OX2 AB Interim Report 2024 January-March
Net sales LTM
SEK 7,305 million
(7,486)
Return on capital
employed (ROCE) LTM
19.2%
(35.3)
Comparative figures refer to the same period the previous year
Operating margin LTM
11.2%
(14.9)
Total portfolio
47,223 MW
(42,755)
- Net sales fell by 2.4 percent over the last twelve months due to lower sales from the construction business
- The growth in investments in organisation and project development resulted in a lower operating margin of 11.2 percent (14.9) for the last twelve-month period
- Return on capital employed was 19.2 percent (35.3)
- The total portfolio increased to 47,223 MW (42,755). The increase is mainly attributable to increases of 1,155 MW in the onshore wind portfolio, 2,493 MW in the solar portfolio and 3,822 MW sold with potential additional payments.
Good demand and progress in ongoing sales processes
January-March 2024
- Net sales amounted to SEK 944 million (1,463)
- Operating income amounted to SEK -110 million (102)
- Operating margin amounted to -11.6% (7.0)
- Net income for the period was SEK -58 million (89)
- Earnings per share before and after dilution totalled SEK -0.19 (0.36*)
- Cash flow from operating activities amounted to SEK 125 million (878)
The Group's key performance indicators
Significant events after the end of the reporting period
- On April 3, OX2 announced that an agreement had been signed for the sale of the Bredhälla energy storage facility in Sweden. The deal is expected to be finalised in the second quarter of 2024.
- In April, the Gotland County Administrative Board granted a Natura 2000 permit for OX2 and Ingka Investments' Aurora offshore wind farm.
Q1 | LTM | Full year | ||||
2024 | 2023 | Apr-Mar | 2023 | |||
Net sales, SEK m | 944 | 1,463 | 7,305 | 7,824 | ||
Operating income, SEK m | -110 | 102 | 816 | 1,028 | ||
Operating income adjusted for project development costs, SEK m | -37 | 176 | 1,172 | 1,385 | ||
Operating margin,% | -11.6% | 7.0% | 11.2% | 13.1% | ||
Operating margin adjusted for project development costs,% | -3.9% | 12.0% | 16.0% | 17.7% | ||
Profit for the period, SEK m | -58 | 89 | 862 | 1,008 | ||
Cash flow from operating activites, SEK m | 125 | 878 | -524 | 229 | ||
Investments in the project development portfolio, SEK m | -127 | -229 | -922 | -1,025 | ||
Earnings per share before dilution, SEK | -0.19 | 0,36* | 3.23 | 3.79 | ||
Earnings per share after dilution, SEK | -0.19 | 0,36* | 3.23 | 3.79 | ||
Project acquisitions, MW | 50 | 952 | 4,109 | 5,011 | ||
Sold projects, MW | 0 | 0 | 4,429 | 4,429 | ||
Projects handed over, MW | 0 | 171 | 373 | 544 | ||
Total portfolio, MW | 47,223 | 42,755 | 47,223 | 47,460 | ||
Project development portfolio, MW | 33,107 | 33,095 | 33,107 | 33,517 | ||
Sold MW with potential additional payments | 8,232 | 4,410 | 8,232 | 8,232 | ||
Projects under construction, MW | 1,062 | 1,173 | 1,062 | 961 | ||
Contracts under management (TCM), MW | 4,823 | 4,077 | 4,823 | 4,750 | ||
Number of employees | 497 | 404 | 497 | 496 |
* Adjusted for result from non-controlling interests
For definitions of alternative performance measures and key performance indicators, see pages 25 and 31.
Interim Report January-March 2024 | 1 |
About OX2
OX2 has a three-phase business model for the development and sale of renewable
electricity generation capacity: Expand, Develop and Deliver.
OX2's business model
OX2's project development portfolio
Sweden | ||
Onshore wind | 3,470 MW | |
5,508 MW | ||
power | ||
1,159 MW | ||
11,619 MW | ||
40 MW | ||
Offshore wind power
13,768 MW
France | |
Solar power | 509 MW |
6,793 MW | |
Energy storage | |
926 MW | |
Spain | |
25 MW | Italy |
OX2's offices | 233 MW |
391 MW | |
100 MW |
Åland
5,200 MW 25 MW
Finland 5,346 MW
3,060 MW 1,015 MW
50 MW | |
Estonia Poland | |
659 MW | 845 MW |
200 MW | 1,714 MW |
556 MW |
Romania 620 MW
Greece
446 MW 533 MW
Australia
1,222 MW
180 MW
Interim Report January-March 2024 | 2 |
The CEO's comments
We have made good progress in our current sales processes and reiterate our forecast of an increased operating income for 2024. During the quarter, we initiated the process of selling another substantial portfolio of onshore wind power in Finland and after the end of the quarter we signed an agreement to sell our first energy storage project in Sweden.
Quarterly fluctuations
We report negative operating income for the first quarter, which can be attributed to the lack of finalized project sales during the first months of the year. Our business involves quarterly fluctuations and we fully understand that it is difficult to assess OX2's development based on individual quarters. In order to make a fair assessment it is relevant to look at longer trends.
For the past two years, we have achieved an operating income level of just over SEK 1 billion on an annual basis, despite significant costs related to investments in our organization and project development. We reiterate our forecast of increased operating income in 2024, with the expectation that earnings will largely be driven by the sale of onshore wind projects.
Good demand
Customer demand continues to be good and we have made good progress in the ongoing sales processes. The valuation of our projects is supported by recent third-party assessments of the long-term electricity price forecasts in several of our key markets moving upwards. This applies not least in Finland, with increases in forecasts of 15-20 percent compared to the previous year.
Over the past year, the majority of our sales have been to industrial buyers. They generally have longer decision-making processes than financial investors, which has meant that it has taken longer to finalize our sales. We have however in the beginning of the year noted a higher level of activity and increased capital inflow among financial investors.
Our first sale in energy storage
In the beginning of April, we signed an agreement for the sale of our first energy storage project, Bredhälla in southern Sweden, along with a ten-year agreement for technical and commercial management. Bredhälla will provide ancillary services to Svenska Kraftnät, the Swedish authority operating the transmission system, to ensure the stability of the electricity grid
Paul Stormoen, CEO
and provide energy arbitrage. We expect the deal to be finalized in the second quarter 2024.
OX2 has built up a strong development portfolio within energy storage totalling more than 900 MW with projects in Sweden, Finland, Poland, Italy and Australia. Energy storage is a technology that will become an important enabler for the transition to renewable energy.
Construction started on solar project in Poland
OX2 has several projects that are approaching sales in the coming months. We have made good progress with the 100 MW solar project Rutki in Poland, which we have now also started construction on. Since a large part of the future electricity production of Rutki is covered by a Contract For Difference (CFD), a government contract that provides a guaranteed minimum income, the construction is carried out at low financial risk while we have good visibility over the expected sales value of the project.
Change in total portfolio, | Total portfolio, | |||
Projects sold, MW | MW | MW | ||
0 | -237 | 47,223 | ||
Relates to Jan-Mar 2024 | Relates to Jan-Mar 2024 | As of March 31, 2024 | ||
Interim Report January-March 2024 | ||||
3 |
Additional onshore wind projects for sale
During the quarter, another sales process of a substantial portfolio of around 800 MW of onshore wind power in Finland was initiated. The project, which we call Skywalker, consists of a consolidation of six different permitted projects. We are seeing strong demand for larger portfolios and with this project we can reach new customer categories. Our business model provides high flexibility, enabling us to tailor the projects we introduce to the market to maximize returns.
Our total ongoing sales processes for permitted projects amount to nearly 2 GW, providing us with good potential for value creation in the coming year.
Increased focus
OX2 has expanded significantly over an extended period of time. We expense all our development costs, which impacts earnings in the near term, but which will contribute to our future growth and earning capacity. It is thanks to these investments
that we today have a platform that gives us good prospects for profitable growth. Costs related to personnel and project development are expected to remain relatively stable over the coming year, while we focus our investments on markets where we see the greatest potential.
Paul Stormoen
Interim Report January-March 2024
4
Expand and develop
It is OX2's project development portfolio that creates long-term value and makes it possible to drive the transition to renewable energy. The portfolio consists of greenfield projects, as well as acquired wind and solar power projects and energy storage solutions in different stages of development and in different markets. Development and optimization of these projects take a long time and not all projects will be realized. The likelihood of a project being realized increases the further on in the development phase the project is.
At the end of the first quarter, the development portfolio totaled 33.1 GW (33.1), comprising offshore wind power of 13.8 GW (13.9), onshore wind power of 11.6 GW (10.5), solar power of 6.8 GW (4.3) and energy storage of 0.9 GW (0.6).
The project development portfolio decreased by 410 MW during the quarter, mainly attributable to net changes in existing projects of 748 MW. This was offset in part by new greenfield projects of 289 MW and project acquisitions of 50 MW.
The increase of 289 MW in greenfield projects is attributable to new
solar energy projects, including 180 MW in Poland and 109 MW in France. The project acquisition in the quarter of 50 MW related to an onshore wind project in Romania.
The reduction in the portfolio of 748 MW was partly attributable to a solar energy project in Spain of 53 MW that was sold back to the developer and to solar energy projects in Estonia and Greece totaling 209 MW that were discontinued due to limited progress in permit processes. The portfolio was also reduced due to updated assumptions in the existing portfolio totaling 387 MW, mainly in onshore wind projects in Finland and Sweden. In addition, OX2's decision to start construction of a Polish solar energy project affected the portfolio by 100 MW.
Overall, the development portfolio made good progress during the quarter, with several projects advancing to mid- and late-stage status. The Aurora offshore project received Natura 2000 permit, and if the government gives the go-ahead, construction could begin as early as 2028 and the park could start supplying electricity before 2030. Located between Gotland and Öland in the Baltic Sea, the Aurora wind farm could generate up to 24 TWh annually if the entire area is approved.
Project development portfolio as at March 31, 2024
Onshore | Offshore | ||||
Market (MW) | wind | wind | Solar | Storage | Total |
Sweden | 3,470 | 5,508 | 1,159 | 40 | 10,177 |
Finland | 5,346 | 3,060 | 1,015 | 50 | 9,471 |
Åland | 0 | 5,200 | 25 | 0 | 5,225 |
Poland | 845 | 0 | 1,714 | 556 | 3,115 |
Italy | 233 | 0 | 391 | 100 | 724 |
Australia | 0 | 0 | 1,222 | 180 | 1,402 |
Romania | 620 | 0 | 0 | 0 | 620 |
Other markets | 1,105 | 0 | 1,267 | 0 | 2,372 |
Total: | 11,619 | 13,768 | 6,793 | 926 | 33,107 |
Sold MW with potential additional payments | |||||
Sweden | 5,292 | 5,292 | |||
Finland | 2,940 | 2,940 | |||
Total: | 8,232 | 8,232 |
During the first quarter, total external project development costs amounted to SEK -73 million (-74). Development costs in the first quarter are in line with the same quarter last year. Lower investments in the project development portfolio of SEK -127 million (-229) can be attributed to a lower number of acquired MW compared to the same period last year.
Interim Report January-March 2024
5
Project development portfolio, GW
40 | 34 | 34 | ||||
35 | 33 | 32 | 33 | |||
30 | ||||||
25 | ||||||
20 | ||||||
15 | ||||||
10 | ||||||
5 | ||||||
0 | ||||||
Q1 | Q2 | Q3 | Q4 | Q1 | ||
2023 | 2024 |
Project acquisitions, MW
3 500 | 3 082 |
- 000
- 500
- 000
- 500
952 | ||||
1 000 | 694 | |||
500 | 283 | 50 | ||
0 | ||||
Q1 | Q2 | Q3 | Q4 | Q1 |
2023 | 2024 |
Project development portfolio/
development phase, MW
24 000 | ||||
21,354 | ||||
21 000 | ||||
18 000 | ||||
15 000 | ||||
9,371 | ||||
12 000 | ||||
9 000 | ||||
6 000 | ||||
2,382 | ||||
3 000 | ||||
0 | ||||
Early | Mid | Late | ||
Sweden | Finland | |||
Åland | Poland | |||
Italy | Australia | |||
Other markets |
External project development costs for offshore wind power during the quarter totaled SEK -10 million (-25) due to the sale of shares in two additional offshore wind farms in the preceding year. External project development costs from these projects are now recognized in part as results from joint ventures. Other external costs and personnel costs for offshore wind power totaled SEK -21 million (-14). In addition, the Group's share of costs for offshore wind in joint ventures amounted to SEK -34 million (-15) for the quarter.
Projects sold
There were no new sales in the first quarter. OX2 has sales processes underway in both wind and solar power on a number of geographical markets and demand remains strong.
OX2 has projects with permits in several countries, and ongoing sales processes amount to almost 2 GW. The process of selling a large onshore wind portfolio in Finland of approximately 800 MW was initiated during the quarter. Other current sales processes include onshore wind power of approximately 350 MW in Finland and approximately 200 MW in Romania, as well as solar power projects of approximately 270 MW in Australia and 100 MW in Poland. After the end of the quarter, and agreement was signed for the sale of a 43 MW energy storage project in Sweden.
In connection with the IPO in 2021, OX2 announced that the average sales price for onshore wind projects over the past two years had been around EUR 1.3 million per MW. Price levels have risen since then and have averaged about EUR 1.8 million in Sweden and Finland and EUR 2.8 million in Poland during the period 2022-2023. Since the IPO, the probability that onshore wind and solar project reaches sales is estimated to have been around 50 percent for projects in the early stage, around 75 percent in the middle stage and around 90 percent in the late stage.
Deliver
In addition to developing wind and solar farms and energy storage solutions, OX2 is responsible for construction of the projects and delivers long-term technical and commercial management.
At the end of the quarter, OX2 had 10 projects under construction totaling 1,062 MW (1,343). OX2 has started construction of the 100 MW Rutki solar project in Poland, which is expected to be sold in 2024. A large part of Rutki's future electricity production is covered by a Contract For Difference (CFD), a government contract that provides a guaranteed minimum revenue, which means that construction is carried out at low financial risk.
In 2023, turbine supplier Siemens Gamesa (wholly owned by Siemens Energy) announced expected delays in future deliveries. OX2 has three projects under construction totaling 670 MW that use Siemens Gamesa turbines (Niinimäki, Riberget and Lestijärvi) where handover to the customer may be delayed, as reflected in the table below. OX2's construction contracts are based on fixed prices and delivery dates, which means that delays caused by the turbine suppliers generally have no financial impact on OX2.
Interim Report January-March 2024
6
Projects sold, MW
3 500 2 967
- 000
- 500
2 000 | ||||
1 500 | 1 | 327 | ||
1 000 | ||||
500 | 135 | |||
0 | 0 | |||
0 | ||||
Q1 | Q2 | Q3 | Q4 | Q1 |
2023 | 2024 |
Total MW under construction
1 600 | ||||
1 400 | 1 335 | |||
1 200 | ||||
1 173 | ||||
1 200 | 961 | 1 062 | ||
1 000 | ||||
800 | ||||
600 | ||||
400 | ||||
200 | ||||
0 | ||||
Q1 | Q2 | Q3 | Q4 | Q1 |
2023 | 2024 |
Constr. | Operat. | ||||
Projects | Country | Technology | start | start | MW |
Projects to be completed in 2024 | 156 | ||||
Krasnik | Poland | Onshore wind | 2021 | 2024 | 24 |
Wysoka | Poland | Onshore wind | 2021 | 2024 | 63 |
Bredhälla | Sweden | Energy storage | 2022 | 2024 | 43 |
Eolia | Italy | Onshore wind | 2023 | 2024 | 27 |
Projects to be completed in 2025 | 790 | ||||
Riberget | Sweden | Onshore wind | 2022 | 2025 | 70 |
Niinimäki | Finland | Onshore wind | 2022 | 2025 | 145 |
Lestijärvi | Finland | Onshore wind | 2021 | 2025 | 455 |
Bejsce | Poland | Onshore wind | 2023 | 2025 | 20 |
Rutki | Poland | Solar PV | 2024 | 2025 | 100 |
Projects to be completed in 2026 | 115 | ||||
Ånglarna | Sweden | Onshore wind | 2023 | 2026 | 115 |
Total MW under construction at period end | 1,062 |
At the end of the quarter, OX2's technical and commercial management activities totaled 4,823 MW (4 077), spread across five European markets and Australia. During the quarter, management was initiated for several wind farms that were delivered to customers at the end of 2023. In addition, the focus remained on integrating the Australian operations and strengthening the customer offering in solar energy and energy storage.
Financial highlights
Performance and financial position
Q1 | LTM | Full year | ||
SEK m | 2024 | 2023 | Apr-Mar | 2023 |
Net sales | 944 | 1,463 | 7,305 | 7,824 |
Cost of goods sold* | -684 | -1,073 | -4,956 | -5,345 |
Gross profit* | 260 | 390 | 2,349 | 2,479 |
Project development costs* | -73 | -74 | -356 | -357 |
Other external costs | -70 | -52 | -285 | -267 |
Personnel costs | -186 | -140 | -724 | -678 |
Result from joint venture | -34 | -15 | -150 | -115 |
Depreciation and amortization of tangible and intangible | ||||
assets | -7 | -6 | -34 | -34 |
Operating income* | -110 | 102 | 816 | 1,028 |
Operating income adjusted for project development | ||||
costs* | -37 | 176 | 1,172 | 1,385 |
Gross margin, %* | 27.6% | 26.7% | 32.2% | 31.7% |
Operating margin, %* | -11.6% | 7.0% | 11.2% | 13.1% |
Operating margin adjusted for project development | ||||
costs, %* | -3.9% | 12.0% | 16.0% | 17.7% |
*For definitions of alternative performance measures, see page 25.
Interim Report January-March 2024
7
Technical and commercial management contracts, MW
4,823
(4,077)
Net sales
Net sales during the first quarter totalled SEK 944 million (1,463).
Net sales for the quarter were lower than the same period last year due to lower revenue from the construction portfolio. Operations in Sweden contributed 9 percent (34) of revenue, Poland 14 percent (25), Finland 68 percent (41) and Spain 8 percent (0), where the latter was attributable to the resale of projects to the developer.
No project handovers were finalized in the first quarter of 2024. In the same period last year, three projects were handed over to customers. No new sales were finalized during the quarter, which was also the case in the corresponding quarter last year.
Costs
During the first quarter, cost of goods sold totalled SEK -684 million (-1,073). Cost of goods sold as a percentage of revenue is affected by the product mix in the period. Gross margin for the quarter increased to 27.6 percent (26.7) compared with the same period last year. The gross margin is positively affected by renegotiation of contingent consideration in a previously divested project (SEK 49 million) and by positive currency effects in construction projects, which are expected to be offset by negative effects in the coming quarters. The group's net flows in foreign currency are hedged. A currency effect arises in the accounts, which affects the gross margin, when inflows and outflows do not occur in the same period. The positive currency effect amounted to around 100 MSEK.
Project development costs amounted to SEK -73 million (-74) during the first quarter. Development costs in the first quarter are hence on par with the same quarter last year, although as a share of net sales they increased to 7.7 percent, compared with 5.1 percent for the corresponding period last year. In addition to project development costs, income from interest in joint ventures amounted to SEK -34 million (-15) for the quarter. The result is attributable to OX2's share of development costs mainly for offshore wind power in the companies that were partially divested to Ingka Investments in 2022 and 2023.
Other costs in the quarter totalled SEK -70 million (-52). The increase is related to the operations in Australia and higher costs for consultants and IT investments.
Personnel costs in the first quarter amounted to SEK -186 million (-140), an increase of 33 percent compared with the same period the previous year. The change can be attributed to an increase in the workforce (93 employees) compared with the same period the previous year, which follows the planned expansion that has taken place. Personnel expenses for staff located outside Sweden have also increased in Swedish currency due to the weakening of the SEK compared with the corresponding quarter last year.
Interim Report January-March 2024
8
Revenue LTM, SEK m
9 000 | ||
8 000 | 7 486 | 7 305 |
- 000
- 000
- 000
- 000
- 000
- 000
-
000
0
Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | Q4 | Q1 |
2022 | 2023 | 2024 |
Project development and personnel costs LTM,
SEK m
1,200 | 1,080 | |||||||
1,000 | ||||||||
828 | ||||||||
800 | ||||||||
600 | ||||||||
400 | ||||||||
200 | ||||||||
0 | ||||||||
Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | Q4 | Q1 |
2022 | 2023 | 2024 |
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OX2 AB (publ) published this content on 25 April 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 25 April 2024 07:14:27 UTC.
