Release Date: August 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Orron Energy AB (STU:LYV, Financial) reported a 20% increase in power generation for the first half of the year compared to the same period last year.
- The company successfully reduced its net debt from EUR 91 million to EUR 46 million by selling a non-core asset, enhancing its financial flexibility.
- Orron Energy AB has a strong balance sheet with more than EUR 120 million in available liquidity, providing significant financial firepower for growth.
- The company has a 40-gigawatt greenfield project portfolio across five countries, indicating strong potential for future growth.
- Orron Energy AB is part of the entrepreneurial Linden group, which has a history of delivering value for shareholders, providing a solid backing for the company's growth ambitions.
Negative Points
- The company experienced weaker-than-expected wind conditions in the first half of the year, resulting in power generation being 10% lower than anticipated.
- Electricity prices in the second quarter were significantly lower than the breakeven cost for new power generation technologies, impacting revenue.
- Orron Energy AB reported a negative EBITDA of EUR 3.4 million for the quarter, excluding non-cash items, due to lower revenues and increased costs.
- The company is trading at a 50% discount to its net asset value, indicating potential undervaluation in the public market.
- Despite having the mandate for share buybacks, the company has not yet proceeded with buybacks, which could be a missed opportunity given the current discount to asset values.
Q & A Highlights
Q: The reports refer to low energy prices, but SE4 prices are high by Nordic standards. Is your budgeting too optimistic?
A: Daniel Fitzgerald, CEO: SE4 indeed takes a significant premium, currently around EUR90 per megawatt hour, compared to lower prices in other regions. Our budgeting forecasts between EUR30 and EUR70 per megawatt hour, and we remain financially stable despite low Q2 prices.
Q: Since you weren't the buying party in recent takeovers, do you expect further market weakening for better acquisition opportunities?
A: Daniel Fitzgerald, CEO: We are not at the scale to acquire large companies like Neon. However, we see value in the market for strategic buyers. We've been active in acquiring solar and battery projects in the Nordics at low prices, which is creating value for us.
Q: Can you elaborate on the monetization of greenfield assets in the next 12 months?
A: Daniel Fitzgerald, CEO: We aim to bring projects to market, with UK projects around 1 gigawatt and smaller ones in Germany at 100 megawatts. We expect to start processes in the second half of this year, concluding in early 2025.
Q: With an improved balance sheet, how should we think about CapEx for 2025?
A: Espen Hennie, CFO: We will provide detailed budgets later, but expect investments to be short-cycle and self-funding through project monetization. CapEx might not differ significantly from this year's levels.
Q: What is the purpose of the 500-megawatt new portfolio acquisition?
A: Daniel Fitzgerald, CEO: This early-stage portfolio from a major Swedish landowner enhances our solar and battery projects in Sweden. We aim to mature and monetize these projects before significant CapEx investment.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
