Release Date: May 06, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Orron Energy AB (LNDNF, Financial) has a robust financial position with over EUR100 million in liquidity headroom.
- The company is progressing with its greenfield projects, with the first project in Germany reaching the ready-to-permit stage.
- Orron Energy AB (LNDNF) has a strong platform for long-term asset life and cash generation, primarily from wind assets in Sweden and Finland.
- The company is actively managing market volatility through ancillary services and price-dependent bidding, optimizing revenue.
- Orron Energy AB (LNDNF) is financially resilient, with a low breakeven cost and the ability to withstand prolonged periods of low prices.
Negative Points
- Nordic electricity pricing remains lower than expected, impacting financial results.
- Power generation in Q1 was below expectations due to lower-than-expected wind speeds and curtailments.
- The company faces headwinds from higher-than-expected balancing costs and currency impacts.
- There is uncertainty surrounding the UK grid connection reform, affecting project timelines.
- The current share price is perceived as undervalued compared to the underlying asset value, indicating a disconnect.
Q & A Highlights
Q: How do you see M&A opportunities in this market environment?
A: Daniel Fitzgerald, CEO: There are accretive M&A opportunities, and we have the financial capacity to act on them. We were active in Q4 and Q1 with some transactions. Larger-scale assets are presenting more opportunities, such as the recent Equinor deal near our Cars Group asset in Southern Sweden.
Q: Looking at the Nordic market, is this something you think will continue moving forward? Or what's your view on the long-term pricing?
A: Daniel Fitzgerald, CEO: In the short term, we expect some weakness due to market sentiment and economic conditions. However, in the medium- and long-term, we anticipate pricing will pick up as demand increases. Espen Hennie, CFO, adds that the company is resilient and can withstand prolonged low prices.
Q: Will your strategy change if the current prices remain? Or will you look into other opportunities?
A: Daniel Fitzgerald, CEO: Our strategy remains on track and is resilient in a low-price environment. We continuously evaluate the valuation and cash flow of our assets, both for sale and purchase opportunities, and will evolve our strategy as needed.
Q: Are you looking at buying assets in Germany, UK, France, or other regions than the Nordics?
A: Daniel Fitzgerald, CEO: We are active in various regions, including Germany and the UK, where electricity prices are stronger. However, meeting our return requirements in these markets is challenging, and we are cautious in pursuing M&A in these countries.
Q: We got a few questions about the current share price. When will you start buying back shares? Is this something you're looking at?
A: Daniel Fitzgerald, CEO: We are not satisfied with the current share price, which we believe undervalues our assets. The Board is actively discussing share buybacks, and we have shareholder support to proceed when conditions are favorable.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
