Release Date: November 20, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Eolus Vind AB (STU:7EVB, Financial) received a significant milestone payment of $64.7 million from the Centennial Flats project, positively impacting Q4 results.
- The company has a robust project pipeline, with ongoing construction projects in Sweden and the US progressing according to plan.
- Eolus Vind AB (STU:7EVB) has secured full financing for the POM project in the US, ensuring its completion without financial strain.
- The order backlog increased by over 100 million SEK, indicating strong future revenue potential.
- The company is strategically positioned in the US market, which remains strong, providing a buffer against Nordic market softness.
Negative Points
- No new sales transactions were completed in Q3, contributing to negative operating results for the quarter.
- The Swedish government's rejection of offshore wind project permits led to a 40 million SEK write-down.
- Higher interest costs and increased ROI expectations among investors may pressure project margins.
- The company's net sales and operating profit significantly decreased compared to the previous year, with a net loss of 79 million SEK for the period.
- Cash flow from operating activities was negative, primarily due to ongoing construction and investments in the project portfolio.
Q & A Highlights
Q: In your report, you mention that ROI requirements have increased among investors. How do you expect this to impact your project margins going forward? Can we expect lower margin levels compared to historical levels?
A: Yes, all energy projects are extremely capital-intensive. With higher interest costs, return expectations increase. If not countered by higher forecasts for electricity prices, it will affect our margins unless we can drive CapEx and OpEx down enough. We expect some pressure on margins but anticipate making satisfactory deals due to higher electricity prices in certain markets.
Q: This quarter, you booked 40 million in impairments on the offshore projects Acona and Gardner. Can we expect any more impairments in rejected offshore projects, or are the book values now set to zero?
A: We have taken the full write-off for these projects. There are other ongoing processes, and while there is a risk of write-offs if projects are denied, we see positive signals from the government adding resources to evaluate these projects.
Q: Regarding your balance sheet, you mentioned that roughly 1.9 billion is referred to ongoing constructions in your projects. Can we assume that the rest is related to development costs for late-phase and early-phase projects?
A: Yes, that's what you can expect.
Q: Could you elaborate on which factors could drive the sale of the Pom project towards the later end of 2025?
A: We are in an advanced stage in the sales process, and the construction has progressed significantly. We expect to reach mechanical completion early in Q1, which supports closing the sale during Q1. Delays could occur if there are disruptions when the new administration takes office.
Q: Are customers in the US generally expecting you to build projects on your own books, or is this specific to the Pom project?
A: We evaluate what brings the most value compared to the risk on a project-by-project basis. For the Pom project, we found substantially higher value by progressing the project and de-risking it by taking on the construction ourselves.
Q: Can you elaborate on the construction progress of the Flos project?
A: We are constructing roads, hard stands, and foundations. The delivery of the turbines to the site will start during the spring after the thawing season.
Q: Why do you believe the Pinah project will enter your backlog at this stage?
A: Both projects in Latvia are fully permitted with secured grid connections. They have good wind resources and are in markets with significantly higher power prices than Sweden, which gives us good traction in the market.
Q: Why has the sales process for the Pom project been delayed?
A: It was an active choice to do the construction ourselves since we saw that it was valued highly by our customers compared to just selling the project rights.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
