September 26, 2021

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Costs increase in Quantafuel's Skive plant - decrease in stock

Costs increase in Quantafuel’s Skive plant – decrease in stock

Plastic recycling company Quantafuel’s sales ended operations in the second quarter at NOK 479,000, a significant increase from the steep NOK 5,000 achieved in the same period last year.

The company’s pre-tax profit was NOK-9 million for the quarter, less than one-tenth the NOK-94.3 million loss in the second quarter of last year.

Quantafuel’s business concept is to extract fuel from plastic waste, thus reducing the need to extract fresh oil. The company has been one of the most talked about in the recent green wave that marked the Oslo Stock Exchange. The stock price fluctuated sharply.

At the opening of trading on the Oslo Stock Exchange, Quantafuel shares fell more than seven percent.

“We understand and appreciate the great interest from our dedicated shareholders and I would like to stress that we are 100 percent committed to creating value for them, as well as making a difference to the environment,” Interim CEO Terje Ekin says in a Tuesday report.

Quantafuel had an operating profit before depreciation (ebitda) of minus NOK 28.7 million in the second quarter, which is an improvement/double from minus NOK 29.8 million in the second quarter of last year. Analysts’ EBITDA estimate was minus 28 million advances.

Analyst: This is the most important

The future of the Quantafuel plant in Skive in Denmark, and the process of finding a new senior manager are key elements in today’s report, analyst Haakon Amundsen at brokerage house ABG Sundal Collier said in advance.

These clarifications are the most important, and therefore I don’t think the market will focus too much on the actual numbers in the report, unless costs are very high and there is a significant increase in Skive’s capex budget.

Capital expenditures (Capital expenditures) refer to investments in assets such as buildings, vehicles, or other equipment.

Plant costs in Skive in Denmark have increased from NOK 581 million to NOK 610 million. Major upgrades were announced here in the fourth quarter, which according to plan will remove obstacles to stable long-term production.

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COO Terje Eiken is currently the interim director of Quantafuel. This summer it became known that Its founder Kjetil Bøhn has resigned after seven years as a senior manager In the company. The plastics company said the process of finding a permanent president is underway in a report on Tuesday.

We believe in improvement in the fourth quarter

Eiken said the bottlenecks were revealed during Danish factory testing, during the company’s quarterly presentation on Tuesday, reproduced by TDN Direkt. The plant will be upgraded in the fourth quarter, and the company expects to be able to achieve stable production after that.

During the question session, on the other hand, management receives many questions about how certain this statement is and whether more obstacles are likely to arise in the future. Here, the CEO is clear in his speech, TDN writes:

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– It is difficult to talk about something we know nothing about, but this is what we know so far; We’ve said all we know, which is that we found the last hurdle and ordered the equipment we’re missing to meet it.

Regarding the increased costs, Eiken says:

– Had we built Skive correctly from the very first moment, the capex would have looked different. Hopefully this will be the last quarter of the year, and we’ll have to adjust the cost estimate, according to TDN.

No news = good news

Amundsen didn’t think any news in principle would be good news for Quantafuel shareholders.

– Any change of steering on the Skive in principle will not be interpreted positively, because after all there have been some disappointments lately. In any case, this means that you continue according to the last time you contacted the company. He says any change would likely mean new delays that would disappoint the market.

Amundsen believes that there is a logical explanation for the stability of Quantafuel’s share price at a relatively low level thus far:

The stock price reflects that the market considers it a bit binary at the moment. Production has to be running in Skive for the company to move forward, and the market needs clarification. This is the big question.

Retirement and lower prices

The combination of resignation and delay caused a sharp drop in the share at the beginning of July and thereafter Many insiders took the opportunity to buy stocks at low prices.

Here is what the company said about the departure:

“With the company entering a new phase, the Board of Directors and Bøhn over time have had an ongoing process of planning the company’s future management, thus opening up to a more industrial leader,” the company wrote in a stock exchange announcement.

Former CEO Boone continues to serve as a strategic advisor to the company on “future value creation and new investments”.

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In late June, Quantafuel announced Delays at a recycling plant in Skive in Denmarkof which the company now owns full ownership. Then it was announced that the implementation of the project would be postponed from the end of the third quarter to the middle of the fourth quarter.

This isn’t the first time Quantafuel has reported delays in Skive, as the coronavirus has been highlighted to explain weaker-than-expected progress in 2020.

The company also plans to build a raw material pretreatment plant integrated with a chemical recycling plant in Esbjerg.

The goals of the course are the sky above the course of the day

Like most other green stocks that are quoted on uncertain future earnings, Quantafuel’s price has collapsed in the past six months. Where the price was at most 300 percent above the exchange’s listing, it has since fallen to more than 60 percent since the end of January.

Among the analysts at brokerages with coverage on Quantafuel stock, there are relatively large gaps in their price targets, but all have long-term buy recommendations for the stock. They see a rise of anything from 105 to 561 per cent compared to Monday’s closing price of 30.2 kr:(Terms)Copyright Dagens Næringsliv AS and/or our suppliers. We would like you to share our cases using a link that leads directly to our pages. All or part of the Content may not be copied or otherwise used with written permission or as permitted by law. For additional terms look here.

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