Solar company Scatec recently launched its largest project ever. At the same time, the Russians are causing problems for the company in Ukraine.
We deliver what we intend to deliver, says Terje Pilskog, CEO of Scatec.
The company’s renewable turnover was NOK 1.13 billion, up from NOK 1.01 billion a year earlier. Gross operating profit (ebitda) decreased from NOK 601 million in the second quarter of 2021 to NOK 517 million this year.
Turnover was previously expected at NOK 1047 million and EBITDA of NOK 511 million, according to Infront’s consensus based on three analyst estimates.
– Financially and operationally, a quarter ends almost as expected. We are doing well and have good cash flow from our facilities, which make up our organization, says Scatec’s president.
Strong Quarter for Vår Energi – Increased Profits
affected by war
Among other things, Scatec operates in Ukraine, and in the first quarter the company was badly affected by the war in the country. In the first quarter, the company had to write down values in Ukraine by NOK 770 million, and at the same time allocate NOK 87 million for credit losses.
The company is still affected by the turmoil in the country, Belskog says.
– We have a number of facilities in Ukraine, and most of the facilities are in good condition. There is a small factory in an occupied area, which makes up 4-5 percent of the portfolio in Ukraine. Partially destroyed and the Russians vandalize and steal the panels. We have an ongoing insurance case there.
In total, Scatec owns and operates five solar parks in central and southern Ukraine. The Ukrainian state has purchased long-term contracts for electricity from utilities several years into the future.
In the report, the company emphasized that energy demand had fallen, and that the network operator had cut production at irregular intervals.
Make a huge investment
Scatec announced last week that the company has begun development of three projects in South Africa. These projects will be the largest investment in the company’s history, with a total investment of $962 million.
– I have high expectations for projects in South Africa. As mentioned earlier, projects will generate returns and gross margins as directed, says Pilskog.
We negotiated contracts for equipment purchases and construction services, so we are comfortable with the cost picture.
In addition, the company recently started a project in Brazil, and secured an agreement with Yara Clean Ammonia for the first phase of a project in Oman.
– It’s been a long time since we last started building new projects. The fact that we are now starting to build the largest projects we’ve ever had is incredibly positive, Belskog says.
Pilskog acknowledges that there are risks associated with the countries in which Scatec operates, but says the company has developed a business model that enables it to deal with the risks.
We see very big opportunities in emerging markets, both growth opportunities and earning opportunities. This is an area in which, based on our business model, we may be best suited to compete, he says.
Growth goal can be changed
The projects will contribute to Scatec achieving its target of 15 gigawatts of total capacity in 2025.
Analysts have stated that Scatec’s target for 2025 is unrealistic.
They fail to make the 2025 growth target credible. We’ve gone from a situation where a growth target has been priced in the stock price, to one where few believe it is realistic,” Magnus Rasmussen of Kepler Cheuvreux told E24 on Monday.
It’s also clear that the Scatec manager can change the target, and that the company doesn’t think gigawatts is a good target in and of itself for business.
– Looking at how our business is evolving, we don’t feel that the 15 GW target reflects our strategy in a good way. We’ll have a capital market day in September where we’ll come up with an updated strategy and updated goals that better reflect the business, Belskog says.
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stock market crash
Since the stock market peak at the beginning of last year, Scatec’s share is up 70 percent. So far in 2022, the rate is down 30 percent.
– After I took over as director, I bought shares. He says it probably reflects my belief in the company, without commenting on stock price movements.
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