Release Date: November 01, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Scatec ASA (STU:66T, Financial) reported strong financials for the third quarter, with proportionate revenues of NOK2.4 billion and a significant increase in EBITDA to NOK1.54 billion, nearly doubling from the same quarter last year.
- The company achieved a 24% increase in power production compared to the same quarter last year, reaching 1,254 gigawatt hours.
- Scatec ASA (STU:66T) has secured major projects, including a 1.1 gigawatt solar project in Egypt and a 120 megawatt project in Tunisia, enhancing short-term growth visibility.
- The company has successfully optimized its portfolio through strategic divestments, including agreements with TotalEnergies and SUSI Partners, contributing to financial gains.
- Scatec ASA (STU:66T) has a robust pipeline of 12 gigawatts, with 1.6 gigawatts in backlog and 565 megawatts under construction, supporting future growth prospects.
Negative Points
- The company faced a tragic accident involving a contractor in South Africa, highlighting significant risks related to transportation and safety.
- Scatec ASA (STU:66T) has a high net interest-bearing debt of NOK22 billion, which remains a concern despite efforts to reduce corporate debt.
- The company is reliant on divestments to generate proceeds for debt reduction, with a target of NOK4 billion by 2027, which may pose risks if market conditions change.
- There is uncertainty regarding the timing of ancillary services revenues in the Philippines, which could impact financial projections.
- Scatec ASA (STU:66T) faces challenges in managing cash flow and capital efficiency during increased construction activity, which could strain working capital.
Q & A Highlights
Q: Does the NOK4 billion target include proceeds from the sale of African hydropower assets and Vietnam?
A: Yes, it includes proceeds from those sales as well as Phase 2 of South Africa. However, specific breakdowns of these transactions are not publicly disclosed yet. - Terje Pilskog, CEO
Q: Can you break down the NOK3.4 billion in remaining D&C revenues between 2024, 2025, and 2026?
A: The majority of these revenues will be realized in 2024 and 2025, with a limited portion coming in 2026. - Terje Pilskog, CEO
Q: Regarding the ancillary revenues that are pushed out, is this a one-off payment?
A: Yes, it is a one-off payment representing the accumulated difference between current tariffs and those awarded in the tender. We expect a higher tariff going forward. - Terje Pilskog, CEO
Q: Have you agreed on the price with TotalEnergies for the Uganda assets?
A: Yes, we have agreed on the price. If it was below book value, we would have had to impair it, which is not the case. - Hans Hegge, CFO
Q: What is the outlook for cash flow to equity from power production by 2027, net of investments and divestments?
A: We haven't provided specific guidance on this yet. However, we have highlighted significant contributions from divestments, with at least NOK4 billion expected. - Hans Hegge, CFO
Q: Does the 75% corporate debt repayment include regular debt amortization?
A: Yes, it includes regular debt amortization. - Hans Hegge, CFO
Q: How do you view the appetite for asset sales currently?
A: We continue to see good interest in quality assets and will only sell if the price is favorable. - Terje Pilskog, CEO
Q: Are you satisfied with the $1.5 million per megawatt pricing for disclosed projects?
A: Pricing depends on various factors such as tariff, currency, and remaining lifetime. We assess based on the NPV of cash flows to determine satisfaction. - Terje Pilskog, CEO
Q: Regarding Egypt's green hydrogen project, how do you assess its risk profile?
A: We are comfortable with the project due to secured permits, mature financing processes, and existing infrastructure, which mitigates technology risk. - Terje Pilskog, CEO
Q: What drives the strong D&C margin?
A: The margin is driven by declining component prices and disciplined execution by our EPC organization, allowing us to release contingencies. - Terje Pilskog, CEO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
