Scandinavian Biogas: Q1 ’23 profitability affected by fixed prices

Scandinavian Biogas has released its Q1 '23 results, reporting an increase in the volume of energy sold by 3.1% to 88.1 GWh, from 85.4 GWh during the same period last year. Total revenue has increased by 32.3%, to SEK 130.1 (€11.4m), from SEK 98.4m (€8.6m) in Q1 '22.
The company further reported its operating EBITDA margin as 6.4% (3.9% for the same period in 2022), with profit/loss after tax standing at SEK -58.8m (€5.1m). This was SEK -11.9m (€1.04m) for the same period last year.
The company said that SEK -31.2m (€2.7m) was due to unrealised translation differences - a figure that was -SEK 19.3m (€1.6m) for the first quarter of 2022.
The order book totalled 2.5TWh at the end of the quarter, which Scandinavian Biogas said corresponds to a market value of approximately SEK 3.4m (€298m).
"During the first quarter, the market showed continued high demand for biogas, but falling market prices for fossil gas," commented Matti Vikkula, CEO of Scandinavian Biogas. "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."
He went on to say that the company is far below this target, with profitability affected by fixed prices to customers - significantly lower than market prices - combined with sharply increased operating costs for electricity, chemicals and raw materials.
The company will gradually replace old contracts with new ones, and during Q1 '23, the company extended its contract with SL at market price levels, meaning it will continue to be SL's main biogas supplier.
The company added that it proposes to change its name to Biokraft International AB, which the board will present to its annual general meeting.
"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," said Vikkula. "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.