Completing the first half of the year with positive indicators, Galata Wind Enerji A.Ş. recorded a 26.2% year-over-year (y-o-y) growth in its consolidated revenues and boosted its EBITDA profit by 16.8% to TRY 130 million.
Galata Wind Enerji A.Ş.'s consolidated revenues climbed by 26.2% in 1H21, reaching TRY 180.069 million (2020: TRY 142.684 million). The major driver of revenue growth was the increase in electricity sales prices due to an 11% y-o-y increase in generation, reaching 308,485 MWh (2020: 276,872 MWh).
Galata Wind's consolidated gross profit increased by 13.6% y-o-y to TRY 115.525 million (2020/06: TRY 101.67 million); and the company’s Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) rose by 16.8% to TRY 130.625 million (2020/06: TRY 111.807 million).
The main reason why the gross profit rate fell short of the revenue growth rate is the depreciation expense calculated in 1H21 for the Taşpınar WPP, which was partially commissioned in 4Q20. (Depreciation expense included in the cost of sales 30.06.2021: TRY 30.735 million – 30.06.2020: TRY 16.954 million, increase: TRY 13.781 million).
Despite the increase in net profit from operations, foreign exchange revenues from commercial activities dropped from TR 24.871 million to TRY 2.134 million, financial expenses went up by TRY 26.271 million due to the interest and foreign exchange expenses of the loans utilized, a significant portion of which was allocated to financing the Taşpınar WPP investment, ultimately leading to a 1H21 net profit figure below the previous year’s first half close with TRY 14.158 million (2020/06: TRY 51.796 million in profit).
Galata Wind raised TRY 136.467 million (2020/06: TRY 138.412 million) in cash from operations in 1H21. Cash inflow from operating activities indicates that the Company boasts a strong cash generation potential. Moreover, as of June 30, 2021, there are retained earnings of TRY 262.187 million on the Company's balance sheet. Considering the retained earnings on our balance sheet and our stable cash flow, we aim to distribute profits regularly every year as per our dividend policy.
The sales revenue generated from carbon emission reduction certificate right, which are reported under the company's revenue, skyrocketed by 518% y-o-y to TRY 6.252 million, up from TRY 1.012 million. The Company will continue to acquire these rights, which it has obtained with the generation activities at its power plants, in 2021 as well.
Partially commissioned at the end of 2020 and fully commissioned with all its turbines in March 2021, the Taşpınar WPP, which sells the electricity it generates at 94 US$/MWh including domestic contribution as part of the Renewable Energy Support Mechanism (YEKDEM), recorded a generation output of 15,598 MWh in 1Q21 and 27,266 MWh in 2Q21. The power plant is expected to have a more positive impact on revenue growth throughout the rest of the year as it will be running at full capacity both operationally and technically.
The Taşpınar WPP Hybrid Solar Power Plant (SPP) investment, which is included in the Company’s project pipeline set to have an installed capacity of 42.58 MW, has been approved on the precondition that the investment receives a positive EIA within one year following the decision of the Energy Market Regulatory Authority dated 05.08.2021 and numbered 10345-3.
The Company aims to obtain all the necessary permits such as EIA, Reconstruction, Expropriation, etc. and start the construction by the end of 2021 with the goal of completing and commissioning the SPP by 1Q22. As the power generated by the SPP will be sold as part of YEKDEM, which also governs the activities of the Taşpınar WPP (94 MW/US$ until the end of 2025; 73 MW/US$ for 5 years between 2026 and 2030), the power plant is expected to drive revenue growth for the Company in the short term.
Operating under Galata Wind with an installed capacity of 62.7 MWm/51 MWe in the Mut District of Mersin, the Mersin WPP now boasts an installed capacity of 62.7 MWm/56.85 MWe following the amendment to its license as per the permission of the Energy Market Regulatory Authority. This increase in the generation output of the Mersin WPP is expected to culminate in a generation boost of around 10%. Especially considering the region will soon transition to the high-yield period of its wind regime, the revenues from the increase in power generation in the coming periods will be reflected positively in the financial statements.
The rise in the revenue and gross profit generated from operations, which are to be considered as key performance indicators of the Company, points to a successful 1H21 performance. The revenue contribution of the Taşpınar WPP, which was commissioned at full capacity at the end of March, and of the 10% capacity increase of the Mersin WPP, realized as of the end of May 2021, to the financial statements will further consolidate in the rest of the year. While the combined output of our Şah WPP, Mersin WPP and Taşpınar WPP in 2Q21 was 120,737 MWh (in 3 months), the same power plants managed to generate an estimated 103,798 MWh in total during a 1.5-month period between July 1 and August 15. If the WPPs maintain their level of generation during the high-yield period (starting from summer) of the wind regimes in their respective locations, the revenue growth they will drive is expected to have a positive effect on the financial statements in the coming period.
Galata Wind also explores investment opportunities both inside and outside Turkey and will publicly announce any new developments as necessary.