Consumer segment 

Elspot prices have been highly volatile in Norway in the quarter. This has been
especially notable in Central and Northern Norway, where supply conditions in
Sweden have led to an unprecedented price increase in December. 

Pursuant to a regulatory change from 1 November, variable contracts have a
mandatory 30-day notification period for price increases. However, as customers
have no corresponding binding period, future delivery volumes have become less
predictable in phases with high price volatility and shifts in consumer
preferences.

Elmera Group has assisted customers in migrating from variable to spot contracts
and has experienced a significant shift toward spot contracts in Q4. At
year-end, variable contract customers are expected to represent less than 15% of
the Consumer segment, down from approximately 27% at the beginning of Q4. This
significantly reduces the margin risk associated with the product category going
forward.

In order to manage price risk in the variable contract portfolio, the Group
enters into forward contracts on parts of the estimated delivery volume. With
decreasing elspot prices through October and November, the value of the forward
contracts for the variable products these months was negative. Due to
significant product migration, the remaining variable contract volume was not
sufficient to absorb the negative impact from hedges. In addition, the rapidly
increasing prices in December has had a negative margin impact on the remaining
unhedged volumes on variable contracts. The trend of lower energy consumption
levels per delivery compared to periods with lower electricity prices has also
continued in the quarter. 

Despite the challenging market conditions, the Group has achieved a customer
growth of approximately 20,000 in the Consumer segment so far in Q4.



Outlook

As a result of the stated developments, the Consumer segment is expected to
deliver negative EBIT adjusted in Q4 2022. Performance in the other segments is
expected in line with previous communication. Consequently, Elmera Group does
not expect to meet the EBIT adjusted outlook for 2022. For 2023, the Group
expects EBIT adjusted in the area of NOK 500 million. Due to increasing interest
rates and continued high forward electricity price levels, interest expense
associated with electricity purchase is expected to significantly increase in
2023 compared to 2022. 

Further details will be provided in the Q4 earnings release 16 February 2023.


Reference is made to stock exchange notice of even date concerning Elmera Group
ASA entering into cooperation with Telia Company AB on mobile customers.


For further information, please contact:
Henning Nordgulen, Group CFO, +47 952 65 990, henning.nordgulen@elmeragroup.no
Morten A. W. Opdal, Head of Group Accounting, Reporting and IR, +47 970 62 526,
morten.opdal@elmeragroup.no