Dear ladies and gentlemen, welcome to the Analyst and Investor Conference call of Uniper. At our customer's request, this conference will be recorded. As a reminder, all participants will be in a listen-only mode. After the presentation, there will be an opportunity to ask questions. If any participant has difficulty hearing the conference, please press star key followed by zero on your telephone for operator assistance. May I now hand you over to Stefan Jost, who will start today's meeting. Please go ahead.
Good morning, dear analysts and investors. Welcome to the Uniper interim results call for the first nine months of fiscal year 2021. Thank you for participating in our conference call today. This time, our CFO, Tiina Tuomela, will guide you through the interim results presentation and answer all your questions. Tiina will start with a brief wrap up of the key highlights, and then focus on the financial data. Tiina, please.
Thank you very much, Stefan. Good morning, everyone. Also from my side, a warm welcome. Before I will go into the details of our financials, I would like shortly to start briefly with the key highlights, and shed some light on recent developments relating to our portfolio and strategy execution. Uniper's business performance in the third quarter again exceeded our expectations, which led ultimately to the ad hoc announcement two weeks ago. Accordingly, our financials should not come as a surprise to you today. Adjusted EBIT increased more than 50% year-on-year to EUR 614 million in the first nine months of the fiscal year 2021. Adjusted net income increased by approximately 60% to EUR 487 million in the same period.
We have increased the outlook for our adjusted EBIT by EUR 250 million, now with a range of EUR 1,050 million-EUR 1,300 million. For adjusted net income, the guidance has been increased by EUR 200 million to a range of EUR 850 million-EUR 1,050 million. Turning now towards our strategy and portfolio development. Today, I will focus on the key events since our half year reporting in August. There have been two dominant themes in the recent months. First, the development of the international commodity markets, and second, the federal election in Germany and possible effects on the energy policy. Ultimately, both are linked on the topic of security of supply, which is back on the agenda. With its portfolio, Uniper contributes significantly to security of supply in Europe.
With our comparably high gas storage filling levels, we are ensuring reliable gas supply to our customers. I will go more in detail on our role in the gas commodity markets in a bit. When it comes to our power generation, we've delivered significantly higher volumes in the U.K. and German markets from our fossil assets this year. Based on the improved commercial prospects for peak load power in Germany, we are now looking at repairing and bringing back online a 160 MW pumped storage plant, namely the Happurg facility in Bavaria. In the U.K. electricity market, we served demand peaks during the recent shortage periods in September. The increase in load factors was particularly strong for the efficient units, one of them being Datteln 4.
At present, there are ongoing discussions between the potential coalition parties of accelerating the German coal phase-out from 2038 up to 2030. As you know, Klaus-Dieter, our CEO, has announced our willingness to talk about how Datteln 4 could fit into a new concept. When it comes to the legal dispute with respect of Datteln 4, in August, the Higher Administrative Court of North Rhine-Westphalia ruled against the defendant, the City of Datteln, declaring the development plan invalid and not allowing an appeal. By now, Uniper and the City of Datteln have filed a complaint against the non-admission of an appeal. In our view, the issue raised by the court in its ruling require clarification by the highest court, the Federal Administrative Court.
Uniper continues to assume that the permit granted to the power plant and underlying development and regional planning are lawful. Despite the currently higher demand for fossil-based energy, we continue to drive the decarbonization of our portfolio, and to focus on creating customer solutions in parallel. Uniper has ended its chapter of lignite-fired power generation in Europe, and handed over a stake in the Schkopau power plant to the minority owner, EPH, on October 1. Moreover, as announced some weeks ago, Uniper's engineering service business, with around 1,100 employees, will be streamlined and repositioned. Engineering competencies will, in the future, focus on Uniper's own power plants, as well as customers' business in the areas of hydrogen, renewable energy, industrial customer solution, and net zero solutions. We are also making progress on our product investment plans.
In the renewable business, our first essential projects are taking shape, even though today I cannot be more concrete yet. There have been a number of recent news items relating to the development of our hydrogen activities. In Germany, the joint venture flagship project, Energiepark Bad Lauchstädt, with an integrated value chain, including a 30 MW electrolyzer, an estimated CapEx at up to EUR 140 million, received funding of EUR 43 million from the German Ministry of Economics in September. Another example is the memorandum of understanding on joint hydrogen projects between Ørsted and Uniper. The main aim here is to establish a hydrogen production facility at our coastal site in Wilhelmshaven that is powered by offshore wind farms in the North Sea.
Finally, Uniper and Fortum are continuing to work on the expansion of the joint OneTeam platforms with the three key areas, renewable developments, hydrogen, and Nordic hydro and physical trading optimization. The Nordic hydro and physical trading optimization area now takes shape under Fortum's responsibility. It includes a joint organization for the hydro asset management and operation in Sweden, as well as its physical trading operations. The entity, with 400 employees, will start operations during the first quarter of 2022. Furthermore, the nuclear dismantling and decommissioning cooperation between Uniper and Fortum is operational since October. The initial focus will be on the technical execution of the ongoing decommissioning program in Sweden, followed by a rollout of services for nuclear generators in Europe. At present, around 1,000 colleagues from Uniper and Fortum are working on over 80 business cooperation projects. Now, over to the next slide.
One of the key questions this year has been what is and what will be happening in the gas markets. The global gas markets are showing a number of signs of a perfect storm this winter season. China, in particular, but also unexpectedly other markets such as Brazil or Turkey, and also Europe, have significantly increased their demand this year. Although supply is also increasing, it has so far fallen short of expectations. As you can see on the slide to the left, in Europe, rising demand meeting falling European production, limited pipeline gas supply, and significantly fewer LNG cargoes. Due to the tight supply and even record prices on the spot and forward markets, Europe and Germany are heading into a winter 2021/2022, with very low gas storage filling levels.
Accordingly, the way how temperature develops will have an even bigger impact on the markets this time around. Gazprom has ramped up its own production by over 10% so far in 2021, thus above pre-corona 2019 levels. Nevertheless, Russia was criticized for not doing more to improve the supply situation in Europe. Accordingly, there was some relief around Gazprom's recent statement that it would be able to deliver more gas into the German and Austrian storages once it has built up its own Russian storages from the next week on. Nevertheless, it remains unclear whether Gazprom will be able to deliver significant additional gas volumes to Europe this winter, especially during cold spell, and whether Gazprom will then be able to use the Nord Stream 2 pipeline.
The 55 billion cubic meters pipeline, representing more than 10% of gas consumption in the EU, with three pipes, has been completed. One of the two pipes is filled with gas and would be ready for commercial operation. In September, Nord Stream 2 AG applied to the German regulator for certification. As publicly stated, it is expected that this process takes us into the year 2022. As a reminder, Uniper is only a financial partner in Nord Stream 2. Accordingly, Uniper's gas midstream portfolio is not directly linked to the availability of the Nord Stream 2 pipeline. Our gas midstream business positioned itself early on successfully in this market, ensuring sufficient supply volumes for our customers and strong optimization position for our assets.
This did not only lead to higher earnings in Q3, and ultimately trigger the ad hoc announcement, but it also is the perfect starting point going forward into a tight and potentially volatile winter season like this. This is best reflected in the storage filling levels at the end of the third quarter. While the European average was only at about 75%, Uniper storage levels were significantly higher, as shown on the next slide. As usual, you find the main operating indicators summarized on this slide. Starting with our physical storage levels on the left side. At the end of September, and despite the challenging environment, Uniper's storage filling levels were at 95%, and therefore close to prior year's levels and around 20 percentage points above market levels. Next to the storage filling levels, you'll find a breakdown of the generation volumes in our generation, European generation fleet.
Overall, in line with trend in the previous quarters, we see an increase in power generation of about 16% for the first nine months in the current financial year. Looking at the underlying movements, hydro volumes decreased by about 10% year-on-year, mainly caused by a normalization in the Nordics compared to previous years' extraordinary precipitation and snow melt. Prior weather in 2021 led to significant decreases in inflows and thus limited hydro supply, which will also most likely extend to the upcoming winter period. This development was offset to a certain extent by a precipitation-related 11% increase in German hydro output. Nuclear production increased by 6% as a result of better availability compared to 2020, where we faced extended outages at the Ringhals and Oskarshamn plants.
Gas and coal-fired power are up by 34% on a year-over-year basis, despite extended unavailability at our Dutch Maasvlakte 3 power plant. This is the result of consistently low wind power generation, healthy demand coupled to the economic recovery, but also unplanned interconnection outages influencing our UK business. In addition, unlike last year, the Datteln 4 and Irsching 4 and 5 power plants are now fully contribute to the nine month figures. Our Russian power segment also is showing an increase in generation volumes, however, to a smaller degree. The 6% increase year-over-year is driven by the recovery of domestic consumption and the growth of electricity export to Finland and the Baltic countries. The overall growth in fossil-based generation volumes translates into a 21% increase in carbon emissions year-over-year. Looking at the full year 2021, we expect this trend to continue.
Our specific carbon intensity slightly decreased to approximately 435 g CO2 per kWh. Although we could observe a further production increase, the more or less constant level can be mostly explained with the highly efficient units 4 and 5 at the Irsching power plant site. Moving over to the financial section, starting with a summary of our main KPIs on the next slide. The overall picture of the nine months is first and foremost a positive one. In a volatile and extreme commodity market environment, Uniper managed to significantly increase operating performance. However, looking at the magnitude of some of the presented metrics, it is also fair to conclude that Uniper's financials pretty much capture the level of exceptionality that we saw in the commodity market. Let's go through the metrics from left to right.
Both adjusted EBIT and adjusted EBITDA increased by about EUR 200 million each compared to previous year. Consequently, depreciation and amortization turned out flat year-over-year with EUR 486 million. The adjusted net income followed this positive development and increased by EUR 179 million year-over-year, benefiting also from a stronger economic interest result due to a revaluation of our hydro provision in light of the higher interest rates. While minorities remained stable at EUR 40 million, the economic tax rate increased towards 25% as more earnings shifted towards higher taxed countries. Despite a long operational set of numbers, the reported IFRS net income shows a loss of almost EUR 5 billion. As explained in the ad hoc announcement, this matter suffers from a mismatch in IFRS accounting.
The deals that Uniper uses to hedge its portfolio are subject to mark-to-market accounting. As commodity prices have surged, the hedge deals have significantly decreased in value. The total non-operating loss from hedge instrument valuation amounts to roughly EUR 7 billion and is reflected in this net income figure. However, the corresponding value gains on Uniper's underlying assets, like power plants or inventories, are not reflected here as their book values are capped at historic costs under IFRS. This mismatch is only temporary and will resolve over time as the position settles. While the impact on the net income is therefore of limited relevance, the valuation losses on the derivative side did have a very tangible impact on Uniper's financial situation. In many cases, the mentioned hedge deals are concluded via commodity exchanges and bilateral agreements that are subject to clearing.
Accordingly, with prices hitting uncharted territory and increasingly out of the money hedge deals, Uniper faced significant variation margin calls over the last weeks. The finance team worked very intensively and closely with our business as well as financing partners to make sure that those calls and the resulting liquidity risk were properly managed. In order to achieve this in the most efficient way, Uniper relied on a broad set of tools, including commercial papers, bank loans, intergroup loans, and ultimately also operational measures within our commodities portfolio. The very high operating cash flow reflects, to some extent, those measures. When it comes to the economic net debt, margining payments do not have an impact here. With every margining payment made or received, Uniper recognizes a corresponding margining receivable or liability, which are all included in Uniper's economic net debt definition.
Therefore, not being impacted by margining, the net debt developed in line with the very high operating cash flow. As usual, I will now get into the details of the KPIs, starting with the underlying earnings drivers on the next chart. This slide breaks down the year-on-year development of adjusted EBIT into the main effects. The overall positive delta of EUR 209 million after nine months is primarily driven by our international and gas midstream commodity business, which together showed an increase of more than EUR 450 million. Roughly two-thirds of this increase is related to the international commodity business, in this case, our U.S. and LNG business that benefited from the market developments in North America and Asia already during Q1.
Uniper's European gas midstream results came in more than EUR 100 million higher year-on-year compared to the already strong previous year. This is reflecting the successful optimization of our flexible asset portfolio and our good positioning in times of volatile and rising gas prices. Usually, in this business, the earnings are materializing rather in the winter, i.e., Q1 and Q4. This year, however, the gas midstream business has already made a strong contribution to the third quarter due to the way the entire portfolio has been managed in this exceptional market environment. Next, European fossil generation is up by almost EUR 70 million compared to the already strong previous year. Now we can see the full nine months contribution from Datteln 4 and the gas-fired Irsching power plants, all of which went into commercial operation during the last year.
Increased prices from capacity auctions resulted in higher capacity payments in the U.K. for 2021. The positive drivers were partly offset by lower availability of Maasvlakte 3 this year. Our outright generation business is on par with last year's results. On the volume side, hydro is down mostly due to specific station in Sweden being very high last year, which came down to below normal levels this year. However, this is partly compensated by a stronger nuclear generation after lower outputs for most of the nuclear assets during last year. Price-wise, given increased spot prices and not fully hedged position on our hydro assets, we see a positive price effect here, while on the nuclear side, the achieved price mix came down. The next driver is so-called carbon pricing effect that we had already flagged in previous calls, including the last one at the half-year stage.
As you know, this is temporary intra-year effect that will fully revert in Q4. As CO2 prices increase, so do our CO2 provisions during the year, leading to higher expenditures in the first nine months. The offsetting gains on our carbon hedges, however, are not recognized within adjusted EBIT until the hedge deal settles, which is in Q4. Given the increase in CO2 prices and the high total generation volume after nine months, the CO2 phasing effect reached almost EUR 450 million in absolute terms, which is about EUR 320 million more than in the previous year. The contribution from the Russian power generation business developed in line with last year's result. Here, a negative effect offsets the positive performance in the underlying Russian business.
The additional contribution from Berezovskaya III and higher day-ahead market prices in European price zone compensated for lower earnings from Shaturskaya, Yaivinskaya, Surgutskaya plants, which all moved from the CSA capacity market scheme into the CM scheme. Now over to the operating cash flow. The operating cash flow after interest and taxes amounted to roughly EUR 2.2 billion at the 9-month date, which is extraordinarily high. Looking at the waterfall that derives the operating cash flow from the adjusted EBIT on the left, there are two elements that stand out in terms of magnitude. The first one is the so-called other category, which amounts to EUR 927 million. This category summarizes all CO2-related provisions and working capital movements. As already mentioned, we had quite high CO2 provision built up in the first nine months.
Accordingly, as those are burdening the EBIT, but are not cash effective, this leads to a significantly positive effect here. In principle, at some point, there would be an offsetting effect in this category once the actual CO2 emission certificates are delivered into our balance sheet. However, as you know, this does not happen before Q4. Accordingly, we see a very positive effect here that should largely balance out at the full year stage. Let's have a look at the second large driver on the operating cash flow. The net movement in the working capital amounting to EUR 615 million. This figure reflects ultimately the way how the individual gas assets, including storages and contracts, as well as market channels, have been utilized over the last nine months and particularly in Q3.
Given the extreme and unpredictable market, commodity market development, the optionality in the portfolio was seen in a way that emphasized prudence and liquidity. Hereby, the business contributed to meet Uniper's funding requirements before, but also after the 30th of September. Next, the development of the economic net debt. After nine months, the economic net debt came in at EUR 1.4 billion, which is about EUR 1.6 billion lower compared to beginning of the year. Obviously, the main driver here is the high operating cash flow, which is by far overcompensating the payouts for dividends and investments. Lower pension provision and asset retirement obligation further contributed about EUR 450 million to the positive development of the economic net debt. In both cases, this was due to the rising interest rates.
With regards to the pension provision, the underlying interest rate increased from 0.8%- 1.3% in Germany, and from 1.5% - 2.1% in the U.K. For the sake of clarity, please note that the category, divestments, includes proceeds from the sale of our last European lignite asset, Schkopau, that took place end of September. Given the positive earnings outlook for the remainder of the year, we expect the economic net debt to end up at a more than comfortable level at the year-end as well, admittedly, not at current record low levels. Having said that, let's have a look at the updated earnings outlook on the last slide today.
As communicated in our ad hoc announcement, we have raised our full-year outlook for 2021 adjusted EBIT and adjusted net income by EUR 250 million and EUR 200 million respectively. Hence, we now expect an adjusted EBIT between EUR 1,050 million and EUR 1,300 million, and adjusted net income in the range of EUR 850 million to EUR 1,050 million. The reasons for the higher outlook are both a stronger than anticipated Q3 and higher expectations for the rest of the year. Aside from the revision of the carbon pricing in effects, we expect Q4 to turn out better on the back of our gas midstream and fossil generation business. One final remark on the bandwidth of our outlook. Depending on how prices move until year-end, earnings could shift between 2021 and 2022.
Given the current tightness in the commodity market, those movements could be quite material. Therefore, even though we feel generally very comfortable with the new outlook, we did not narrow down the bandwidth of our guiding range at this point of time. That brings me to the end of my presentation today. Stefan, back to you.
Thank you, Tiina. It's now time for our Q&A session. Therefore, we're happy to take your questions, and as usual, please limit yourself to two questions each. Operator, please.
Ladies and gentlemen, if you have a question for a speaker, please dial 0 and 1 on your telephone keypad now to enter a queue. Once your name has been announced, you can ask a question. If you find your question is answered before it is your turn to speak, you can dial 0 and 2 to cancel your question. If you are using speaker equipment today, please lift the handset before making a selection. One moment, please, for the first question. The first question is from Lueder Schumacher, Société Générale. Your line is now open.
Yes, good morning. Two questions on my side. The first one is on your economic net debt. I was just wondering how clean is this operating cash flow number of EUR 2.2 billion, i.e. how sustainable is it, and how much of this do you expect to revert in Q4? I mean, just now, Tiina, you just, I think hinted that full year net debt will not be at the level it is now. If you could give us an idea where you see full year net debt, that would be quite interesting. The second is a more general question on the European gas market. I mean, obviously quite extraordinary times there. I believe one of your traders has described the market as not functioning properly anymore, given the extent of variation margin flows that are there.
That was certainly a Bloomberg headline that picked up. Do you believe that if Nord Stream 2 were to get its operating license earlier than currently anticipated, and I believe additional Russian gas flows have always been linked to receiving this operating license, would that be enough to bring the European gas market into balance, even if we were to get a cold winter? Or would even this be insufficient if we're in for a cold winter? Your general view on the supply-demand balance in the European gas market, that would be very interesting.
Hello, Lueder, and good to have you today in this call. I'll take your first question about the economic net debt. The question was that how, in a way, sustainable the numbers are if we look at the full-year forecast. As you know, we don't provide any forecast for the coming specific economic net debt numbers. But clearly we can see that the current market are very exceptional, and therefore we could see that also the our measures to provide the liquidity to meet all the margin calls has been, in a way, exceptional. In that sense, we would anticipate the cash flow to be kind of more normalized level.
Maybe one way to look at this is that if we look at our EBIT guidance range, our depreciation levels are roughly EUR 700 million, quite constant, giving us EBITDA and then quite good cash conversion rate. That is, in a way, the normal level. As I said, very big volatility still in the market, so we'll need to see how that goes. Clearly would emphasize that this has been a special quarter. I think the other question about market and are they functioning. I think it is fair to say that the movement, first of all, the increase in the prices have been very exceptional.
Power and gas prices increased five to six fold if compared to the previous year. Putting much pressure to the companies, not only the producers, but particularly to the retailers. The margin calls surely, I think, has, in a way, limited how the players could act in the market. What we see is that also the liquidity in the market started to be fairly small. It has been, in a way, hopefully not continuing. Of course, what comes to the Nord Stream 2, if that would go into the operation, it would take giving more supply and take the market to the right direction. I think it is still questionable whether it will fully change the picture.
That of course depends also on what kind of winter, how the demand supply overall, will develop.
If we're going to get a cold winter, then Nord Stream 2 alone will not be able to balance the market. Is that what you're saying?
I would say that it is still questionable because there are also some other impacts in the market. How the demand and supply, how much we get LNG. As we saw in Q3, very little LNG coming to Europe now. Lately, I think the prices are supporting, and we can see that also LNG coming to the market, so I think we need to look at the overall. Clearly it would help, but you know the situation and the picture is more complex.
Okay, thank you.
Thank you.
The next question is from James Brand, Deutsche Bank. Your line is now open.
Well, hi, good morning. Well done on the good performance and for having some gas, hopefully, keeping us all warm over the winter. Two questions from me. Firstly, I'm just gonna try a different angle on the net debt question. I can understand it's all very uncertain, so maybe you won't be able to give a precise number. You seem to suggest in your comments earlier that of the EUR 900 million of other, most, if not all of that, was going to reverse. I was wondering whether I could also perhaps ask about the working capital improvement of EUR 600 million. You don't normally see that in the nine-month stage.
Although I think you might have slightly changed your definition in terms of how you present net debt dealing with margins, so maybe that made a difference. Of that 600 working capital move that we've seen in the nine-month stage, maybe you could comment on how much of that you think might be sustainable. That's the first question. Secondly, you obviously give very precise guidance on your hedging for the outrights. The spreads, as you showed, spot spreads, dark spreads, as you showed in your chart, have increased very substantially, particularly for the year ahead.
I was wondering whether you could maybe give us a bit of color on the extent, I guess, to which you might have capacity that you can be putting into the market to benefit from that. I presume that not all of your capacity is hedged for the whole year, or maybe you have some open positions anyway. If you could just give some color on how much capacity might not be fully hedged for next year, that'd be really interesting. Thank you.
Hello, James. Thank you for your questions. If I got it right, your first question relates to cash flow and the item what we have in other, this EUR 900 million. From this area-
No, sorry. The first question, although I think you were clear, the question is more around the EUR 600 million of working capital.
Sorry. Very good. Clearly, as mentioned, the working capital measures were bigger in this quarter. I would say that normally what we'll do is that, you know, these kind of measures are taken in the last quarter. Clearly the working capital measures were a support to our liquidity situation when we got this additional margin call. I would say that the main, in a way, action what we did actually was mostly on the funding side. We increased our funding with bank loans, commercial paper, intragroup loans. Also then, we did some operative measures to close the kind of remaining gap and also improve our additional cash situation.
I think the operating measures or working capital measures were mostly related to our gas business. There we have certain, in a way, contracts where we use the flexibility when it comes to the timing of the payments of our supply and sales. Also we have some assets and inventory, so which could be in a way converted in easy way to the cash in a way to reduce the balances and improve the cash. The question about the hedges. I think the hedges is to secure our cash flow and earnings for the future.
Usually, as you know, we will start to build the hedges for from a couple years beforehand, but then also based on what is the liquidity in the market, how we could, in a way, build that. In general, the hedge levels, we recall last year it was COVID, so we also have relatively high hedge levels. In the spread side, so we see in general the better spreads. But to recall that they are not directly to the volume related. For example, last year, so we in a way do the deals and put the hedge all the different legs, the power, the fuel and the CO2s are in a way locked.
Of course we use the optionality, whether we will produce or whether we will buy from the market. For example, last year, we made very good result by using these optionalities or so the spreads in general, they are not directly linked to our generation volumes. I think going forward, we see the spread spreads and we have capacity now coming from RtC, so it's in a way available, but we probably don't give more detailed, in a way, numbers on that. Of course, very important to keep our power plant in friendly if needed, and then we can capture any possible additional spikes or give the security of supply to the market.
Brilliant. Thanks, Tiina. Very, very useful answers.
Thank you.
The next question is from Sam Arie, UBS. Your line is now open.
Hi. Good morning, everybody. Thank you so much for the presentation and congratulations on the more strong results. I wanted to just dig into the global commodities business, if I can, with a couple of questions. The first one, I think, is about, you know, how much of the current strong performance is, you know, really just to do with the exceptional markets this year, and how much could we think of as kind of sustainable? The second question is, you know, if we think about the global commodities activity, I mean, it's been a huge part of the story for Uniper in the last five years. I suppose it's easy to forget, but the reason for the creation of Uniper was that I suppose E.ON didn't like these businesses at the time.
Things have changed massively, haven't they, in the last five years. The other thing that changed is your strategy and your strategy within the Fortum group of focusing more on kind of clean activities going forward. There's a kind of tension between the fact that this global commodities business is performing really, really well for you, producing a lot of earnings and cash flow, but kinda isn't really fitting very well with the strategy. My second question here is not, you know, are you gonna sell the global commodities business? 'Cause I'm sure that you can't answer that question or wouldn't answer that question. Could you talk to us a little bit about how sort of essentially integrated the commodity business is with the rest of your activity?
You know, how much of it is really an essential route to market for, you know, your power assets, and how much of it can we think of as a sort of standalone, separate business that could exist within Uniper or could exist somewhere else in the future? Thank you.
Hello, Sam. Good to have you today in our call. I think your first question relates to global commodities and the extraordinary income what we have made, I think, last year and also so far this year. Whether this is sustainable. I think it is fair to say that these kind of profit levels really relate to the market conditions. I think also it in a way reflects that the our ability to capture, utilize our flexibility and the optionality what we have, really happy how the assets and the contracts are used.
I think that what comes to our guidance for longer term. I think our old guidance, what we have given, roughly EUR 350 million-EUR 500 million of EBITDA per year, still remains. Depending, of course, how the market develops and what is the volatility, so we assume in the longer term, more kind of the normal years. I think in general, we are very happy to have global commodities in our portfolio and see a lot of synergies, how it's linked to our generation portfolio, gives really the access to the market, because I think it's not only about the hedging and optimization, but also looking to the future.
There, I think that what we have already done is that, you know, our customers want the green products. We are providing already now offering the PPA. I think this is kind of one example and also other green products what we are developing. As well, very important for our renewables and hydrogen business, so to finance and attract, in a way, put the renewable project, wind project, solar project, so it is important to have the access to the market. I think the global commodities is essential. Likewise, in our gas midstream business, so we are aiming to get that more green, so our hydrogen business and so forth, to be able to utilize the infrastructure, the competencies, so very important.
To put it very shortly, it is the commercial heart of our Uniper group operation.
Very, very helpful and very clear. To summarize, you know, the ongoing guidance is still valid at sort of EUR 350-EUR 500, even though this year might be sort of double or triple that at the low end of the range and, very much a core part of the business.
That's right.
Very helpful answer.
Very good.
Thank you.
Thank you.
The next question is from Deepa Venkateswaran, Bernstein. Your line is now open.
Thank you. I have two questions, Tiina. The first one is, I'm going to come back to the net debt. If I look at your disclosure later on in the deck, there's basically EUR 5.3 billion of margin receivables. That's roughly on a year-on-year basis, EUR 4.2 billion. Can I assume that that's the variation margin outflow you've had in the year? And now because you show these assets, of course, that's not included in the net debt. Can I check how the ratings agencies look at this? Or would they basically be looking at your net debt differently and, you know, force the variation margin? What's the timing of unwind of this outflow?
That's my first question on the net debt and variation margin. Second question, what are you hearing about how the EU Commission is thinking on the EU Taxonomy with regards to nuclear and gas? I know the decision was supposed to come out later in the end of the year, but any updates on how their thinking is developing on these two technologies would be great.
Hello, Deepa. Thank you for joining our call today. To your first question, the net debt and in relation to EUR 5.3 billion margin receivables. That is clearly reflecting the payments what we have made, mostly related to power and gas, and also book them in our receivables. I think it is also worth to mention there are margining payables and the net amount of that is EUR 3 billion. In a way, how that will roll over, of course, it is in relation to how our hedges will roll over.
Clearly, of course, the winter is the important time when the backlog will happen. I would say most of that would go in the next winter, but also something going even further because of course hedging is done for the longer term. I think what comes to our rating and how they look at that, they follow pretty much our view when it comes to our net debt definition, because I think this is the money what we have paid or received and will roll over. The swings what are there, they are temporary, but not impacting the net debt. The question about the taxonomy.
I think we are also waiting for announcements, and of course it would be very important to get the clarity as soon as possible. I think the current situation where we have had a pretty high prices and the supply demand also not fully matching. Hopefully that will bring, and I believe also it will bring the importance of the gas and also nuclear, so that we need the nuclear being CO2 free production form, gas very important, particularly in the transformation form. I think that it is important to recognize the role in this transformation and look at the broader picture.
That we know that the delegated act, so it's expected later on, but very much believing that this current situation brings the security of the supply and alternative, in a way, all forms of production forms, how to take this transformation further.
Okay, thank you.
The next question is from Nico Lander, Bank of America. Your line is now open.
Hi. Hi, good morning. I wanted to ask a quick one on the Nordic hedge prices. It looks like quarter-on-quarter they're a bit down. So I wonder if you could explain why is that? Thank you.
Hello. Thank you for the question. The question was the hedges in the Nordics and why they are the level in a way remaining as they are.
I think quarter-over-quarter prices are down a couple of euros for-
Okay.
2022 and 2023. Yeah, thanks.
Very good. Of course, one reason is that the overall hedge levels are very high, so before they roll off, it is, you know, not that much open. What could improve the price. In addition, we have the proxy hedging impacts from the earlier years, which will burden the number. Also, if we look at the areas what we hedge in Sweden, so are mostly the price area two and three, and particularly the price area two, we have seen very low prices. There is unfortunately a lot of, in a way, limitation in the connections between the different areas, and the area two has really burdened also our hedge prices.
Okay. Makes sense. Thanks.
As a short reminder, if you would like to ask a question, please press zero to join on your telephone keypad. The next question is from Andrew Moulder, CreditSights. Your line is now open. We can't hear you at the moment. Maybe you put yourself on mute.
Yes, sorry. Yes, it's Andrew Moulder at CreditSights. Yeah, I understand what you're doing with the net debt. That's fine. I just want to understand more about what's actually happening with the cash flows. I'm sorry if this is a bit of a detailed question, but if I look at your cash flow statement on page 31 of your report, particularly if I look at the working capital movements there, I can see there's an operating receivable of EUR 94 billion and an operating liability of EUR 101 billion within the working capital. Could you perhaps just clarify for me exactly what they are? There's two items further down, which are the purchase of securities of EUR 4.8 billion and the proceeds from new financial liabilities of EUR 4.9 billion.
I mean, I guess that's all to do with the margining and the cash flows around the margining and the hedges, but could you please just explain to me what those items are, and how it all fits together? Thank you.
Thank you, Andrew. Looking at the kind of the individual numbers in the cash flow. I think the margining is certainly one item, but I think that it also includes the derivatives. Derivatives assets and liabilities, which are at a very high level on a gross level, but they will net out, as mentioned, this EUR 7 billion derivative loss. Therefore, I would, in a way, maybe guide you to look at the waterfall in our IR presentation. That might be more helpful. It doesn't include this mark-to-market valuation of the derivatives.
There you can see the overall operating working capital positive effect and the mark-to-market, which in a way gives the better picture because certainly this quarter, the impact of the markets, mark-to-market derivative values are really disturbing maybe the underlying, in a way, drivers.
Okay. Thank you. I'll take a look at the IR windfall in the presentation. Thank you very much, Tiina.
Thank you.
We have a follow-up question from Sam Arie, UBS. Your line is now open.
Oh, hi. Thank you for coming back to me. Tiina, a follow-up question that perhaps should have asked last year. It was reported, I think around a year ago that Centrica was looking to sell some of its LNG activities. I'm hearing you say that the LNG and the commodities is core and obviously U.K. important geography for you. I was just wondering, did you ever comment if you were interested in those type of assets, or did you look at the Centrica assets that were for sale? Any update you can give us on that particular situation would be very interesting. Thank you.
Thank you. Thank you, Sam. Well, I think that when we discuss about our core, I said the global commodity as a whole, and as usual, we do not comment any speculation of the individual assets. Frankly, I would have expected you to ask about the other assets actually, not the LNG. But that's it, you know, we don't comment any speculation.
Okay. All right. Well, just worth a try. Thank you again for all your commentary this morning. It's super helpful and very good results obviously too, have a good day. Thank you.
Thank you very much.
We have no further questions on the line. I hand back to Mr. Jost for concluding remarks.
Thank you very much, everyone, for your questions, and wish you a nice day. We conclude the call here. Thank you very much.
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