Denmark based renewable energy developer European Energy scored well on financial metrics in Q2/2022 when compared annually, giving it confidence to meet guidance for 2022. However, management admitted to construction and financing costs increasing due to inflation and higher prices for procurement for future projects.
"Currently we see two major tendencies disrupting the energy market. The energy prices remain at a high level and so do the prices for steel, logistics and solar panels. At the same time inflation and interest rates are rising," explained CEO Knud Erik Andersen.
Nonetheless, the company will continue to use all free cash to invest in new projects that promise to bring down CO2 emissions, as demand keeps rising in the face of high energy prices. "These disrupting factors contribute to the interest that European Energy is facing from stakeholders and business partners globally in its renewable projects," added Andersen.
Q2/2022 financials
European Energy's Q2/2022 revenues amounted to €43.7 million, compared to €26.0 million a year back thanks mainly to high power prices and revenues from power sales going up. EBITDA totaled €11.9 million, increasing by €4.9 million in Q2/2021 while gross profit increased by €11.2 million to €23.2 million.
It reported profit of €4.9 million in the reporting quarter, up from €1.4 million annually, thanks to increasing power prices. However, there was negative development in operating cash flows in Q2/2022 due to higher inventories owing to increased construction activity and cost of renewable energy plants.
In H1/2022, its revenues increased from €38.1 million annually to €285.5 million thanks to divestments concluded in Q1/2022 and higher power prices in Q2/2022. Gross profit in the 1st half of the year amounted to €99.0 million, rising from €21.8 million in H1/2021.
At the end of Q2/2022, its renewable energy pipeline grew by 4.4 GW sequentially to a total of almost 44 GW, comprising wind and solar projects with 22.4 GW in development phase, 18.7 GW in the screening phase and 1.6 GW in structuring phase. The growth in Q2 came primarily from solar.
As of June 30, 2022, European Energy had 12 solar projects under construction including 304 MW Kasso plant which has been delayed from its original commissioning deadline of Q2/2022 due to 'technical issues regarding a component' from one of its suppliers (see Green Hydrogen For E-Methanol Production).
During H2/2022, it plans to grid connect more than 600 MW new generation capacity. It continues to expect EBITDA of €135 million and profit before tax of €100 million in 2022.
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