Biokraft Interim Report January – June 2023: Continued focus on growth and operational efficiency

SECOND QUARTER 2023 IN BRIEF

• ­      Energy sold totalled 82.0 (82.2) GWh.
• ­   Total revenue, including capitalised work, increased by 33.7% to SEK 135.1 (101.1) million.
• ­      Operating EBITDA totalled SEK 17.7 (1.1) million, and the EBITDA margin, 13.6 (1.2) %.
• ­      Profit/loss after tax was SEK -12.2 (-43.1) million.
• ­      Basic and diluted earnings per share were SEK -0.28 (-1.41).
• ­      At the end of the quarter, the order book totalled 2.4 TWh, corresponding to a market value (end of quarter) of approximately SEK 3.3 billion. We also have contracts for the supply of raw materials corresponding to 2.3 TWh.
• ­      According to the general meeting resolution in April 2023, the company changed its name to Biokraft International AB (publ).
• ­      Perstorp council has approved a land allocation agreement where Biokraft is planning a biogas plant.
• ­      Stockholm Bio-LNG has entered the final phase, and start-up of the plant has been ongoing since July.
• ­      Biokraft established subsidiaries and entered into an agreement to develop two biogas plants in Germany with a combined capacity of approximately 240 GWh.

 

Significant events after the end of the period

• ­      No significant events occurred after the end of the interim period.

 

 

GROUP	3 months			6 months			12 mos.
	Apr–Jun	Apr–Jun	+/-	Jan–Jun	Jan–Jun	+/-	Full year
SEK million, unless otherwise stated	2023	2022		2023	2022		2022
GWh sold	82.0	82.2	-0.3%	170.1	167.7	1.4%	328.1
Net sales	109.3	92.8	17.7%	216.6	185.7	16.6%	366.7
Other revenue	20.5	3.0	575.9%	37.7	3.6	962.1%	20.3
Total revenue, including capitalised work	135.1	101.1	33.7%	265.2	199.4	33.0%	407.4
EBITDA	17.7	3.7	376.3%	25.6	7.4	245.8%	19.7
Operating EBITDA	17.7	1.1	n/a	25.6	4.8	435.1%	16.4
Operating EBITDA %	13.6%	1.2%	12.5pp	10.1%	2.6%	7.5pp	4.3%
Operating income	-6.2	-17.7	n/a	-21.5	-34.6	n/a	-65.2
Earnings per share (SEK)	-0.28	-1.41	n/a	-1.63	-1.80	n/a	-1.95
Cash flow from operating activities	16.5	5.7	186.5%	-5.8	-9.6	n/a	7.4
Equity/assets ratio	37.4%	28.1%	9.3pp	37.4%	28.1%	9.3pp	38.6%

 

 

MATTI VIKKULA CEO's Comment

 

We continue our intense transformation and growth journey. The focus is on increasing production capacity, and we passed several important milestones in the quarter. In addition, our business areas have focused on increasing efficiency in their day-to-day operations, while also having to deal with some minor disruptions.

Our efforts to drive growth are multifaceted. For example, we established subsidiaries in Germany to run two growth projects in cooperation with an external development team. We also decided to divide Södertörn III into smaller sub-projects with a focus on efficiency and increased productivity.

It is important to continue the work of identifying new projects, as experience shows that not all growth projects live up to our high standards. In line with this, we have intensified our networking and PR work to spread knowledge and increase interest among politicians, farmers and other substrate suppliers. Despite significantly lower market prices for LNG and GHG certificates, profitability remains good for future fertiliser-based projects.

When it comes to our plant projects, Stockholm Bio-LNG has entered the final phase and start-up of the plant began in July, while Mönsterås is in the early construction phase. 

Organisationally, we took an important step when we changed our name and launched our new brand name, Biokraft. Our new logo and graphic profile revitalise our identity and reflect our purpose: A sustainable world that produces bioenergy and plant nutrients in a circular cycle. This is a guiding principle that inspires us to push boundaries and drive innovation. In connection with the name change, we also sharpened our business concept to: Biokraft will operate profitable, large-scale biorefineries that extract bioenergy and plant nutrients from organic waste and residues. As an important part of the branding work, we have also launched Biokraft.com, which highlights our new brand, mission, goals and activities.

Less visible externally, but more important internally, is that during the quarter we created a common Microsoft platform that enables seamless communication between different functions within the Group. The work to create a group-wide IT platform is continuing, and it feels good that we have a framework in place. Another but very important milestone was the introduction of a common system for continuous improvement. The implementation is taking place in stages, starting in Business Area Sweden.  The Biokraft Business System is holistic, fact-based and focuses on four main areas: safety, quality, delivery and cost. This system ensures high efficiency and the ability to grow sustainably. We also expect to significantly realise productivity gains as we continuously streamline our processes and foster a culture of collaboration and team spirit.

Operationally, the quarter offered stable production, planned maintenance and some minor challenges in Norway. Input costs remained at a high level, partly due to annual indexation in relation to the prices we can charge to customers. New contracts are gradually replacing old ones, at a higher price level and better linked to general price increases for inputs, for example.

The Swedish operations continued their efficiency efforts and increased both production volume and energy sold for the fourth consecutive quarter. The Norwegian operation unfortunately lost a few days of production due to an unplanned shutdown in May, but since then, production has gradually increased, and we expect to reach the planned production volume. The Korean operations continue to deliver stable production and profitability. Our customer carried out a major maintenance stop during the quarter, and the volume sold was therefore slightly lower than the corresponding period last year, while revenues increased due to price increases.

Going forward

The European biogas market shows continued strength with a structurally driven demand for biomethane. It is mainly in Germany where manure-based liquid biogas has the greatest potential within a green transition of heavy road transport. Shipping and industrial use are also expected to increase the consumption of liquid biogas.

We continue to view the future very positively with great growth opportunities in Northern Europe. We continue aThe work continues to expand the business and develop our project portfolio to reach a production capacity of 1.2 TWh by 2026 and at least 3 TWh by 2030. Operationally, the focus is on efficiencies, and we have initiated several improvement projects with the aim of increasing profitability and flexibility in production and removing bottlenecks.

Regarding our financial goals, we feel confident with our production capacity and revenue goals for 2024. Concerning the profitability goal of 30% operating EBITDA margin, it is firm although current market prices for biomethane and certificates make it more challenging to reach the goal as early as 2024. New projects are expected to contribute positively to increased profitability.

Outlook

As previously communicated, operating EBITDA will continue to be weak throughout 2023 given that we have a large proportion of fixed delivery agreements with fixed low prices that do not enable compensation for greatly increased costs.

We continue to break new ground, and it is gratifying to see how we as a team are developing the opportunities that lie ahead and building a remarkable and sustainable future.

 

 

This information herein is information that Biokraft International AB (publ) is obliged to make public pursuant to the EU Market Abuse Regulation and the Securities Markets Act. The information was submitted for publication, through the agency of the contact persons, on Thursday 20 July 2023 at 7:30 a.m. (CEST). 

 

For more INFORMATION, please contact

Matti Vikkula, CEO, telefon: +46 70 597 99 38
Anna Budzynski, CFO, telefon: +46 70 043 43 13

 

invitation to Press and analysts meeting

Investors, analysts and media are invited to a Teams presentation, where CEO Matti Vikkula and CFO Anna Budzynski will give a brief presentation of the report followed by a Q&A session.  The presentation will be given in English and recorded to be made available online afterwards. To participate in the conference, click on the Teams link or visit Biokraft’s website.

 

Financial Calendar

Interim Report January–September 2023	31 October 2023
Interim report January–December 2023	7 February 2024