Release Date: July 25, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- OX2 AB (FRA:4DA, Financial) has a strong portfolio with over 2 gigawatts of projects ready to build and in the sales process.
- The company completed a 42.5 megawatt-hour battery storage project during the quarter.
- OX2 AB (FRA:4DA) has exceeded 5 gigawatts in asset management, including more than 1,000 wind turbines.
- The company has a solid project in Poland with limited financial risk due to a contract for difference with the Polish state.
- OX2 AB (FRA:4DA) is making significant progress in the construction portfolio, with three projects set to complete in 2024.
Negative Points
- The operating margin has dropped to 5.5% LTM, and return on capital employed is down to 9%.
- The company experienced a slow quarter in terms of new project sales, impacting gross profit and operating income.
- There is an elevated risk on timing for project sales due to the need for comprehensive offtake agreements and debt financing packages.
- The acquisition pace has been quite low, which is slower than expected.
- OX2 AB (FRA:4DA) is currently below its targets for new sales, profitability, and returns.
Q & A Highlights
Q: Has the market sentiment changed compared to three months ago? Any differences in types of customers?
A: No significant changes in the customer landscape. The decision-making process remains lengthy, and the need for comprehensive offtake agreements and debt financing packages at closing continues. This complexity is causing delays, but there is no elevated risk on project or margin levels, only on timing.
Q: Can you provide an update on the status of the Galena and Triton offshore wind projects?
A: For Galena, we received the Natura 2000 permit, with one permit outstanding for the grid cable. We expect a financial investment decision by 2025-2026. For Triton, the Natura 2000 permit is in full legal force, and we await government approval. We anticipate a financial investment decision by 2026-2027, aiming for operation around 2030.
Q: What is the development status in Australia?
A: We expect to conclude our first projects in Australia in the second half of this year. These projects are hybrid, integrating battery and PV panels, which is a new experience for us. The renewable energy atmosphere in Australia is strong, and we are leveraging our experience from Swedish battery construction.
Q: Can you comment on EQT's strategy to expand into owning assets?
A: We see value in keeping some assets to ensure long-term revenue and profit stability. The strategy will depend on EQT's direction, but it adds strength to our business case. Currently, we maintain flexibility in our projects, like in Poland, to meet our long-term return targets.
Q: Has there been a shift in strategy towards building projects for yourselves instead of selling them?
A: No significant shift in strategy. We continue to sell projects in the market, ensuring clarity for our customers. Any gradual shift towards owning assets will be discussed post-closing with EQT and will require capital.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
