Interim Report Q3 January – September 2023 – Significant increase in sales in Sweden, continued focus on growth
THIRD QUARTER 2023 IN BRIEF
- Energy sold totalled 86.8 (80.4) GWh.
- Total revenue, including capitalised work, increased by 30.6% to SEK 131.1 (100.4) million.
- Average sales price in Business Area Sweden has increased by approx. 20%.
- Operating EBITDA totalled SEK 8.6 (15.7) million, and the operating EBITDA margin, 6.8% (16.3%).
- Profit/loss after tax was SEK -31.0 (-16.2) million.
- Basic and diluted earnings per share was SEK -0.71 (-0.53).
- At the end of the quarter, the order book totalled 2.1 TWh, corresponding to a market value of approximately SEK 2.9 billion. We also have contracts for the supply of raw materials corresponding to 2.1 TWh.
- Stockholm Bio-LNG has been commissioned and the first deliveries of Bio-LNG have been made from Business Area Sweden.
Significant events after the end of the period
- No significant events occurred after the end of the interim period.
| GROUP | 3 months | 9 months | 12 months | ||||
| Jul–Sep | Jul–Sep | +/- | Jan–Sep | Jan–Sep | +/- | Full year | |
| SEK million, unless otherwise stated | 2023 | 2022 | 2023 | 2022 | 2022 | ||
| GWh sold | 86.8 | 80.4 | 8.0% | 256.9 | 248.0 | 3.6% | 328.1 |
| Net sales | 113.9 | 89.0 | 27.9% | 330.5 | 274.8 | 20.3% | 366.7 |
| Other revenue | 12.2 | 6.2 | 98.3% | 50.0 | 9.7 | 413.9% | 20.3 |
| Total revenue, including capitalised work | 131.1 | 100.4 | 30.6% | 396.3 | 299.8 | 32.2% | 407.4 |
| EBITDA | 8.6 | 14.4 | -40.2% | 34.2 | 21.8 | 56.8% | 19.7 |
| Operating EBITDA | 8.6 | 15.7 | -45.2% | 34.2 | 20.5 | 66.7% | 16.4 |
| Operating EBITDA % | 6.8% | 16.3% | -9.5pp | 9.0% | 7.2% | 1.7pp | 4.3% |
| Operating income | -17.6 | -6.6 | n/a | -39.1 | -41.2 | n/a | -65.2 |
| Earnings per share (SEK) | -0.71 | -0.53 | n/a | -2.34 | -2.33 | n/a | -1.95 |
| Cash flow from operating activities | 6.6 | 7.8 | -15.6% | 0.9 | -1.8 | n/a | 7.4 |
| Equity/assets ratio | 35.3% | 27.8% | 7.5pp | 35.3% | 27.8% | 7.5pp | 38.6% |
CEO COMMENT
The intensive growth and transformation journey we are on continues, and during the quarter we passed a very important milestone with the commissioning of Stockholm Bio-LNG at Södertörn. The plant is now one of the largest biomethane liquefaction units in the world. Since mid-September, all biomethane produced has been liquefied at Södertörn, enabling much greater flexibility for deliveries of our production in both Scandinavia and the rest of Europe. Södertörn has a production capacity of 80 GWh, but the unit for liquefaction has a total capacity of 220 GWh, which means that we have the opportunity to take in additional volumes from our other facilities or another external supplier.
With the commissioning, deliveries from Södertörn to Germany and our customer Alternoil have started and are running as agreed. The deliveries are made in a climate-friendly way, as the gas tanks themselves are transported by train through Sweden and onward to the continent and refuelling stations.
Our ongoing growth project in the construction phase, Mönsterås, is proceeding according to schedule. However, we can see that the weak Swedish krona is affecting investment costs to some extent. Otherwise, the growth projects in our pipeline have developed well towards our goal of having a production capacity of 1.2 TWh in 2026.
Furthermore, the organisation has continued to maintain a strong focus on systematic improvements and streamlining production. The continued implementation of our management system, Biokraft Business System, in Business Area Sweden has identified processes with improvement potential and created clarity and priorities to further strengthen the business. Business Area Norway is in the preparation phase to start implementing the system from 2024.
Total deliveries during the quarter increased by 8%, or 6.4 GWh, compared to the same quarter the previous year. The increase is mainly attributable to Business Area Sweden, which increased its sold energy by 17%. In addition, we have seen an increase in the average sales price by approximately 20%, which is a direct result of the price transformation journey we are on. In Business Areas Norway and Korea, volumes have remained at the same level as the previous year. However, due to problems in the production process with certain inputs, production in Norway was below expectations.
The Group's operating EBITDA fell during the quarter to SEK 8.6 (14.4) million as a result of increased growth costs, especially personnel costs, and higher costs for input goods and electricity. We also see that the costs for input goods have increased over time and have stabilised somewhat at a higher level.
New contracts continue to gradually replace old ones, and we expect that this will eventually lead to a higher price level and a better link to general price increases for input goods.
More broadly, we welcome the announcement by the Swedish government that it has confirmed additional funding for Klimatklivet (Climate Leap Initiative) in next year's budget proposal. This is very positive for Sweden's and our continued expansion of additional biogas plants and biogas investments.
GOING FORWARD
We see that interest in Bio-LNG continues to be high in the European market and that demand, as a whole, exceeds the industry's capacity to produce. Market prices for natural gas have stabilised during the quarter and have even increased slightly. However, certificate prices in Germany have fallen a little.
According to the European Biogas Association (EBA), heavy-duty transport represents 2% of the total vehicle fleet operating on EU roads. At the same time, it is estimated that these alone account for a third of total transport emissions in the EU.
The summer also saw the release of a report by the European Research Institute for Gas and Energy Innovation (ERIG), which confirms biomethane's benefits and states that renewable fuels can accelerate greenhouse gas reductions for heavy goods vehicles as they transition to meet European reduction targets. Against this background, we remain positive about a future with growth opportunities in Northern Europe.
Work continues to expand the business and develop the project portfolio to reach 1.2 TWh in 2026 and at least 3 TWh by 2030. We also continue to focus on continous improvements, as well as increasing profitability and flexibility in production.
Considering our financial targets, we feel confident about our production and revenue targets for 2024. However, we see continued challenges in achieving the group target of 30% operating EBITDA as early as 2024, given the current market prices for biogas and certificates. However, the target remains, and new projects are expected to contribute positively to increased profitability.
OUTLOOK
As previously communicated, 2023 will show weak underlying profitability given that we have a large share of fixed delivery contracts with fixed low prices that do not allow compensation for sharply increased costs.
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 Tuesday 31 October 2023 at 7:30 a.m. (CET).
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 on Tuesday October 31, 2023.
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. To see all published financial reports and presentations, click here.
FINANCIAL CALENDAR
| Interim Report January-December 2023 | 7 February 2024 |
| 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 |