Scatec reports third quarter results: Focus and discipline

Oslo, 2 November 2023: In the third quarter 2023, Scatec reported solid proportionate revenues of NOK 2.46 billion (1.63), with an EBITDA increase of 5 percent compared to the third quarter last year to NOK 893 million (850).

Scatec realised strong development and construction (D&C) revenues of NOK 1.32 billion (412) from its three main projects under construction and improved the gross margin for a third consecutive quarter to 13 percent. These projects are now entering the final construction phase and preparing for commercial operations. Proportionate Power Production was 1,047 GWh (1,135) and revenues in the Power Production segment were NOK 1,028 million (1,120), impacted by reduced revenues in the Philippines. Power production EBITDA was NOK 778 million (907).

“We take pride in the progress we have achieved since our capital markets update and in recent months. Our dedicated team is committed to driving transformative change through world-class renewable energy initiatives spanning from South Africa to the Philippines to Brazil. Scatec has realised significant renewable growth through our highest construction activity ever and the projects have strong economics with robust returns and attractive gross margins,” says Scatec CEO Terje Pilskog.

“Crossing key milestones during the quarter, we have showcased operational excellence and business model resilience amid current challenging economic conditions. In addition, we have focused our activities to ensure our readiness for profitable growth. The pipeline has been streamlined; we have reduced operational costs levels and sold assets, both to recycle capital and reduce complexity in our portfolio,” adds Pilskog.

Strategy and way forward
Scatec’s strategy remains firm – to develop, build, own, and operate renewable energy, with a focus on growing renewables and optimising the portfolio. Scatec continues to see strong long-term demand for renewables and particularly attractive opportunities within solar as component prices are decreasing.

However, the current macro-economic landscape, marked by record high interest rates is putting pressure on the cost of capital and project profitability. Scatec is therefore aligning its growth rate to internal funding capacity, targeting NOK 500 – 750 million of gross equity investments annually, in line with the company’s historical growth pace. Investing with discipline, Scatec will utilise its integrated business model and stay committed to delivering attractive returns of 1.2 times cost of equity, D&C gross margins of 8-10% and O&M margins of 25-30%.

The cash flow from Scatec’s operating plants is robust and will increase significantly over the next months with the new plants coming into operations. Growth and debt repayments will be funded by internal capacity coming from a strong and growing cash flow from operating assets, enhanced capital recycling activities, alternative ownership structures with reduced equity stake and no dividend payments.

“We continue to be committed to disciplined growth with attractive margins funded by internal capacity, while focusing on optimising our portfolio. The long-term fundamentals for renewables remain strong, and we’re adjusting in the short-term to navigate the current macro-economic and capital market situation, putting firm mitigating actions in place. We’re also accelerating our efforts on capital recycling and will also consider additional debt repayments,” adds Pilskog.

Outlook
The full year 2023 EBITDA estimate for Power Production is updated from NOK 3.1 – 3.4 billion to NOK 3.05 – 3.25 billion, driven by a revised production estimate for the Philippines, the sale of the solar plant in Argentina and foreign currency effects.

Dividend policy
Given the current macro-economic and capital market situation the Board of Directors have approved to change the dividend policy to no dividend. The dividend policy will be assessed annually by the board based on Scatec’s capital situation.

Additional information
Proportionate historical financial information on a country-by-country level is attached to the stock exchange notice.

A presentation of the results, followed by a Q&A session will be held at Scatec’s headquarters at Skøyen Atrium III (1^st floor), Askekroken 11, 0277 Oslo, today at 09:00 am CET. You can also follow the presentation and Q&A session from our website, or this direct link: Scatec webcast Q3 2023.

For further information, please contact:
For analysts and investors: Andreas Austrell, VP IR, phone: +47 974 38 686, andreas.austrell@scatec.com
For media: Meera Bhatia, SVP Communications & Government Affairs, phone: +47 468 44 959, meera.bhatia@scatec.com

Attachments