Key financial results

Overview of the Economic Environment

In 2018, the overall economic environment was still quite favourable for the Group. While in 2017, the global economic growth reached the highest level of the last decade, i.e. 3.1%, according to the data provided by the Global Bank, in 2018, it was expected to be on the matching level, i.e. 3.0%. In the following years, the Global Bank expects economic growth to be at the level of 2.8-2.9% per year.

Since a large share of the turnover of VKG is made up of the sale of oils, the financial indicators of the Group are mainly affected by what is happening at the global oil market. Global factors put pressure on the oil market and change the architecture of the economy completely, aggravate competition, and boost price volatility.

Oil reserves in the OECD countries

According to the assessment of the experts from the OPEC's Joint Technical Committee, the commercial oil reserves of the member states of the Organisation for Economic Co-operation and Development (OECD) by the end of 2019 will have exceeded the average 5-year rate by 170 million barrels if in the first half of 2019 the validity of the OPEC+ Agreement expires, and they will fall by 50 million barrels below the 5-year average if the OPEC+ Agreement remains in effect until the end of the year.

Global dynamics of oil prices

Against the background of the favourable of macro-environment, in 2018, the prices for different kinds of fuels continued to grow. On the one hand, the reason for that was an increasing demand for fuels, i.e. according to the estimates of the International Energy Agency (IEA), the global demand for fuels increased by 1.2%, reaching 99.2 million of barrels per day. On the other hand, the growth in prices was promoted by an agreement made between the OPEC and Russia concerning cutting down on production volumes as well as an abrupt decline in production in Venezuela. Even though the growth rate of production of shale oil in the USA has partially compensated for a decrease in production volumes in the OPEC, the decision made by the American president in May concerning the renewal of sanctions against Iran increased the price pressure even more, and by October, the prices for Brent crude oil reached 86 USD/bbl as compared with 66 USD/bbl at the beginning of the year. An increase in production volumes in the OPEC, as well as a relief of sanctions against Iran and the signs of the economic slowdown, brought Brent prices down to 50 USD/bbl fast enough by the end of the year According to the results for the last year, the price was 71.04 dollars/barrel, which is 31% higher than the average price in 2017 (54.3 dollars/barrel).

VKG sells a major part of manufactured oils with 1% of sulphur content based on the price for fuel oil. As compared with Brent crude oil, the 1% fuel oil market is less liquid, which is why the price for fuel oil can fluctuate differently from Brent, depending on the ratio between offer and demand existing at the market. In addition to that, the financial indicators of VKG are also affected by the dollar rate, which in 2018 strengthened once again and facilitated an increase in profitability. All in all, the situation in the market in 2018 was favourable for VKG. It was only a fast decrease at the end of the year that caused some uncertainty with respect to the future.

In 2018, the Estonian economic environment was also characterized by a continued growth. According to Statistics Estonia, the GDP in Estonia increased by 3.9%, which, compared with 4.9% in 2017, was more moderate, but still it exceeds both the preceding years and the global economic growth on the average. The Group is still concerned by the brisk growth of the average gross salary, which went up by 7.3% in 2018 (as compared with 6.5% in 2017), exceeding the average economic growth for the seventh year in a row. With due consideration of the peculiarities of the Estonian labour market, we cannot expect the slowing down of the growth in salaries in the nearest future, which is why, in order to provide competitive ability, the added value that accompanies workplaces should go up continuously.

Economic Performance of the Group

Revenue and its distribution

The consolidated sales revenue of the Group in 2018 increased by 30%, as compared with the previous year. An increase in turnover has been caused both by an increase in production volumes (the volume of oil shale products increased by +13%, and the volume of electricity output increased by +23%) and the growth of the price for oil products at the global market (the average price of fuel oil +23%). Under the improved conditions at the oil market, VKG has managed to earn net profit once again, the first time in three years, which, owing to an increase in production volumes and efficiency, has reached 26.9 million EUR.

In thousands of euros

2015 2016 2017 2018
Sales revenue 166 788 104 270 161 282 208 924
Revenue from sales of products -189 159 -106 147 -149 630 -170 353
Gross profit -22 371 -1 877 11 652 38 572
Marketing expenditure -3 360 -3 213 -4 046 -5 841
General administrative expenditure -9 109 -9 471 -9 480 -9 733
Other business revenue 9 973 10 153 7 373 12 839
Other business expenditure -1 745 -2 218 -1 485 -3 447
Business profit -26 612 -6 626 4 014 32 390
Financial revenue and expenditure -5 269 -8 589 -9 776 -6 901
Profit before income tax -31 881 -15 214 -5 762 25 488
Unplanned expenditure
Income tax 300 560
Net profit of financial year -32 181 -15 214 -5 762 24 929

Balance Sheet

Within 2018, the balance sheet volume at Viru Keemia Grupp increased by 168.6 million EUR and as of 31.12.2018 made up 722.4 million EUR. In 2018, the share of equity capital made up 71% of the balance sheet volume.

In thousands of euros

2015 2016 2017 2018
Current Assets 71 086 65 398 75 552 108 992
Fixed Assets 485 513 518 354 479 175 454 871
TOTAL ASSETS 556 599 583 752 554 727 563 863
Short-Term Liabilities 75 383 52 343 50 093 172 872
Long-Term Liabilities 182 724 234 758 201 373 38 671
Total Liabilities 258 107 287 101 251 466 211 543
Equity Capital 298 493 296 652 303 261 352 320
TOTAL LIABILITIES AND EQUITY CAPITAL 556 599 583 753 554 727 563 863



In millions of euros


Investments into environment and occupational safety

In millions of euros


The investments made by the Group made up 27 million EUR in total, out of which amount 19.5 million EUR was invested into the projects dealing with the provision of safety.

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VKG Soojus, which provides thermal energy to the area with over 30,000 inhabitants, initiated a large-scale project aimed at the renovation of amortised heat pipelines, within the frames of which 10 kilometres of heat pipelines will be renovated. The investment volume has made 4.4 mln EUR.

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We completed the construction of the belt conveyor for semi-coke, and since spring the transportation of the entire amount of coke and ash has been taking place via the enclosed belt conveyors. This logistic solution has obvious environmental as well as economic benefits.

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We have continued implementing the environmental project aimed at enhancing the quality of the ambient air. The two-year action plan aimed at the reduction of unpleasant odour contains five measures, aimed at providing cleaner environment. The investment volume has made 1.1 mln EUR.

Loan burden

The Group's current loan burden is visualised by the following figure which shows the outstanding amount of external loans and finance lease agreements.In 2018, no changes took place in terms of loan contracts. Throughout the year, VKG paid back to the banks the main part of the loans in the amount of 40.8 million EUR, in the result of which the bank loan balance decreased down to 139.6 million EUR and the shale of debt obligations down to 29% from the balance sheet volume by the end of the year. The investments made throughout the year were financed by VKG in the amount of 89% from the cash flow of the company and in the amount of 11% by means of new lease contracts. An event after the balance sheet day was the initiation of negotiations with banks on the part of VKG on the issue of refinancing of loan balance. Presumably, loans will be refinanced for five years in the third quarter of 2019.



Taxation Load

In 2018, tax revenues in the amount of 40 million EUR went into the state budget from the activities of the Group, which is 13% more as compared with the previous reporting period. The largest share comes from taxes on labour force, i.e. 17.1 million EUR (+7%), and different environmental fees, i.e. 15.6 million EUR (+39%).


  • Labor taxes
  • Environmental charges
  • Excise duty
  • Other taxes

The data presented in this Chapter represents consolidated economic indicators taken from the audited reports for the financial year 2018.