission rights costs.
• Polska Grupa Energetyczna SA (FRA:6PG) is actively expanding its energy storage capabilities, which will help stabilize energy supply and demand fluctuations.

Negative Points

• The company faced challenges with environmental decisions regarding a mine and delays in offshore wind farm projects, which required significant management attention.
• There was a general decrease in the profitability of energy generation due to lower actual sales prices and reduced revenue from support mechanisms.
• The company experienced a decrease in retail sales, particularly to large clients, impacting overall revenue.
• Polska Grupa Energetyczna SA (FRA:6PG) had to notify the prosecutor of potential crimes related to mismanagement and suspicious promotional activities, indicating governance issues.
• The company is cautious about future dividend payouts due to uncertainties in the conventional energy sector and associated costs.

Q & A Highlights

• Warning! GuruFocus has detected 4 Warning Signs with FRA:6PG.

Q: When can we expect the announcement of the new strategy of PGE? A: The new strategy will be announced in the first 10 days of June. It will include components such as wind offshore energy, storage, and distribution projects. The strategy aims to adapt to the transformation and challenges ahead, assuming no major geopolitical surprises.

Q: What is PGE's stance on dividend payouts given the current market conditions? A: PGE believes it has the potential to pay out dividends, but the general shareholders meeting decided not to recommend this for the current year. The decision will be revisited at the point of strategy publication, considering the comprehensive strategy and market conditions.

Q: What is the total CapEx expected for 2025? A: Excluding the Baltica II project, CapEx is expected to grow by up to 10%. The total amount will depend on the schedule of work and settlements.

Q: Are there any plans for asset acquisitions or offsets? A: The topic of asset offsets is not closed, with studies still being prepared. Decisions will be made in the second half of the year. PGE is interested in acquisitions, particularly in wind energy, onshore wind energy, and the gas sector, with a conservative approach to negotiations.

Q: What was discussed in the recent meeting with the Prime Minister? A: The meeting focused on energy prices and their impact on the competitiveness of the Polish economy. The Prime Minister emphasized the need for energy prices to support economic growth. PGE's investment program aims to target price decreases, aligning with the government's strategic goals.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.