Scatec ASA

It’s been a very strong start of 2025 for Scatec. And financially, we have also had a strong first quarter.

We have made significant progress in the quarter towards our strategic ambitions. We have and we continue to grow renewables within our core areas, and we also continue to progress well in terms of optimizing our portfolio and bring down corporate debt on an overall level.

And I will as usually start with an overall summary, and then Hans Hegge will take us through the financials. So let us first start with the highlights of the quarter.

Firstly, as I said, we have had a very strong financial quarter with NOK2.4 billion in revenues on a proportionate basis and NOK1.4 billion in EBITDA. These are figures that are significantly up relative to same quarter last year.

Secondly, we currently have 4.2 gigawatts in backlog and in construction. This is an all-time high number and enables us to have significant construction activity going forward and also enables us to double our operating capacity over the next couple of years.

Finally, we have also made significant progress on optimizing our portfolio. And we are now having a corporate net debt, interest-bearing debt of NOK5.2 billion.

And this is based on proceeds from divestments as well as a very strong cash position in the company. Let me also mention the fact that we’ve issued a new Green Bond during the quarter of NOK1.25 billion at very attractive terms.

And we’ve used the proceeds from this bond, including our available cash position to also pay down our EUR Bond. And through this, we have significantly improved the maturity profile of our debt on corporate level.

And I’d like to thank our investors for the confidence that they are putting in us related to this. So altogether, this puts us in a very robust position in terms of exercising and realizing our growth portfolio, even in the current turbulent times that we’re seeing in the capital market.

And also on that note, let me also comment on what’s going on globally in terms of tariff discussions and tariff negotiations. And I would like to say that Scatec and our growth portfolio, we see no direct impact on our growth portfolio in terms of those tariff negotiations that are currently ongoing.

So let me then move to Power Production. We continue to see high availability and stable operations across our portfolio of operating assets.

And I think that our O&M teams, they are doing a stellar job in keeping this up. Power Production for the quarter reached 979 gigawatt hours, and this is up from 901 gigawatt hours same quarter last year.

And if you adjust from divestments, up from 811 gigawatt hours, and this is a 21% increase then in Power Production. And this is partly driven by the positive contributions from our new projects that has come into operation.

We have Botswana that came into operation during the first quarter this year. And we also had Brazil and Pakistan coming into operation in the first quarter last year, and all of these projects have contributed positively to the increase in power generation.

And in addition, we have also had very good hydrology in Laos and the Philippines that has also contributed positively to our power generation. And the strong production has contributed to a 72% increase in our revenues in the Power Production segment.

And we are now reaching just above NOK1.6 billion in total revenues. And this has been driven by strong performance, obviously, across the portfolio, but we have also seen accounting gains related to the divestments of Uganda and of Vietnam.

And we are also seeing a very strong quarter in the Philippines, which I will come back to. And in addition to that, we have also seen a one-off payment from a tariff true-up in Pakistan, and we’ve also seen other net positive movements.

So let me then talk about the Philippines. The Philippines delivered an exceptional quarter, both in terms of Power Production and ancillary services and also in terms of financial contribution.

And in the Philippines, we reached a Power Production of 149 gigawatt hours, which is, in principle, a doubling or close to a doubling of power generation relative to the same quarter the year before. And this is due to strong hydrology.

We had good water levels when we came into the quarter, and we have also had good water inflows during the quarter to contribute to this. And also, please notice in terms of this quarter, despite being in the dry season, we have a long energy position.

And this is obviously partly due to the fact that we have a very strong generation, but also partly due to the fact that we have reduced our contract portfolio in the Philippines, which is then putting us in a more robust position in terms of the dry season in the Philippines. Net revenues in the Philippines increased by 2.8x, now reaching NOK320 million in the quarter.

And we see that we have strong contributions both from power sales as well as from ancillary services. And this again shows the strategic value of the flexible position that we have with hydropower and the batteries in the Philippines.

Further, ancillary services revenues reached NOK224 million, and batteries are now playing an important role in the revenue generation that we’re having in the Philippines, and we see that batteries is outcompeting hydropower in terms of the short response ancillary services market. And on the back of this, we continue to develop and build out more battery capacity in the country.

So, in terms of EBITDA, this increased then to NOK270 million, which is an increase by 3.6x. So overall, again, this quarter highlights the earnings potential of the Philippines and particularly the growing contribution from the ancillary services segment and also from batteries.

So let me then move to construction. And we are growing our portfolio, and we currently have close to 2 gigawatts of projects in construction, and this is really an all-time high for Scatec.

And since the last reporting, we have added 3 new projects to our construction portfolio. We have the 1.1 gigawatt solar and 100-megawatt battery project of Obeliskin Egypt.

And then in addition, we have two battery projects in the Philippines. And while these two projects are merely 56 megawatts, they will represent a tripling of our battery capacity in the Philippines, and this is significantly improving our position in terms of the ancillary services market going forward.

So, in total then now, we have a construction portfolio that is spanning 6 different countries. We have South Africa, where we have Grootfontein, which is now nearing completion, and we expect to put into operation during Q2 this year.

And we also have the Mogobe battery project that is now progressing well in terms of construction. In addition, we have Botswana, where we took Phase 1 into operation in the first quarter.

And we are now also well underway with constructing the second phase in Botswana, another 60-megawatt project. Construction is also further progressing well in Brazil, Tunisia and the Philippines, and we expect all of these projects to come into operation during the first half of 2026.

And finally, we have the Obelisk project in Egypt that I just mentioned. This is a 1.1-gigawatt project with 100 megawatts of battery capacity.

It’s being implemented on an accelerated schedule, and we aim to get the first half of the solar capacity plus the batteries into operation first half next year and the second phase into operation during second half next year. So, I think that the breadth of our construction portfolio is obviously showing, and it’s a result of the development approach, the solid development approach, and activities that we’ve had over the last couple of years.

And when these projects are being brought into operation during 2026, we will reach more than 6 gigawatts in operational capacity. So, I will now zoom out a bit and talk about sort of the overall growth profile.

So, we continue to expand our near-term growth platform. In addition to the 2 gigawatts that I have currently talked about in construction, we also have 2.2 gigawatts in backlog.

And we have, since the start of the year, added 1.5 gigawatts into the backlog, which is a significant number. And in addition to the Romania project that we talked about during the first quarter or the Q4 reporting, we have also now added 120 megawatts, where we have signed a PPA in Tunisia, which is then doubling our potential capacity in Tunisia, and Tunisia is emerging as a very interesting market for us.

And then we have also signed 1.1 gigawatt PPA with Egypt Aluminum. And this is a very interesting project.

It’s the first corporate PPA in Egypt and is being backed by a solar guarantee. And Egypt Aluminum is the largest energy consumer, electricity consumer in Egypt.

It’s also the largest CO2 emitter in Egypt. And this is a very important project in terms of industrial decarbonization in the country.

So, we will implement this portfolio based on our integrated model. And let me also add some comments in terms of how we capture value, and also in terms of how we manage the working capital of this portfolio going forward.

So, our growth is underpinned by a strong D&C revenue model and also limited equity exposure, enabling us to scale through a self-funded model without overstretching our balance sheet. And on the left side here, you see our construction portfolio, which I’ve already talked about.

It has a D&C or an EPC revenue value of about NOK9.2 billion. And the remaining contract value related to this portfolio is NOK6.7 billion.

And then, in addition, you will see that in terms of the backlog, we also have about NOK9.3 billion in EPC revenue value linked to that portfolio. So, in total, with these projects together, we are seeing a remaining EPC value related to backlog and construction of about NOK16 billion.

In terms of the backlog, you will see that three of these projects are expected to reach financial close by the end of 2025. And among these 3 projects, you will also see our Egypt green hydrogen project, where we now expect financial close rather in the second half, as we see that the structuring and the financing of this project is taking more time than what we have previously communicated.

And for the full near-term growth portfolio, so for all of these projects, we are expecting to realize a gross margin in the range of 10% to 12%. So, this margin generated from our construction is key to our strategic strategy of capital-efficient growth, and this is funding a large part of the equity injections that we will put into these projects.

And also, on the top right side here, you will see that we will continue to implement this, obviously, based on an S-curve. So, all projects will have slower revenue recognition during the first and the last parts of the construction period, and then they will have a more aggressive revenue recognition during the middle part of the construction period.

And importantly, we strive to obtain and maintain positive working capital during the construction period as we are illustrated at the bottom right here by trying to get milestone payments under the EPC contract in the beginning of the construction period and then push out payments to suppliers and to contractors towards the end of the construction period. And as you understand now, we have a transformative period ahead of us.

And we will implement this in all this portfolio as part of our self-funded growth plan. And you will see that we have high construction activity now for the next 2 to 3 years.

We aim to implement this whole portfolio by the end of 2027, which means that by the end of 2027, we target to double our operating portfolio. So, with that, I will hand it over to Hans Jakob to take you through the financials.

Thank you, Terje, and thank you for coming listening to Scatec today. So, we present strong results across the group, driven by the higher Power Production, the high D&C activity, and gains from divestments.

I’ll walk you through the group financials and the performance of our operating segments, and I will also cover the improved capital structure and strategic progress. Starting with the group level performance, the strong results in the first quarter are backed by consolidated revenues significantly up 42% to NOK1.8 billion.

EBITDA, NOK1.5 billion, up 48%. To the right, you see the proportionate financials.

Revenues increased by 95% to NOK2.4 billion, while EBITDA grew by 63% to NOK1.4 billion. The increase was mainly driven by higher Power Production, especially in the Philippines, the divestment gains, and our proportionate figure also reflects the high D&C activity in the quarter.

Our Power Production segment delivered another strong quarter. The revenues reached NOK1.6 billion, up 53% from the same quarter last year, and the EBITDA was NOK1.4 billion, a 60% increase year-on-year.

As mentioned, the growth was mainly driven by the Philippines and the divestment gains. On a 12-month rolling basis, the segment has delivered more than NOK6 billion in revenues and NOK5.2 billion in EBITDA, underlining the strength of the cash flow in our portfolio.

Overall, we are very pleased with the value generated from our operating assets. In our Development & Construction segment, activity levels continued to increase, proportionate revenues of NOK751 million and EBITDA of NOK26 million.

In this segment, the quarterly performance shows variability depending on project phasing. But the trend from the last 12 months confirms the long-term strength and scalability of our D&C platform.

It gives a clearer picture of the strong momentum we are building. Over the past year, D&C revenues have reached NOK2.9 billion with a steady increase over the last 3 quarters, and we aim to continue.

Keep in mind that the 12-month rolling figures from Q1 last year include the very busy construction period of 2023. The rolling EBITDA ended at NOK202 million with contributions from high-margin projects and disciplined cost control.

The increasing trend reflects higher activity levels across several geographies. With a strong backlog moving into construction, we expect D&C to remain a key engine of our continued profitable growth.

At the end of the quarter, we had an all-time high available liquidity of NOK5 billion. This was impacted by significant divestment proceeds, and it has continued to strengthen.

In total, the liquidity, including undrawn RCF increased by NOK1.2 billion. Let me explain some of the main movements.

We received NOK155 million in distribution from power plants, NOK2 billion in net proceeds from announced transactions. We invested net NOK214 million in growth projects and paid NOK391 million of interest and debt repayments.

Additionally, we have increased our RCF by NOK50 million to $230 million after the reporting date. In total, we now have close to NOK5.5 billion in available liquidity.

We continue to strengthen our capital structure. Net corporate debt was reduced to NOK5.2 billion from NOK7 billion in the Q4.

The reduction was mainly driven by cash received from divestments. The cash position and net interest-bearing debt will vary over time, dependent on cash movements.

We also repaid NOK240 million of debt in combination of regular amortization and through refinancing. On project level, the net debt decreased to NOK13.4 billion, down from NOK14.9 billion, and this was primarily due to the removal of debt from divestments of the Uganda and Vietnam projects.

We also report a NOK200 million net increase of debt related to projects under construction. These reductions reflect our continued commitment to capital efficiency and balance sheet strength.

They position us well to finance growth without increasing corporate leverage. Now let me look at the progress on divestments and deleverage.

We have set out a clear strategy to rotate assets and reduce corporate debt. We are targeting to self-fund our growth while strengthening the capital structure by 2027.

In the strategic update last year, you might recall that we specified divestment proceeds of minimum NOK4 billion, of which 75% would be used for debt repayments. I am pleased to say that we have come quite far already.

Since the Q3 last year, we have generated NOK2.6 billion in proceeds from asset divestments, including transactions in Uganda, Vietnam and South Africa. This demonstrates both the market’s appetite for our assets and our ability to execute divestments timely.

As a result of these divestments, our net corporate debt is down by NOK2.9 billion since the Q3 last year. We are on track to deliver on our 2027 targets.

Here, you can see the debt maturity profile of the corporate debt following the transactions in the quarter. In the quarter, we took further steps to extend and optimize our corporate debt profile.

We successfully placed a 4-year NOK125 billion Green Bond with a margin of 3-month NIBOR + 315 basis points with the help and support of our core banks. This reflects the credit market’s confidence in our ability to continue to deliver strong operational and financial results in the future.

These proceeds from the bond, together with the existing liquidity, were used to repay the €114 million bond, and we have repaid or refinanced all major short-term debt. We have our next large maturity in 2027.

Overall, we have a well-structured and extended maturity schedule with solid headroom to support growth and navigate market volatility. Let me share the outlook for 2025.

For the full year, we estimate the power production between 4,100 gigawatt hours and 4,500 gigawatt hours, unchanged from last quarter. We have, however, increased our expected full year 2025 EBITDA midpoint by NOK400 million.

The range of 4,150 million to 4,450 million for the power production segment is what we guide on. The update is driven by divestment proceeds over performance in the quarter and partly offset by negative FX effects.

For the second quarter, we expect a total power production between 900 gigawatt hours and 1,000 gigawatt hours, EBITDA in the Philippines of NOK180 million to NOK220 million based on normal hydrology and strong contribution from ancillary services. In our D&C segment, we currently have a remaining contract value, as Terje said, of NOK6.7 billion.

And we keep a gross margin guidance of 10% to 12% on average across portfolio for projects under construction and in backlog. For corporate, we expect the full year EBITDA of NOK115 million to NOK125 million negative, in line with previous guidance.

These estimates reflect a strong base for operating assets, high construction activity and in line with the previous guidance, a good start of the year, positioning us well for reaching our 2025 targets. And then I welcome Terje to do the quick summary.

Good progress on our divestment plans and we also have very good P&C activity level and progress there. In terms of the growth part, we are now seeing that we have a portfolio, a near-term growth portfolio linked to backlog and construction that is set to double our operating capital, double our operating capacity in a 2027 perspective.

And finally, we are progressing well in terms of optimizing the portfolio and that activity with the divesting activities, refinancing activities is strengthening our balance sheet, enabling us to take down corporate debt now to NOK5.2 billion. And we also have a liquidity position, as Hans Hegge talked about, of NOK5 billion and including the recent increase in the RCF, NOK5.5 billion.

And all of this enables us and puts us in a good position to continue to implement and push forward with our self-funded growth plan. Thank you.

Then we open up for Q&A.

Now you are heading into 2025, a lot of things under construction. I think activity will be at peak ever, it looks like.

Do you see any reason why that should not continue into 2027? That you will be able to continue adding backlog for construction into 2027 in a way that actually keeps the activity level at the same level or higher than 2026?

I can get the microphone. Yes.

So, I mean 2027 is obviously our current sort of near-term planning horizon. And as we said, we currently have NOK16 billion in remaining EPC contract value related to the projects we have in construction and in backlog.

And that will take us also well into 2027 in terms of construction activity. And then looking at 2027 and beyond, I think you also then should look at what we have in pipeline.

We still have close to 9 gigawatts of projects in pipeline. It’s a good diversification between solar, between wind, batteries and also green hydrogen.

And as you said, there is no reason why we will not be able to continue to convert new projects from pipeline into backlog and into construction. It is still so that renewable energy is the most competitive source of electricity, not only on an intermittent basis, but also as a base load and capacity energy in most, if not all, of the countries that we operate in.

And the competitiveness of renewable is only going to continue to improve as costs come down and as we see technology development and scaling up of this, within this industry.

Thank you and congratulations on a good quarter. You have previously talked about the price increases on the long-term ancillary service contracts in the Philippines, and you have also talked about the opportunity the spot ancillary service market in the Philippines gives you.

The outperformance this quarter, is that the price increase on the longer term contracts, or is it playing in the spot market? You mentioned batteries.

Yes. So, approximately, I think that in terms of the ancillary services market, it’s, in terms of the market, it’s about 50-50 contract and spot market or service market as we call it.

Price variations is what we see on, in the spot market, while obviously, the contract market, there the prices are fixed. So, what we are seeing – what we have seen in Q1 is that we have had price volatility in the spot market and that with batteries, we have been able to capture high prices in that part of the segment.

And this was the case last year as well...

And this was the case last year.

Do you think this is kind of an add-on revenue that we will see tomorrow? This last year, you were a bit more reluctant on saying [Technical Difficulty]

Just adding the hydrology that we commented on as well, so the two of them are the main explanation for this quarter, so I think it’s harder to predict the hydrology. Remember the last year was quite a soft one in a 10-year perspective.

So, maybe this is more normal, but we still remain optimistic on ancillary services as we commented on. But both of them are important for this quarter.

But I think it’s difficult to say something firm about the longer term. I mean if you continue to see extremely attractive prices, there will be built out more capacity.

So, it will normalize over time. But we continue to see that batteries are very competitive in the short response segment or part of this market, and we believe that it’s going to be possible to capture good value in that segment going forward.

And that’s obviously also why, we are now building out 56 megawatts in addition, and we are developing and looking at doing even more batteries in the future.

I am using microphone. Great to see so much activity as well, but we are seeing quite substantial construction in non-core markets, and you are also completing projects in non-core markets.

Could you shed some color on what the plan is for those projects in non-core markets? Will you hold on to them, or are you planning to divest them?

Yes. In terms of what we are doing in the non-core markets.

I think a general comment on non-core market is that we are only looking at markets where we believe there is a fundamental strong position, competitive position of renewables and that there is a clear opportunity for significant renewables build-out over time based on renewables being the most competitive technology based on an agenda of energy transition and also based on the general need for increasing electricity generation in the countries. So, even though these are emerging markets where we have a bit of a more opportunistic perspective, if we see that we are able to build out scale in those markets, then it’s not necessarily so that we will sell and divest those projects.

If we see that these markets are changing and we don’t see an opportunity to build out scale, then over time, it’s natural that we will look at possibilities of divesting those projects.

On corporate net debt, you are now at the – not corporate, but the overhead net debt, you are now at NOK5.2 billion. And say, if you are to double your asset base, does that mean that you are comfortable doubling the holdco net debt as well, or will net debt on a corporate level remain roughly where it is going forward?

Could you give us some guidance?

I can give you a short answer to that. As we said, the net debt will vary with cash movements, but we have no plans to increase the corporate debt.

So, adding new activity will be on project level, non-recourse. That is the profile.

So, we are not adding corporate debt.

And we are still committed to what we have already said, target of NOK4 billion in divestments and using 75% of that to pay down corporate debt in a 2027 perspective.

Yes. I will add one more just to pass the microphone.

In terms of the equity investment target of NOK750 million, obviously, I suppose that’s maybe an average over some years. I suppose it fair to assume a bit more in 2025 and 2026, or am I mistaken?

Yes, I can start and you can fill me in, Terje with color. But I think you are absolutely right.

We said NOK750 million to ‘27 as an average to give a point around our best estimates and also to nurture the discipline that we are progressing. If we go above, we will have to explain it.

And when we wrap up the year, we will explain where we landed and where we are in this plan. That’s a natural follow-up.

But, on the direct question, is there a risk that we will go above this year? Yes, for commercial reasons.

That’s why we deliberately said this is an average for the 3-year, the strategy period basically.

One final is on the, you are obviously guiding on the EPC gross margins of around 10% to 12%. And then I suppose that’s excluding any contingencies.

And you are closing in on Grootfontein and you have some construction activity ongoing. CapEx levels are remaining at low levels.

Is it fair to assume that we can see more contingencies?

That one is so hard, I need to…

Obviously, not on the projects that you haven’t started on constructing, but on the projects that have progressed.

Well, in the past, we have said very clearly that, well, at least I have been very impressed by the D&C organization. One thing is to lay out a plan, include a contingency and not use them.

This is a disciplinary act on many moving parts, many players in an integrated approach of delivery. And if you can do that again, there will be more milk and honey.

I guess that’s the backing of your question, as happened with Kenhardt, but we cannot say that upfront. But we always comment on it when it happens.

Strong margins backed by and then we explain.

Thank you. It seems like you have done a lot of right things last year or 2 years.

Debt is down, you have reignited growth. You have successfully constructed things on time, on budget and release contingencies.

So, everything seems to be moving in the right direction, and it seems like the equity market at least is agreeing today. But what are the concerns right now?

What are you worried about? Where can you step wrong?

It’s not necessarily about where we can step wrong, but I mean, it’s about, we need to continue to be very disciplined in terms of what we do. We need to be disciplined in terms of what projects we are moving forward, making sure that they are attractive from an economic point of view, making sure that we are not moving projects forward that in this current situation is too marginal, right.

And then we need to continue to have a very, very strong focus, as Hans Hegge said, on EPC execution. I mean we have the largest EPC execution program that we have ever had in Scatec.

We are looking at six different countries and 2 gigawatts. So, obviously, it’s incredibly important for us to also have high focus on making sure that we are doing that in a good way.

And these are internal risks, but external risks, what are you worried about externally?

No, I think sort of the – while renewable energy is becoming more and more competitive in the markets where we operate as an energy source, I mean there is still competition out there. We still sort of have to address that competition and make sure that we are able to capture good projects that are competitive in the countries where we operate and putting us in a strong competitive position when we are securing offtake and trying to get offtake for our projects.

In terms of the geopolitical situation and the trade discussions going on politically, we are not so concerned given that we don’t have operations in the U.S. in terms of what is coming from the U.S.

But there are obviously also potentially changes that are happening on a country-by-country level in terms of changing regulations, so that’s going to be important for us, watching closely going forward. And then obviously, we have a special attention as Scatec for Ukraine and the geopolitical situation and the war going on in Ukraine.

But that’s as much on the people side, on the moral side as well as it is from a business point of view.

Yes. Obviously, we will not share any specific BESS capacity numbers.

I think we are in our data sheet, we are sharing the CapEx levels of the projects that we are doing also within BESS. For instance, the Mogobe BESS project in South Africa.

So, those numbers are available. It should also be noted that implementation of a BESS project in terms of CapEx will be very different country from country and also relative to what services you provide, whether you just provide load shifting or if you also provide other types of grid stabilization types of services.

On a general note, I can still say that we have seen battery CapEx coming down significantly over the last couple of years. And over the last 2 years, I think we have seen a reduction in CapEx on the batteries themselves in sort of a 60% to 70% range.

The economics of our projects, I would say. So, obviously, the first project that we are now implementing, and we have been very clear on that.

We are implementing these together with Toyota, which is a very strong partner and based on the climate funding, which is being provided by Japan. And this is something that we are seeing that we are able to replicate in Tunisia.

And based on that climate funding, we are able to continue to be competitive in that market. Then I would say Tunisia has an aggressive ambition in terms of converting towards renewable energy, green energy, become more independent in terms of energy and electricity supply.

And this is obviously also something which is fueling opportunity growth in the market, and that’s why we are interested in the market.

No. I mean the NOK4 billion that we have been talking about, those are related to divestments in non-core market.

I think that’s what we have indicated, and that’s also what sort of in terms of our plans are included in that figure.

That was actually commented on a normal hydrology for the remainder of the year, but still contributions, strong contributions in the Philippines from ancillary services, particularly commenting on the second quarter as we normally do.

Yes. And obviously, that is also reflected in our guidance when it comes to the full year and the Philippines, there we provide guidance, obviously, on a shorter term basis.

And it’s obviously also important that when we talk about the full year in terms of guidance, we have included the catch-up in terms of the ancillary services contract prices where we have seen that there has been a positive decision in the Energy Regulatory Committee in the Philippines, but the decision has not been formalized and issued yet.

So, these are the ASP revenues, NOK200 million, which is not included in the Q2, but is included for the full year guidance.

Thank you.