Ladies and gentlemen, welcome to the PNE AG Q1 2025 results conference call. I am Sandra, the conference co-operator. I would like to remind you that all participants are in listen-only mode and the conference is being recorded. The presentation will be followed by a Q&A session. You can register for questions at any time by pressing star and one on your telephone. For operator assistance, please press star and zero. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Heiko Wuttke, CEO. Please go ahead, sir.
Good morning, everyone. Thank you for joining us today in this conference call regarding the results of the first quarter of 2025. My name is Heiko Wuttke, CEO of PNE AG, and I'm accompanied by Harald Wilbert, our CFO. Let me give you a first overview of the presentation and the course of today's webcast on slide three in the presentation. As usual.
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Webcast. As usual, I will begin with a summary of the first quarter 2025, followed by an update regarding the operating business. I will pass over to Harald for an update on the financials. After that, I will conclude the presentation with the outlook for 2025. We will then open the line for questions. As usual, our slides can be found on our investor relations website. Having said this, I would now like to draw your attention to slide number five. Ladies and gentlemen, overall, we had a solid start in the year in the first quarter of 2025. In the project development, we made good operational progress with high development and construction activities, which resulted in the completion of two projects in Germany, new permits, and a successful tender result.
Our project pipeline, the basis for our future business, remained stable compared with the end of 2024. As expected, we did not sell any projects in the first quarter 2025, but planned to do so in the remainder of the year, primarily in the second half. In power generation, the expansion of our own IPP portfolio continued to 446 MW as we added two projects in the first quarter. These milestones make us optimistic for the future. However, the first quarter was characterized by a sharp drop in electricity generation from wind energy. According to BDEW, around 31% less electricity was generated by onshore wind turbines in Germany than in the same period of the previous year due to significantly lower wind yields. This also affected our power generation segment. Nonetheless, our service business continued to develop well.
In financial terms, our total output was stable at EUR 55.7 million, but EBITDA decreased to EUR 3.6 million, mainly burdened by the weak wind yields. Please note that in terms of seasonality, Q1 is historically a weak quarter, as project sales tend to happen later in the year. With this, let's move on to the project pipeline on slide number seven. As you can see in the chart on the right-hand side of the slide, the project pipeline in the first quarter was stable at 19 GW, but decreased as expected compared to the previous year, mainly due to the sale of our U.S. and Swedish businesses in 2024. The pipeline in our core markets, Germany, France, and Poland, however, grew by a strong 27% to 7.5 GW.
Having a look at the subdivisions compared to the previous year, wind onshore slightly increased to 9.9 GW, PV decreased to 6.5 GW peak, and wind offshore was stable at 2.5 GW. The total project pipeline, wind onshore, which is the basis for our IPP portfolio, grew to 9.9 GW, as I explained, coming from 9.8 in the previous year. Our home market, Germany, which accounts for 33% of our project pipeline, increased by a strong 24% to 3.2 GW. The wind farm Stufenborn 1B, 6 MW, and Herbstleben Dachwild, 11 MW, were completed and put into operation for our own IPP portfolio. In addition, seven wind farms with 153 MW were under construction in Germany, and we received permits here for another 61 MW.
With respect to our other core markets, we have another project with 11 MW under construction in France, and our project pipeline in Poland grew by a strong 49% to 2.1 GW. Finally, we received new permits in Poland of 22 MW and in Turkey of 72 MW. Moving on to slide nine, we see a decrease in our PV project pipeline compared to the previous year, exclusively due to the sale of the complete U.S. PV pipeline in 2024. Adjusted for the market exit in the U.S., the pipeline grew nicely and development activity is picking up. This results in good progress from projects to the later project phases, resulting in a 63% growth of phase three projects to 624 MW peak.
Especially in our core markets, we see a nice increase of our PV project pipeline in Germany with 35% to 909 MW peak, and in France with 30% to 222 MW peak. We also achieved strong growth of 46% to 697 MW peak in Italy. As we are happy to share with you that we received new permits in our core markets, Germany, and we are happy with 124 MW peak, and Poland with 61 MW peak in the first quarter, this shows a very nice success. If you look at the expansion of our own generation portfolio in the first quarter, 2025, on slide 10, you see that we made good progress here as well.
We added 17 MW in the first quarter, and with that, increased the total megawatt in operation to 446 MW at the end of the first quarter 2025, with 429 MW coming from the wind onshore Germany, 11 MW coming from wind onshore France, and 6 MW coming from the woodfired combined heat and power plant Silbits. Further, approximately 164 MW in Germany and France were under construction at the end of the first quarter, partially intended for the IPP portfolio. Burdened by the low wind yields already mentioned before, we produced 197 GW-hours of green energy in the first quarter of 2025. We saved 149 kilotons of CO2 equivalents in the first quarter of 2025. The hidden reserves accumulated in our portfolio were stable at EUR 196.3 million compared to EUR 195.3 million by the end of 2024.
With this, ladies and gentlemen, I would now like to hand over to Harald for the financials.
Yes, thank you, Heiko. First of all, I also would like to welcome everybody here in this call. Looking at slide 12, the financials in Q1 were impacted by our high development and construction activities, the addition of further projects to our IPP, as well as by the negative impact from the weak wind yields. Total output was stable at EUR 55.7 million compared to EUR 57.0 million in the previous year. Cost of materials increased due to high development and construction activities, and personnel expenses rose due to an increase in the average number of employees of 48. Our EBITDA decreased to EUR 3.6 million compared to EUR 8.5 million in the previous year due to the lower wind yields. Net income was positively impacted by subsequent measurements of the interest rate swaps and KfW loan liabilities in accordance with IFRS.
According to IFRS 9 and IAS 20, we have to apply the so-called effective interest method on all loans. As the applicable market interest rates continuously change for PNE, IFRS demands for these loans a revaluation at fair value, the so-called subsequent measurement. In consequence, decreasing market interest rates, as seen in 2024, led to higher present values of the respective KfW loans and so to interest expenses. Increasing market interest rates, as seen in the first quarter of 2025, led to lower present values of the respective KfW loans and to interest income. In our case, the financial result was impacted by plus EUR 10.6 million in the first quarter 2025 compared to EUR -1.2 million in 2024.
This interest income caused by the effective interest method influences our net result, but I want to stress here that these effects have neither an effect on liquidity, nor do they reflect our operating performance. Looking at the segments on slide 13, we see a mixed picture. Total output of the segment project development increased to EUR 57.4 million compared to EUR 54.5 million in the previous year. The reasons for this were the high construction and development activities. However, total output of the segment power generation decreased to EUR 20.1 million compared to EUR 26.1 million in the previous year due to the weak wind yields mentioned before. Total output of the segment services increased to EUR 8.8 million compared to EUR 8.1 million in the previous year, driven by a strong order book.
EBITDA-wise, the segment project development had the highest contribution in the first quarter 2025 with EUR 15.9 million. EBITDA from the segment power generation decreased to EUR 13.2 million, and the services segment contributed EUR 1.0 million. However, I would like to mention in this context that a new allocation formula for the distribution of overhead costs led to personal and other operating expenses by segment not being comparable with the previous year. Consolidation was driven by investments in our IPP portfolio. On the asset side, on slide 14, that most is on the asset side, we see on slide 14 that most is allocated to property, plants, and equipment, as well as inventories, what we see as investment in stable values. Our balance sheet remained solid with a slightly increased cash position of EUR 96.2 million compared to EUR 91.6 million at the end of 2024.
Equity was at EUR 191.3 million, coming from EUR 194.6 million at the end of last year. The equity ratio was 15.1%. Adjusted for hidden reserves, it was at a comfortable 26.5%. Liabilities to banks further increased as the build-up of our IPP portfolio continued. It is worth mentioning that the majority of these bank liabilities are non-recourse project financing. With that, I would like to hand back to Heiko for the outlook.
Thank you, Harald. Ladies and gentlemen, this leads me to the outlook on slide number 16. Our high development activity in Q1 is the prerequisite for targeted project sales in the remainder of the year. We confirm our guidance for the full year 2025 with a group EBITDA in the range of EUR 70 million-EUR 110 million. In line with our adjusted strategy, we are targeting various project sales, for example, in Germany, Poland, or Romania, which we expect primarily in the second half of this year. Having said this, let me assure you that the build-up of our IPP portfolio will continue as well. Further projects are expected to be put into operation for our IPP portfolio this year. According to our stronger focus on selected core markets, we are targeting market exits for Panama and Turkey. All these measures are in line with our strategy.
Let me therefore assure you once again, we are committed to future-proof sustainable growth and value creation. With this, I would like to conclude our presentation and open the call for questions. Thank you very much.
We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touch-tone telephone. You will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use only hands as well as asking a question. Anyone with a question may press star and one at this time. Our first question comes from Guido Heumann from Metzler. Please go ahead.
Yeah, good morning, gentlemen. Three questions, please. The first one is you wanted to conduct or you want to conduct a thorough review of the cost structure of your group. Are there already any results from this analysis currently being carried out? The second one is rather, let's say, a sector question. Do you think that the fact that in Germany the number of hours with negative power prices keeps increasing so that this phenomenon could change the way people or politicians view the expansion of renewable energies here? Could the priority now be shifted to expanding the infrastructure, i.e., storage, etc., and slowing down the expansion of renewable generation capacities? Thirdly, in this context, are you seeing more demand for development of battery storage solutions?
Yeah, thank you very much for your questions. Maybe I take over the first part, the review of the cost structures. If there are any results available, we are still in the project. This will take several more weeks, and then we have the final outcome and results. In the moment, we are still conducting this, and it's a longer process. Maybe in the summer, we will then finish this project, and then maybe we can then elaborate on this in the Q2 call.
Okay. I think I take the second question regarding the, let's say, development of the negative power prices. It is clear that with increasing renewable energy, this is a topic that needs to be looked at very, very thoroughly. Of course, an increase that is slightly seen is something that has to be, let's say, tackled. Therefore, battery systems are definitely one solution. On the second part of that question, will we expect, let's say, a change in the targets of the government or focus? That is actually not what we see. I think there will not be a shift in the targets of onshore wind PV as far as we have seen it so far, but more seeing a technical answer on that rather than shifting targets. Okay.
Yes, on BESS battery energy storage systems, yes, I think that will increase if you have seen the new targets of the BNetzA in Germany, where there is an outline up to 2045. There is a clear pathway that an increase, depending on the scenario, is foreseen. I think it's a necessary step regarding the, let's say, grid stability and certain actions. That's the topic, and that's a segment of technology where we as PNE will focus on as well.
Do you already see increasing demand or increasing requests from your customers or so?
I'm not sure what kind of customers you talk because one is that we develop on our own. And so we focus on certain areas where we're going to develop this. Demand is at least seen to those who are handling this in a, let's say, in a trading way. So really taking over those kind of projects, the demand will increase for sure.
Okay. Okay. All right. Thank you.
The next question comes from Karsten Blumenthal from First Berlin Equity Research. Please go ahead.
Good morning, Heiko. Good morning, Harald, and thanks for taking my questions. My first question is regarding your EBITDA result in the services business. That was much weaker than I expected. Harald mentioned that you have a new allocation formula for personnel cost to segments. Perhaps, and I looked it up in the segment reporting in the services segment, personnel expenses were EUR -4.5 million before, EUR -2.9 million. Perhaps you could elaborate on your new formula and what has changed to get a better understanding of the segment EBITDAs?
Mr. Blumenthal, thank you very much for your question. First, the one quarter is maybe not really representative for a segment like services. It is better to see for a year or so. Anyway, yeah, we changed the allocation formula. It is now depending on revenues, EBITDA, and FTE of each segment. The service segment has a lot of FTEs, and this is the reason why we allocate more personnel expenses and more from the overhead and more other operating costs. We have to see what is the outcome then for the full year 2025. What I can assure is that the order book is really positive. The development for services, they are really strong there. It is really running good, the service segment in general.
Okay, thanks for that. Second question is regarding our new government. The new government is established, and we have Mrs. Reiche as new Minister for Economic Affairs. She will be responsible for energy, and she has a lot of experience in this sector. What are your expectations regarding her and the new government? What do you think they will do first in the area of renewable energy? Yeah, what are your expectations there?
Yeah, thanks for that question. Yeah, in fact, coming to the Ministry of Economics and Energy, Mrs. Reiche, since she, let's say, comes from the other side, understanding the demands where we are partly in as well, I think is a positive choice, first of all. However, being active in the conventional area, I think that her first steps were seen in more or less bringing down electricity costs by, for instance, lowering taxes and focusing on the stability, let's say, baseline stability, which is more than looking into gas-fired power plants. In general, with the new government and that ministry, we have seen already in the coalition agreement, and we see this now, what will be the first steps for our business? We do not see a major impact, actually, not really a visible one, because they have underlined the goals.
They have extended the planning for dedicated areas and onshore wind. Therefore, I think we can look positively towards that. However, we have always emphasized that, of course, the development on renewables in Germany must keep the pace that we had before and that we do not get any disruption because this would, of course, not be favorable for long-term investments.
All right. Thanks for giving me your opinion there. Last question from my side. You expanded the own plant portfolio again, this time 17 MW to 446 MW. So it's a really strong development if you look into the last years. Given that we have now beginning of May, you still think that this year you will further increase your portfolio? Have you a rough current figure where you would like to be at the end of the year with your own plant portfolio?
Yeah, thank you. Thank you again. Yes, the first projects were a good success, and we plan further projects to bring into the IPP this year. It's not completely clear at this stage, but at the end of the day, we tend to reach between around 50 MW. That increase is something that we can expect, and we remain a bit flexible if we add on that or not.
Perfect. Thanks a lot for taking my questions.
You're welcome.
As a reminder, if you wish to register for a question, please press star followed by one. The next question comes from Holger Steffen from SMC Research. Please go ahead.
Good morning, everybody. I have just one additional question about your outlook. What share of EBITDA from the power generation segment did you include in your forecast? Maybe you can give us an idea. Did you change this after the Q1 figures, which were really weak?
Yeah, thanks for the question, Holger, and thanks for waiting since we, I think, the exact figures, we usually don't report, but we are looking this up and come back to you after this webcast. This is something we can provide later on.
Okay. Thank you very much.
Thank you for your acceptance. Thanks.
Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Heiko Wuttke for any closing remarks. Please go ahead.
All right. Thank you. If there are really no further questions, we would like to thank you for your participation in today's webcast. We look forward to welcoming you next time, maybe next week at our annual general meeting on May 13th or at our next webcast on the publication of our half-yearly financial report 2025, which is scheduled for 14th of August. Have a great day, and thank you very much.
Ladies and gentlemen, the conference is now over. Thank you for choosing [for this call], and thank you for participating in the conference. You may now disconnect your lines. Goodbye.