Biokraft Year-End Report 2023
YEAR-END REPORT AND FOURTH QUARTER 2023
Demanding quarter with operational challenges, yet encouraging developments in our price transformation
FOURTH QUARTER 2023 IN BRIEF
- Energy sold totalled 90.5 (80.0) GWh.
- Total revenue, including capitalised work, increased by 28.1% to SEK 137.8 (107.6) million.
- Operating EBITDA was SEK -2.5 (-4.1) million.
- Profit/loss after tax was SEK -57.1 (-13.8) million.
- Basic and diluted earnings per share were SEK -1.31 (-0.32).
- At the end of the quarter, the order book totalled 2.1 (2.4) TWh, corresponding to a contract value of approximately SEK 2.9 billion. We also have contracts for the supply of raw materials corresponding to 2.3 (2.4) TWh.
- In December, the two largest shareholders, Aneo Renewables Holding AS and St1 Sverige AB, announced their intention to consolidate their ownership in a jointly owned limited liability company, 1Vision Biogas AB.
2023 IN BRIEF
- Energy sold increased by 6.1% to 348.0 (328.1) GWh.
- Total revenue, including capitalised work, increased by 31.1% to SEK 534.1 (407.4) million.
- Operating EBITDA totalled SEK 31.7 (16.4) million, and the operating EBITDA margin, 6.2 (4.3) %.
- Profit/loss after tax was SEK -159.2 (-84.9) million.
- Basic and diluted earnings per share were SEK -3.65 (-1.95).
- The commissioning of Stockholm Bio-LNG was started end of summer and the first deliveries of Bio-LNG have been made from
Business Area Sweden. - During the year, the company changed its name and brand from Scandinavian Biogas to Biokraft.
- The construction of the biogas plant in Mönsterås has started.
SIGNIFICANT EVENTS AFTER THE END OF THE PERIOD
On January 29, 1Vision Biogas AB received the necessary permits for consolidation of its ownership in Biokraft, which meant that Aneo Renewables Holding AS and St1 Sverige AB could transfer their ownership, which together amounts to 55%. The consolidation of ownership means that a "Change of Control Event" occurs in the company's issued corporate bonds. Biokraft therefore initiated a change procedure for the terms and conditions to enable the ownership consolidation. On 2 February, 1Vision Biogas made a mandatory cash offer to the shareholders of SEK 20.65 per share, whereby Biokraft's independent Board of Directors announced that the offer is being evaluated and that a fairness opinion will be obtained.
| GROUP | 3 months | 12 months | ||||
| Oct–Dec | Oct–Dec | +/- | Jan–Dec | Jan–Dec | +/- | |
| SEK million, unless otherwise stated | 2023 | 2022 | 2023 | 2022 | ||
| GWh sold | 90.5 | 80.0 | 13.0% | 348.0 | 328.1 | 6.1% |
| Net sales | 115.4 | 92.0 | 25.4% | 445.8 | 366.7 | 21.6% |
| Other revenue | 14.7 | 10.6 | 38.8% | 64.7 | 20.3 | 218.1% |
| Total revenue, including capitalised work | 137.8 | 107.6 | 28.1% | 534.1 | 407.4 | 31.1% |
| EBITDA | -2.5 | -2.1 | n/a | 31.7 | 19.7 | 61.0% |
| Operating EBITDA | -2.5 | -4.1 | n/a | 31.7 | 16.4 | 93.3% |
| Operating EBITDA % | -1.9% | -4.1% | n/a | 6.2% | 4.3% | 1.9pp |
| Operating income | -34.0 | -24.0 | n/a | -73.1 | -65.2 | n/a |
| Earnings per share (SEK) | -1.31 | -0.32 | n/a | -3.65 | -1.95 | n/a |
| Cash flow from operating activities | 21.8 | 9.1 | 139.5% | 22.7 | 7.4 | 208.1% |
| Equity/assets ratio | 29.8% | 38.6% | -8.7pp | 29.8% | 38.6% | -8.7pp |
CEO COMMENT
2023 has been a busy year in which we reached several important milestones. Among other things, we changed our name and brand, started construction of our future plant in Mönsterås and started commissioning our Bio-LNG plant at Södertörn. Our intensive growth and transformation journey continues, and we have added several key competencies to the organisation to be able to add facilities according to our stated growth plan.
Our ongoing growth project in the construction phase, Mönsterås, is proceeding according to schedule. However, the weak krona continues to have a negative impact on investment costs, and we face challenges with the commissioning schedule due to delays in the connection to the electricity grid. Several alternative solutions are currently being examined, and the aim is still to start commissioning the plant in the second half of the year.
The fourth quarter has been characterised by operational challenges. Total deliveries increased by 13% to 90.5 (80.0) GWh, which is lower than expected. In Skogn, Norway, the challenges with the production process continued, achieving stable operation only towards the end of the quarter. This has meant that we have not yet realised the full benefit of our previous capacity expansion, and the total amount of energy sold is at the same level as last year, 25.8 (26.1) GWh. In Sweden, we have had challenges with the equipment for Bio-LNG at Södertörn, which has created delays in the process towards full commissioning and a takeover from the technology supplier. Despite this, the Swedish operations increased their volume of energy sold by 25%, 49.2 (39.4) GWh during the quarter. The increase comes partly from increased own production and partly from an increasing share of incoming trading volumes. We also see that the transformation from old agreements to new ones continues to have an effect, and Swedish sales prices increased by about 23% compared to the previous year. Our operations in Korea continue to be stable, increasing by 6%, 15.5 (14.6) GWh, compared to last year.
The Group's operating EBITDA is marginally better than the same period last year, SEK -2.5 (-4.1) million. Profitability has been affected by both high personnel costs attributable to a larger organisation linked to our growth ambitions and higher costs for input goods and certain substrates.
For the full year, the Group's operating EBITDA totals SEK 31.7 (16.4) million, and the operating EBITDA margin is 6.2 (4.3) %. Of course, this is far from our overall target of 30% operating EBITDA that we want to achieve in 2024, and as previously communicated, we see challenges in achieving this target this year. However, the target remains fixed for the time being, together with the other Group targets.
GOING FORWARD
Interest in biogas, especially Bio-LNG, continues to be high on the European market. The turmoil in the outside world, both Russia's continuing war in Ukraine and, more recently, events in the Middle East and uncertainty in the shipping lanes, combined with an increased ambition for European and domestic self-sufficiency, are contributing to this interest. The European Commission's target of an annual biomethane production of 350 TWh by 2030 puts the issue in focus, and through the REPowerEU initiative, several activities are underway to create the conditions for our industry to scale up production. For us, this means that we see that demand for our produced biogas remains high and we have contracted most of our produced volumes for the coming years. We also see that the availability of substrates continues to be good.
During the year we have seen profitability affected by fixed prices to customers, sometimes significantly lower than the market price, combined with sharply increased operating costs for electricity, chemicals, and other input goods. We expect input costs to remain at a relatively high level in the future, but that we will be able to balance this in a better way than today, mainly through the work on our price transformation from old contracts to new ones and systematic improvements to existing operations.
In December, the two largest shareholders, Aneo Renewables Holding AS and St1 Sverige AB, announced their intention to consolidate their ownership in a jointly owned limited liability company, 1Vision Biogas AB. Significant events after the end of the period are that the consolidation has received necessary regulatory approvals and that 1Vision Biogas has thus been able to make an offer to Biokraft's shareholders. As a result, Biokraft has initiated an amendment procedure regarding the terms and conditions of the company's corporate bond.
OUTLOOK
For 2024, we see that the price transformation will have an effect right from the beginning of the year, where >60% of contracted volumes will be sold through new agreements at market price of biomethane, liquefied biogas and green certifi-cates. The cost of inputs remains at a high level. Our profitability will gradually improve during the year. For 2024, an operational EBITDA of SEK 90–120 million is forecast, excluding the Mönsterås project. At least the same level is also forecast for 2025, excluding the Mönsterås pro-ject. The issue of electricity grid connection and the timetable for commissioning Mönsterås may result in a risk of a delay of six to twelve months.
MATTI VIKKULA
President and CEO
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 7 February 2024 at 7:30 a.m. (CET).
invitation to Press and analysts meeting 7 FEBRUARY 10:00 AM
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
| 2023 Annual Report | 22 March 2024 |
| Interim Report January-March 2024 | 25 April 2024 |
| Interim Report January-July 2024 | 19 July 2024 |
| Interim Report January-September 2024 | 24 October 2024 |
