CEO’s Review

2022 was characterised by growing geopolitical tensions, global economic uncertainty, and the energy crisis in Europe, all of which are related to the aggressive Russian attack on Ukraine in February 2022. In this business environment, the past year was twofold for Enersense. Our revenue increased to EUR 268 (239) million and the order backlog increased significantly, but profitability was weakened, for instance, by multiplier effects of the war, which could not be offset by the increase in volumes.

In the summer, we were already anticipating that the full year would be challenging in terms of profitability. Although our adjusted EBITDA exceeded the updated guidance we issued in July, it stayed low at EUR 13.7 (19.2) million. The improvement of the profitability of our core business operations is at the top of the management’s agenda, and we are actively continuing our measures to turn the trend around. At the same time, however, it is my pleasure to announce that the investments in our growth strategy have already begun to be reflected in orders received. Our order backlog increased by 42 per cent compared with the end of 2021 and grew to EUR 415 million.

The strong order backlog gives us a good starting point for the year. In the financial guidance we have published today we estimate that the business environment is developing favourably and the revenue for 2023 is expected to be in the range of EUR 280–310 million. The adjusted EBITDA is expected to be in the range of EUR 12-18 million. We have managed to accelerate the wind power portfolio development and we assume that the same development continues. Profitability will be impacted by the implementation of the new ERP-system as well as on-going investments in developing the offshore wind power business and acceleration of onshore wind power project development. We expect these development projects to proceed so that they will not burden our profitability in 2024 anymore and we can expect the EBITDA to continue to increase.

To our disappointment, the Finnish Competition and Consumer Authority’s assessment of the Voimatel transaction led us to withdraw from it. According to our assessment the transaction would have been a good solution for creating, developing and maintaining critical telecommunications and network infrastructure for the whole of Finland. However, the non-implementation of the acquisition will have no effect on the objectives of our growth strategy and their attainment. In 2022, we proceeded in implementing our strategy in many fronts.

In the third quarter, our order backlog reached record levels with the inclusion of a service contract on the provision of the operation and maintenance services that were transferred from the Helen energy company to Enersense as part of a business transfer. In October, we acquired a Finnish start-up which manufactures fast and high-power charging stations for electric vehicles. In December, we announced its first significant order, a delivery of heavy-duty fast-charging sites for e-trucks to Sweden. In December, we also announced that Enersense will deliver structural components for three offshore substations to the Danish Bladt Industries, a leading European provider of foundations for offshore wind power plants. For around a year, we have been investing in the ramp-up of Enersense Offshore, and already this first project, running until the second quarter of 2024, will employ up to 300 people in our Mäntyluoto production facilities. Orders related to the core operations of all our business areas have also developed favourably.

In addition to strong core businesses, we want to focus on seeking growth from offshore wind power foundations, renewable energy, and zero-emission transport. Orders received at the end of last year in the offshore wind power and EV charging businesses are evidence of our great success within these focus areas of our specified growth strategy. Today, we have also reported on the significant advancement in the development of the onshore wind power project portfolio. At the end of 2022, the project portfolio was already approximately 8,000 MW whereas in September it was around 3,000 MW. With our solar power projects, the size of our renewable energy project portfolio is altogether over 8,000 MW, which gives us a solid ground on which to build our target to have our own 600 MW onshore wind and 100 MW solar power production.

Besides these Enersense projects, we are also a co-owner in P2X, a producer of green hydrogen. P2X Solutions’ Harjavalta plant is Finland’s first industrial-scale green hydrogen production plant that is progressing to the construction stage, and the foundation stone of the plant was laid in January 2023. We consider hydrogen to play a significant role in the green transition, both in storing electricity and enabling zero-emission heavy transport, and we are pleased to be able to support P2X in executing this development.

We have set ourselves ambitious financial targets of EUR 500 million in revenue and EUR 100 million in profitability (EBITDA) by 2027. This growth also requires financial investments. At the beginning of December, we issued Enersense’s first convertible bond, raising a total of EUR 26 million for investments and other business developments, among additional purposes. We are delighted with the support that both new and former investors have shown through their investments in Enersense and its journey as an enabler of the European energy transition.

Jussi Holopainen
CEO

(Financial Statement Bulletin 27 Feb 2023)