Release Date: August 29, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Eolus Vind AB (FRA:7EVB, Financial) has a robust portfolio of about 250 projects with a potential of 28 gigawatts.
- The company has a strong focus on renewable energy projects, including solar and energy storage.
- Eolus Vind AB (FRA:7EVB) has secured a project finance agreement of USD 175 million for the Palm project.
- The company has several mature projects in Sweden, Latvia, Finland, and the US approaching ready-to-build status.
- Eolus Vind AB (FRA:7EVB) has a diversified portfolio spread over multiple markets and technologies, which helps mitigate risks associated with long permitting lead times.
Negative Points
- The company reported a net loss of SEK 50 million for Q2 2024, compared to a net profit of SEK 422 million in Q2 2023.
- No new transactions were closed during the quarter, impacting revenue recognition and resulting in a negative operating profit.
- The equity to assets ratio has decreased due to capital tied up in ongoing construction projects.
- The company faces delays in project completion and handover due to technical problems with turbine suppliers.
- Cash flow from operating activities was negative SEK 570 million, primarily due to ongoing constructions and investments in the project portfolio.
Q & A Highlights
Q: Would you say that the market sentiment has changed or improved over the last quarter given, for example, the potential rate cuts?
A: It's probably too early to see a significant change, but we have noticed increased activity and interest in projects. However, we haven't yet seen this reflected in investor valuations. We expect this to come if the trend continues. (Per Witalisson, CEO)
Q: Could you discuss the most recent pricing and cost trends? Are you confident that project margins will remain at a healthy level?
A: For our best projects, absolutely. We see stable prices for wind turbines over the last half year and significant reductions in costs for PV panels and battery storage projects. (Per Witalisson, CEO)
Q: How do you expect the technology mix to evolve going forward?
A: Our main focus remains on onshore wind. Offshore projects have a huge impact due to their size, but we see our position as earlier in the value chain for offshore compared to onshore and PV projects. We typically look to exit offshore projects once permits are granted. (Per Witalisson, CEO)
Q: How is permitting developing? Are there any signs that lead times are changing for the better or worse?
A: Lead times are still too long, especially in Sweden. They are shorter in Finland and Poland, but grid connection lead times in Poland are much longer. Our diversified portfolio helps us manage these long permitting lead times. (Per Witalisson, CEO)
Q: Can you provide an update on the milestone payments from the Centennial Flats project?
A: The milestone payments are significant, with total expected revenues well above USD100 million. We have collected 40% so far, with the remaining 60% expected to be collected up until 2026, depending on our customer's decisions. (Per Witalisson, CEO)
Q: What would be the key trigger to generate renewed interest in the market?
A: It's a combination of factors including interest rates, funding possibilities, clear political guidance, and long-term power price forecasts. These all impact both transactions and valuations. (Per Witalisson, CEO)
Q: How much of the lease agreements have been removed from your net debt calculation?
A: Approximately SEK200 million. This adjustment was made to better measure our net debt position. (Catharina Persson, CFO)
Q: How does the EU wind power action plan benefit Eolus Vind?
A: The proposals and decisions from the EU are favorable, but they need to be implemented in member states to truly benefit the industry by reducing costs and leading to lower power prices. (Per Witalisson, CEO)
Q: How do falling battery storage prices affect your projects?
A: Falling battery prices do not affect the Palm project as prices were fixed a year ago. However, it positively impacts future battery storage projects if prices remain low. (Per Witalisson, CEO)
Q: Does the outcome of the US presidential election matter for Eolus Vind?
A: While it can affect market conditions, the Inflation Reduction Act is an agreement between both parties and is crucial for project financing. State-level legislation also plays a significant role, making radical changes unlikely. (Per Witalisson, CEO)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
