Release Date: August 16, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Scatec ASA (STU:66T, Financial) reported strong financial results with NOK1.5 billion in proportional revenue and an EBITDA of NOK951 million.
- The company reached financial close in Tunisia and secured offtake agreements for its Egypt Green Hydrogen project.
- Scatec ASA (STU:66T) signed a 10-year PPA with Statkraft for a 142-megawatt project in Brazil and a 20-year ammonia offtake agreement with Fertiglobe for the Egypt Green Hydrogen project.
- The company refinanced two hydropower projects in the Philippines, resulting in proceeds of NOK170 million.
- Scatec ASA (STU:66T) was ranked as the second most sustainable company by TIME magazine in Norway and among the 100 Most Sustainable Companies globally.
Negative Points
- Power production in the Philippines decreased to 71 gigawatt hours due to higher capacity allocated to ancillary services and lower water inflows related to El Nino.
- The company reported a net profit of minus NOK33 million, with minus NOK55 million attributed to Scatec ASA (STU:66T).
- The net interest-bearing debt stood at NOK22 billion, with significant repayments and refinancing activities during the quarter.
- Scatec ASA (STU:66T) incurred NOK25 million in OpEx related to transaction costs for divestments, impacting overall financial performance.
- The company continues to face challenges in Ukraine, including capital and currency controls, despite repatriating significant cash from the region.
Q & A Highlights
Highlights of Scatec ASA (STU:66T) Q2 2024 Earnings Call
Q: Given the recent development in prices for the different technologies and the current macro outlook, how do you consider investing in solar PV versus wind at the moment?
A: Terje Pilskog, CEO: Solar is generally more competitive in many of our markets, but there are still areas where wind is more cost-effective. Combining solar, wind, and batteries can provide more balanced power. Our central EPC organization is capable of handling both solar and wind projects.
Q: Poland and India, we're not hearing much from those markets. Can you give some comments on what you're doing currently and the outlook for those markets?
A: Terje Pilskog, CEO: In Poland, we have a good pipeline but face lengthy timelines for grid connections. In India, we are focusing on mid-sized projects in the C&I markets and expect good progress.
Q: Can you give any further color or guidance on how recent transactions will impact your debt ratios?
A: Hans Hegge, CFO: We haven't commented specifically due to transaction conditions, but directionally, it will positively impact our debt ratio. We will continue to invest and generate new activities.
Q: Could you talk about the timelines on the Egyptian hydrogen projects?
A: Terje Pilskog, CEO: For the Egypt Green Hydrogen project, we aim to reach financial close in the first half of next year. For the Damietta Green Hydrogen project, we will work to firm up the agreement throughout the rest of the year.
Q: How much do you expect the reopening of the reserve spot market can impact the Philippines in the years to come on annual contribution?
A: Terje Pilskog, CEO: The reserves market in the Philippines is included in our outlook numbers. It's difficult to be specific on its development as it has just opened up.
Q: Would it be fair to expect more contingency releases on projects you now have started building when they are completed, seeing that module prices have continued to fall now at an all-time low?
A: Terje Pilskog, CEO: We continue to stick to our guidance of 8% to 10% gross margin on our projects, including contingency reserves in the budget.
Q: Could you give an update on Ukraine? You are paying down substantial amounts of debt. Does all debt have to be repaid before there is cash flow to the group?
A: Terje Pilskog, CEO: We have already repatriated significant cash from Ukraine after the war broke out. Not all debt has to be paid down before cash flow to the group.
Q: Are you happy with the current portfolio or will you plan further farm downs?
A: Terje Pilskog, CEO: We are happy with the current portfolio but will continue to divest in non-core markets to reinvest in new opportunities.
Q: Could you please update us on the Philippines NOK160 million contract market ancillary services implied in your outlook you expect to receive it only in Q3?
A: Terje Pilskog, CEO: Yes, it is fair to expect that.
Q: Given the D&C performance this quarter, any reason why you don't increase your full-year margin guidance?
A: Terje Pilskog, CEO: We continue to expect 8% to 10% gross margin on the projects that we are having in construction and that's what we are guiding for the rest of the year.
Q: There is a NOK25 million transaction loss at the EBITDA level relating to the hydro sale. Could you add more color on this?
A: Terje Pilskog, CEO: We have incurred costs related to that transaction, including advisor fees and internal costs, which are already taken into the accounts.
Q: Given that power production in Q2 includes positive effects on EBITDA of NOK71 million from Ukraine, does this mean that you implicitly downgrade the full-year guidance a tad?
A: Hans Hegge, CFO: No change in the guidance for the full year.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
