Elektroprivreda Crne Gore (EPCG) ended 2024 with a net profit of 10,2 million euros, a decrease compared to the previous year, when profit amounted to 52,5 million euros. The decrease amounts to almost 80,5%, according to the company's published financial statements.
Profit before tax amounted to 12,47 million euros, while the company's total retained earnings at the end of last year were 70,17 million euros.
"Vijesti" asked the state-owned energy company what the reason for the large drop in profits in one year was and whether it could affect its operations this year.
Business stable
"During 2024, EPCG faced a series of market and natural challenges that affected the final financial result. A profit of around 10 million euros is an excellent result when considering the combination of several aggravating circumstances. The greatest individual impact was the extremely unfavorable hydrological period, which significantly reduced the production capacities of hydroelectric power plants. At the same time, changes in the stock market further reduced export revenue, which was an important source of profit in previous years. Also, in 2023, a kind of one-off income was generated, including those related to property transactions such as the acquisition of the Steel Plant, which was not present in 2024 and naturally reflected in the decrease in comparable results," EPCG said.
As they pointed out, this outcome not only does not pose a threat to the stability of EPCG's operations, but the company has maintained its financial sustainability, and all planned investments in the field of renewable energy sources, digitalization and modernization of the network are proceeding smoothly.
"Also, special attention is paid to the strategic diversification of production sources, which reduces sensitivity to hydrological and market changes in the long term. With a clear focus on efficiency, responsible management and sustainable development, EPCG remains a safe and stable partner in Montenegro's energy transition. We are optimistic about continuing growth and strengthening our role in the regional energy space," the company emphasized.
According to data from the financial report, revenues from the sale of electricity, which represent the main source of income for EPCG, amounted to 416,4 million euros, which is a decrease of 36,6 million compared to 2023, when they amounted to 453 million euros. The decline in other operating income from 41,1 million to only 7,7 million euros was particularly pronounced, which is partly explained by reduced income from asset value adjustments.
The state-owned energy company will face a major business challenge this year due to the ongoing environmental reconstruction of the Pljevlja Thermal Power Plant, which will be out of operation from early April to mid-November. Due to the shutdown, EPCG will not be able to count on electricity worth around 90 million euros, which would have been produced at the Pljevlja Thermal Power Plant during that period. EPCG has already provided around 75 percent of the required amount of electricity, worth around 60 million euros, on the market.
Increased expenses, reduced salary costs
At the same time, income from interest and financial investments remained stable - they amounted to around 4,5 million euros, almost identical to 2023. A novelty in the balance sheet is income from participation in the capital of subsidiaries, which amounts to 6,56 million euros, income that was not present in 2023.
Total expenses amounted to 390,9 million euros, which is 7,9 million more than in 2023. Expenditures for raw materials, supplies and energy decreased from 196,3 to 189,3 million euros, but other operating expenses, including provisions, expenses, taxes and contributions, increased from 160,5 to 176,8 million euros.
Salaries and compensation costs amounted to 31 million euros, which is lower than in 2023, when they were 34,2 million, while asset depreciation amounted to 24,9 million, slightly less than in the previous year.
Capital was reduced from 1,04 billion to 1,01 billion euros, partly due to corrections made based on retroactive CO₂ emission costs. The report states that the beginning of 2024 was marked by changes in accounting rules, due to which EPCG had to subsequently show some previous costs, especially those related to pollution (CO₂ emissions) and the risk of unpaid receivables. As a result, the company's capital was reduced by 12,8 million euros at the beginning of the year.
"In the previous year, the Company's management managed to preserve liquidity, creditworthiness, increase the level of collection and the number of regular payers, as well as the same level of electricity prices charged to citizens and businesses. It is important to emphasize that all of the above results were achieved without state assistance, and with a professional attitude towards the Company by both the Board of Directors and management, as well as all employees.", is the position of the company's management, which was provided with the financial report.
Loans reached 111 million euros
According to the financial report, the energy company's long-term liabilities have increased significantly, from 60,6 million euros in 2023 to 107,5 million euros, and the company's total indebtedness based on long-term and short-term loans reached 111,8 million euros at the end of December last year.
During 2024, EPCG secured four large loans from domestic banks worth a total of 34,5 million euros, intended for the implementation of the state energy project "Solari 5000+70MW". The loans were approved with fixed interest rates and long-term repayment terms, and the funds were secured from Prva Banka, the Investment and Development Fund (IRF), Crnogorska Komercijalna Banka and NLB Banka.
The loan with Prva Banka was concluded on July 16, 2024, in the amount of four million euros, with a fixed interest rate of 4,30%. The repayment deadline is July 2031. The second loan was concluded with IRF (Development Bank of Montenegro) on September 16, 2024, also to finance the same project, in the amount of 10 million euros. The repayment deadline is September 2034, and the interest rate is fixed at four percent per annum.
The third loan in the amount of 10 million euros was concluded with Crnogorska Komercijalna Banka (CKB) on 26 November 2024, with a maturity date of November 2034. The interest rate is 3,55% per annum. The latest agreement was concluded with NLB Bank on 28 November 2024, in the total amount of 10 million euros, but by the end of the year EPCG had withdrawn 3.516.863 euros. Repayment has not yet started, and the maturity date is December 2034. The interest rate is 3,50% per annum.
In addition to domestic banks, EPCG also owes international financial institutions: KfW (German Development Bank) 11,74 million euros for the modernization of HPP "Perućica", EBRD (European Bank for Reconstruction and Development) 5,58 million euros, the loan relates to electricity distribution and the contract provides for the reimbursement of obligations by CEDIS, IBRD (International Bank for Reconstruction and Development) 3,7 million euros, EIB (European Investment Bank) 196.541 euros for projects in HPP "Piva" and HPP "Perućica"....
EPCG's total assets at the end of 2024 amounted to 1,297 billion euros, compared to 1,274 billion a year earlier. Fixed assets increased by more than 20 million euros, while cash on hand increased to 50,7 million euros.
Inventories increased from 14,2 to 16,5 million euros, and investments in property, plant and equipment amounted to over 41 million euros 75,31 million.
Capital investments down by 22 million euros
In a year marked by a decline in profits, EPCG made capital investments in the amount of 52,86 million euros, according to data from the official financial report.
This is 22 million euros less than in 2023, when investments amounted to 75,1 million euros.
The largest portion of the money was directed to the renewable energy sector, specifically projects under the authority of the Directorate for Renewable Energy, where investments amounted to 24,55 million euros. This was followed by FC Production with 18 million, as well as the Directorate for Development and Engineering with 8,17 million euros.
Among the investments implemented or partially implemented during the year, the continuation of the Solari 5000+70MW project, investments in the ecological reconstruction of the Pljevlja thermal power plant, turbine overhauls and boiler replacements, investments in solar power plants owned by EPCG, works on the Perućica and Piva HPPs, including the modernization and second phase of reconstruction activities on the recultivation of the Maljevac landfill, were highlighted.
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