CEO’s Review - Enersense

Difficult first half of the year, reaching turnaround at the end – new guidance for 2024

Enersense’s growth continued in the first half of 2024. Our revenue increased by 23.3% to EUR 199.0 (161.3) million. The Group’s EBITDA turned into negative and was EUR -5.0 (3.1) million. In our view, the second quarter was the weakest of the year due to loss-making offshore business, costs relating to ramp-up of the EV charging business as well as the write-downs. Thanks to actions taken during the spring the turnaround in the profitability development started to be visible at the end of the second quarter, and the outlook for the latter part of the year is positive. Along with the new strategy, we have introduced a new KPI i.e. adjusted EBITDA of the core businesses. The adjusted EBITDA of the core businesses improved in the first half of the year, laying a good foundation for the future. The Group’s order backlog continued to be at a good level at the end of the review period, at EUR 415 (527) million, taking into account normal fluctuations in orders received.

In June, we announced that we will focus on our core businesses, which provide project and service operations for the green energy transition. These core businesses include maintenance, resource and project services for onshore production plants in the Industry business, design, construction and maintenance of transmission grids and electric substations as well as wind farms and solar farms and the entire Connectivity business. Along with the renewed strategy we will abandon our previous goal of becoming a zero-emission energy producer. In addition, we are considering selling our onshore wind power and solar power project development operations and are carrying out a strategic assessment of our offshore wind power business and our business operations focusing on the development of zero-emission transport solutions. On the same occasion we agreed with our financing providers on a EUR-10-million senior unsecured revolving credit facility (RCF) to support the implementation of the company’s strategy. The company will publish further information about the progress of the strategic assessment at the appropriate time.

Profitability of the core businesses is at the core of our actions. During the first part of the year, and especially in the second quarter, there were significant non-recurring items in the core businesses that turned their EBITDA negative. However, in the first half of the year, the adjusted EBITDA of the core businesses improved year-on-year thanks to better profitability in the transmission network projects and growth of the Connectivity segment’s revenue and measures to improve profitability.

Profitability of the businesses defined in the renewed strategy as non-core businesses was weak in the first half of the year. EBITDA for the non-core businesses was burdened especially by the offshore business, whose loss deepened further during the second quarter. In the second quarter, we have examined the causes for the challenges of the non-core business’s weak profitability, and analysed their risk positions and outlook. In the offshore business measures to improve profitability started to bring first results towards the end of the period and EBITDA is expected to be positive in second half of the year. The ramp-up of the EV charging business has been slower than anticipated in the tightened market situation and this has reflected into its profitability.

Based on the good profitability development in the core businesses and measures to improve profitability in the non-core businesses we have today given a new full-year guidance for 2024. Our view is that we have now reached the turning point and the second half is stronger than the first part of the year thanks to the corrective actions. In 2024, we expect the revenue to be in the range of EUR 365–390 million and EBITDA in the range of EUR 4–8 million. Adjusted EBITDA in the core businesses is forecast to be in the range of EUR 17–21 million.

The growth outlook in the green energy transition for the project and service business operations is good, particularly in energy infrastructure construction, and we are determined to take measures to improve profitability in all segments, using our strong professional skills to create a path to profitable growth. I would like to thank all Enersense employees for their commitment to these efforts and to welcome Kari Sundbäck, the new President and CEO, who will start on 25 November 2024, and Anders Dahlblom, the new Chair of the Board, whose appointments we announced on 11 July 2024, to accelerate the implementation of Enersense’s new strategy.

Juha Silvola
CEO, acting

(Half-year Financial Report, 1 August 2024)