Rapporter | 27 Apr 2023 | Biokraft International

Scandinavian Biogas Fuels International AB (publ): High activity in growth projects and more stable production

First quarter 2023 in brief

• Energy sold increased by 3.1% to 88.1 (85.4) GWh.
• Total revenue, including capitalised work, increased by 32.3% to SEK 130.1 (98.4) million.
• Operating EBITDA margin was 6.4% (3.9%).
• Profit/loss after tax was SEK -58.8 (-11.9) million, of which SEK -31.2 (19.3) million was due to unrealised translation differences.
• Basic and diluted earnings per share was SEK -1.35 (-0.39).
• At the end of the quarter, the order book totalled 2.5 TWh, corresponding to a market value of approximately SEK 3.4 billion. We also have contracts for the supply of raw materials corresponding to 2.4 TWh.
• The plants in Henriksdal and Södertörn hold ISCC certificates since January 2023.
• The Board proposes to the AGM that the company name be changed to Biokraft International AB.
• Project Mönsterås started following an investment decision in December and Stockholm Bio-LNG is proceeding according to plan.
• A ruling by the General Court of the EU has led to the cancellation of the tax exemption for biogas granted to Sweden for 2021-2030.
• 15.3% of the shares in Scandinavian Biogas Mönsterås AB have been acquired by Mönsterås Biogas AB, which is jointly owned by farmers in the area around Mönsterås.

SIGNIFICANT EVENTS AFTER THE END OF THE PERIOD

• Scandinavian Biogas has decided to establish a subsidiary in the strategically important German market and has also entered into an agreement to begin development of two biogas plants in Germany with a combined capacity of approximately 240 GWh.

GROUP 3 months 12 mos.
Jan-Mar Jan-Mar ∆ Full year
SEK million, unless otherwise stated 2023 2022 2022
Sold GWh 88.1 85.4 3.1% 328.1
Net sales 107.3 92.9 15.5% 366.7
Other revenue 17.3 0.5 n/a 20.3
Total revenue, including capitalised work 130.1 98.4 32.3% 407.4
EBITDA 7.9 3.7 114.1% 19.7
Operating EBITDA 7.9 3.7 114.1% 16.4
Operating EBITDA % 6.4% 3.9% 2.5 pp 4.3%
Operating income -15.3 -16.9 n/a -65.2
Earnings per share (SEK) -1.35 -0.39 n/a -1.95
Cash flow from operating activities -22.2 -15.4 n/a 7.4
Equity/assets ratio 38.4% 29.9% 8.4 pp 38.6%

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CEO comment

HIGH PROJECT ACTIVITY AND ESTABLISHMENT IN GERMANY
I am very pleased that we proposed to the General Assembly on 27 April to change the name of the group to Biokraft International AB – or Biokraft for short. After careful consideration, we have concluded that Biokraft, the name of our Norwegian subsidiary, is already an established and well-recognised European brand in Bio-LNG. It also better describes the entirety of our offer, i.e. sustainable fuels and fertilisers. We are also convinced that the Biokraft name makes us stand out and reinforces our ability to build a leading market position. We hope for your continued support and commitment to Biokraft and our contribution to a circular economy.

During the first quarter, the market showed continued high demand for biogas, but falling market prices for fossil gas. The trend of falling gas prices has accelerated, and we are approaching the price level before the Russian attack on Ukraine in February 2022. The development is explained by a mild winter and substantially increased imports into the EU of non-Russian liquid fossil gas. Lower market prices have had a marginal impact on our revenues, as the prices in our existing contracts are still mostly fixed. Current price levels do not undermine our long-term target of a 30% operating EBITDA margin.

The Swedish Tax Agency’s decision to remove tax exemption in Sweden, following the EU ruling in December, surprised the industry, as there is a political consensus in Sweden that biogas use must be subsidised. However, the government decided to accelerate a new application for tax exemption under the requirement of a formal review procedure that should have taken place before the previous EU decision. The tax ruling has had a limited impact on us. In the longer term, however, it is essential that biogas is favoured through tax exemptions, green certificates or other subsidies and that we have a clear regulatory framework across the EU. This is a prerequisite for a real transition to a sustainable transport sector.

Activity in the growth business is consistently high and we are delivering largely according to plan while strengthening our position in the market. The establishment of Business Area Germany is a strategically important milestone and adds two new biogas projects with a planned biogas capacity equivalent to 240 GWh. The ambition is to maintain a qualitative project pipeline consisting of around ten growth projects in different phases. We are currently running ten projects, two of which are under construction.

Operationally, we have seen small but clear progress. Capacity utilisation is still too low. Compared to the corresponding quarter the previous year, energy sold improved as did operating EBITDA. However, we are still far below our target of at least 30% operating EBITDA margin. Profitability is affected by fixed prices to customers, significantly lower than market prices, combined with sharply increased operating costs for electricity, chemicals and raw materials. We will gradually replace old contracts with new ones, and during the quarter the SL contract was extended until 2026. We therefore continue to be SL’s main supplier of biogas. The new contract was signed at market price levels for Sweden, and the future price is linked to the market price. The agreement also specifies a minimum price that exceeds our existing fixed price agreements.

Activity in Business Area Sweden is high, and it’s clear that new leadership in the Swedish business has created a greater operational focus with a holistic system for continuous improvement. The business area still has far too low capacity utilisation, and intensive work is underway to increase the volumes of incoming substrates and optimise the mix in the digester. The trend is promising, and the business managed to increase production in the first quarter compared to the previous quarter. In Norway, the project organisation handed over Skogn II to operations. Production volume increased and sales of Bio-LNG increased by 26% compared to the same period previous year. However, we believe that the production level can be increased further through a gradual ramp up, where new bottlenecks are cleared up on an ongoing basis. Korea had a strong quarter, increasing both production volume and profitability.

To summarise, it was an eventful first quarter where we made a lot of progress thanks to very committed employees and a clear growth plan. With a continued focus on long-term growth and continuous development in daily operations, we will achieve our goals, and I would like to thank all employees, customers, partners and shareholders for helping us achieve our vision of a sustainable transition from fossil to renewable energy.

Welcome to press and analysts Teams meeting on 27 April at 10:00 CEST
Investors, analysts and media are invited to a Teams presentation, where CEO Matti Vikkula and CFO Anna Budzynski will give a brief presentation of the report followed by a Q&A session.The presentation will be given in English and recorded and be made available online afterwards. To participate in the conference, click on this Teams link ( https://teams.microsoft.com/l/meetup-join/19%3ameeting_Zjc1Y2IyMmQtMjIzMi00OTA1LTljODktNThlZTBiMGNhM2Nl%40thread.v2/0?context=%7b%22Tid%22%3a%22e193c8c9-ab1e-4290-b35f-0bf7222050c7%22%2c%22Oid%22%3a%22ea15dee1-8a75-482e-87e4-43786fce14d9%22%7d ). The presentation will be uploaded on the website.

This disclosure contains information that Scandinavian Biogas Fuels International AB (publ) is obliged to make public pursuant to the EU Market Abuse Regulation (EU nr 596/2014). The information was submitted for publication, through the agency of the contact person, on 27-04-2023 07:30 CET.