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Arise Windpower (ST:ARISE) AB reported a decrease in Q4 2024 net sales to SEK 153 million, down from SEK 191 million in the same quarter last year. Despite the decline, the company maintained a positive financial position with an EPS of 0.86 SEK per share. The stock price rose by 1.64% to 36.65 SEK following the earnings release, reflecting investor optimism. According to InvestingPro analysis, the company trades at an attractive P/E ratio of 7.08x, suggesting potential undervaluation compared to peers.
Key Takeaways
- Arise's Q4 net sales decreased by 20% year-over-year.
- The company proposes a dividend of 1.25 SEK per share.
- Stock price increased by 1.64% post-earnings announcement.
Company Performance
Arise Windpower's performance in Q4 2024 showed a decline in net sales, attributed to fluctuating Nordic electricity spot prices and lower demand. The company's strategic focus on wind and solar development across Sweden, Finland, and the UK has kept it competitive, with plans for significant project sales in the coming years. InvestingPro data reveals an impressive gross profit margin of 95.07% and management's commitment through active share buybacks, indicating strong operational efficiency despite market challenges.
Financial Highlights
- Revenue: SEK 153 million, down from SEK 191 million YoY
- EBITDA: SEK 47 million
- EBIT: SEK 24 million
- Profit After Tax: SEK 33 million (0.86 SEK per share)
- Operating Cash Flow: SEK 94 million
- Proposed Dividend: 1.25 SEK per share
Outlook & Guidance
Arise remains optimistic about its growth prospects, targeting improved transaction markets in 2025. The company plans to continue its focus on the Nordic and UK markets, with a goal of achieving 500 megawatts in annual project sales from 2026 to 2028. Hedging strategies for Q4 2024 and Q1 2026 are set at above €60-70 per megawatt hour.
Executive Commentary
CEO Perrik Gerson expressed confidence in the company's strategic direction, stating, "We expect 2025 to be another good year for the company." He also highlighted Arise's strong financial position with reduced leverage, which supports ongoing and future projects.
Risks and Challenges
- Fluctuating electricity spot prices in the Nordic region may impact revenue.
- Potential production variability could affect project timelines.
- Economic pressures in Europe could influence market demand.
Q&A
During the earnings call, analysts inquired about the profitability of various technologies, with wind identified as the most profitable. Discussions also covered expected project sales in Finland and the UK, as well as potential market opportunities in Ukraine.
Full transcript - Arise Windpower AB (ARISE) Q4 2024:
Conference Moderator: Welcome to the Arise q four report 2024. For the first part of the conference call, the participants will be in listen only mode. During the questions and answer session, participants are able to ask questions by dialing 5 on their telephone keypad. Now I will hand the conference over to CEO, Erik Ericsson (BS:ERICAs) and CFO, Markus Larson. Please go ahead.
Perrik Gerson, CEO, Arise: Thank you very much. This is Perrik Gerson. I will start with a brief intro on ARISE. ARISE was founded in 02/2007 and the first company in Sweden to be listed first company in the sector in Sweden to be listed in 02/2010. Listed on NASDAQ, we are currently some 73 employees in five different countries.
We have three different business segments. You could say that original arise was the IPP business, the production. Currently, we have some 172 megawatts installed. Could also mention that during 2024 also added 33 megawatts from labels. So we increased the capacity in '24.
And this is corresponding to some four thirty gigawatt hours annual production. The second business segment is the development business. Currently, we have some 8,850 megawatts in pipeline. I could mention that we added during '24 some 2,000 megawatts which we will come back to later on. And we have since inception some 1,500 megawatts.
And the third leg or third business segment is the solutions business where we currently have some 2,000 megawatts under asset management and under production some three eighty megawatts. Two projects, one is Sherwanland, Two Seventy Seven megawatts which we expect to have commercial take over first half this year. And then we have also Folsikam project 105 megawatts under construction. With that, I hand over to Markus.
Markus Larson, CFO, Arise: Yeah. Thanks a lot, Eric. So the fourth quarter was announced this morning and we had the net sales for the quarter of SEK 153,000,000 compared to SEK 191 in the same quarter last year. Q4 this year positively impacted by the sale of Pye Sjorland, but also bearing in mind that the comps number included the FAS account sale the previous year. EBITDA came in at at 47,000,000 SEK and EBIT at 24.
We have a profit after tax of 33,000,000 SEK, which represented a 0.86 SEK per share. Solid operating cash flow during the quarter of 94,000,000 SEK, and the cash flow after investments amounted to 40,000,000 SEK. Our own production generated 97 gigawatt hours, with an average income of $5.25 per megawatt hour. The board also today proposed an increased dividend of 1.25 SEK per share. Short about the segment's performance in the quarter, development posted a somewhat weaker EBITDA compared to the same period last year, where we had this Foscan transaction, which contributed significantly.
Berg mentioned that the portfolio grows a bit. In the quarter alone, it grew by seven fifty megawatts. And the projects are also maturing according to plan or even better than planned specifically in Finland and The UK. We had a higher production in this quarter compared to the same quarter last year with the inclusion of Leopold. However, there was still low wind speeds and lower market prices also than the same period last year.
So the realized price, as I mentioned, $5.25 6 per megawatt hour compared to $7.27 per megawatt hour in q four twenty twenty three. We also announced that we had entered into a settlement with a previous service provider, which impacted EBITDA positively by roughly SEK 10,000,000. Within the solutions segment, pleased to see another stable quarter, stable earnings in line with what we've seen for now a number of quarters. And in this segment, we think we now are pretty well positioned for profitable growth. In January, we announced the successful refinancing.
We entered into a facilities agreement with DNB, which consisted of a green term facility of approximately €52,000,000, which is, you know, you can see that's just a replacing or as prolonging the existing financing which we have connected to our production assets. And in addition to that, we have also access to a RCF of €40,000,000 which provides us with a very flexible and cost efficient solution. All in all, this increases the allocation flexibility and decreases the annual financing costs. January, we redeemed the green bonds, which were a nominal amount of €50,000,000, which ran at an interest of three three monthly arrival plus 5.25%. So we redeemed that with our existing cash position.
This, gave rise to a one time cost, which would be recorded in Q1 twenty twenty five, approximately €1,600,000 mostly related to the break fees for the bond. But all in all, we also realized now net kind of net interest savings of €2,500,000. So very, very happy with that, refinancing exercise in January. Going to the portfolio, we, as we mentioned also in the report, there was some very positive development of the portfolio in Q4, as we in Q4, as we mentioned previously. We saw growth in Sweden, Finland, and UK.
I would say a significant maturing of projects in, specifically Finland and The UK. So if you look at the full year 2024, we increased the late stage by four fifty megawatts, And this, you know, we really expect to see project sales now in 2025. So we have for the last the past few years invested quite a bit in in Finland and and UK specifically. And that's now what we're seeing results from right now. Then I'll hand back over to you, Perrik, again.
Perrik Gerson, CEO, Arise: Thank you, Markus. Looking at market development in 2024, looking at starting with the spot prices, you can see the graph to the upper left. The blue line is the system price in The Nordics and the orange one is at C4 prices. We can see during the fourth quarter that prices were picking up with winter demand which is quite normal, but quite a good pickup during the fourth quarter. Looking over the whole year, we had a bit mixed weather over the year with some periods, shorter periods with very high price, spot prices due to low production.
And also, we had quite, in general during '24, quite low demand and quite strong exports due to high prices in Continental Europe. We also seen some impact as the flow based coupling was introduced during the year. We have seen some impact also with some increasing price area differences. A bit early to give a full statement on that but in the category we can see some impact from flow based coupling. Looking on forward prices, it's very much about low demand combined with quite strong hydrological balance.
So quite low prices during the year. However, we have seen some quite big decrease. You know, we started up Binter period with quite big or high hydrological surplus which decreased quite rapidly during the beginning of 'twenty five. So we had some 18 terawatt hours entering the winter period and now we are down at eight terawatt hours. So it's a quite material decrease in hydrogological surplus.
If we change slide and look a bit some future, some outlook on what we expect for the coming year and of course, it's very much about the price drivers here. So the keys are very much continental pricing and the hydrological balance. And if you start with continental prices in the prices here. You can see in the, in the red dotted frame in the upper left graph. You can see the red dotted frame for from November to February this year.
And you can see a quite big pickup in gas and also power prices in Germany. The blue line is power prices in Germany and that is the y axis is the left one and the orange line is gas prices and the y axis is the right one. So you can see a quite, quite big increase in power prices and gas prices during the recent months. And that is very much it's a really big correlation between power in Germany and gas prices, which you can see clearly by the graphs. And the reason for gas prices picking up is very much connected to the filling levels in European storages.
You can see it down in the left below graph, you can see looking at the same way in the red dotted frame. You can see the orange line, decreasing line. We are moving to the lows which in the storage level, which is seen in 'twenty one, 'twenty two. So storage levels are decreasing rapidly. And as we see, this means that we will German prices will stay elevated for a wide power prices as well as gas prices.
And, of course, we have a bit of a sensitive system and an extreme or record level gap between Nordic prices and German prices which would suggest that we see some potential on the upside. And the combination with that we see a decreasing hydrological surplus now in the Nordics means that we see a clear potential upside on power prices for the coming year or coming years, I would say, even. And due to this, we have, as we said earlier, that we are monitoring the market closely and we are looking into hedging opportunities when markets pick up. And as a consequence of that, we have placed the first hedges now in quarter four this year and quarter one, twenty twenty six. So we started up that quite recently due to the pickup we have seen.
So with that, I think we flip slide. When we entered into 2024, we had set an agenda to accelerate projects to ready to build status, to grow the pipeline and to integrate support acquired companies, the acquisitions we did in 'twenty three. And as always, keep focus on capital discipline. The outcome we had, we said that we should do at least one project, say, in 'twenty four, which we did. We did by Shell (LON:SHEL) and best project, 40 megawatts.
Continue advancing early stage projects to late stage. We have, we have now increased the late stage portfolio by four fifty megawatts. We also said that we also stated a focus to grow our pipeline in selected geographies through greenfield and acquisitions. And so far during '24, we managed to to to deliver some 2,000 megawatts in, increased pipeline, which we're happy about. Integrate and support acquired companies, Yeah.
We we have, that is an ongoing work and continuously ongoing work. But we have done some changes in the organizations, in the organization. For instance, in product development to coordinate and to prioritize and to secure that we use our resources, capital and people in an optimal way. Key focus on capital discipline, that has been something that we have been focused on for a number of years. I could also mention on that topic what Markus just said that we have quite a much lower financing costs due to our refinancing.
Short term outlook, we can see signs of transaction market returning in The Nordics. We had a quite slow market in 'twenty four, which we expect to improve during 'twenty five, mainly driven by return requirements. We see lower interest rates and with some delay that always have some impact on return requirements and we also still see that there is a lot of available capital to be deployed. We see some signs of increased appetite from infrastructure investors as well as we have seen increased activity among utilities in The Nordics and other markets as well. As Jens said, we expect some improvement in power markets, driven by the price gap between Continental Europe and Nordics.
Funny, yeah, as an example, we see now, twenty calendar year, '20 '6 in German era traded around €100 per megawatt hour. In The Nordics, we are around is less than half that number. So quite big gap. We see the hydrological balance in The Nordics weakening during the winter, which also is a strong, strong driver for higher prices and especially big gap to Continental Europe. We think we are well positioned for a successful year in all segments.
We are harvesting from the strategy of diversifying and maturing projects. We see ourselves as quite well positioned for transactions. We have a strong financial position with lower leverage in our production, so we have quite cost effective production. And when it comes to our solutions segment, we have developed and we have a quite efficient way of working and here we see a growth potential as well. Again, for this year, we have a strong focus to deliver on our financial targets, especially when it comes to product sales and portfolio growth.
Obviously, we will keep our targets also on EBITDA margin for production, 60 more than 60%. And also, when it comes to equity ratio, we expect to be a dividend case also for 25%. One important thing as well is that we have a commercial takeover of Schoelwalden, which is a big project and important product for Arise. We will continue to focus on maturing early stage projects to late stage in order to realize also our longer targets, achieving some 500 megawatt product sales per year in the period 2026 till 2028. We also continue to work with integrating our acquired companies who have a, you could call it, a one company approach, where we focus to priority in market to make sure that we use our resources in an efficient manner when it comes to capital, when it comes to people.
And one good example is that we did some changes in the product development organization where we coordinate all the markets together and focus where we see the potential best outcome. That I think is it. So thank you very much.
Markus Larson, CFO, Arise: Let's leave Laura open the question.
Conference Moderator: The next question comes from Caleb Solomon from SEB. Please go ahead.
Caleb Solomon, Analyst, SEB: Hi, guys. Just a few questions from me. In the report, you say that 1,000,000 per megawatt should be viewed as kind of a blended average over time. But can you split what do you expect between different technologies? And can you give us any kind of current average for wind specifically across the different geographies?
Perrik Gerson, CEO, Arise: Yes. It's not the easiest question to answer, Kaela. But in general, if we start with comparing the different technologies, I would say that wind is the most profitable and where we can see the best development premiums, I would say not by far but clearly. We also see that best projects will develop in the coming years. We have one data point, of course, when we did pie chart and as it was in October, I think, right?
So that's one data point and that market is still quite young, I would say, a bit immature. So we will see how that will develop. But I think we'll see a good, fairly good profit margins invest as well. Looking at solar PV, I would say that the Nordic market in current price environment is a bit challenging but we see if you look at, for instance, in The UK, it's a bit different since we have power prices on a much higher level versus what we see in The Nordics. I think the blended million is a pretty good number.
But if you're obviously, there will be as we have seen in recent years that prices can fluctuate very much between two years. It's a bit difficult to give you any more exact answer than that Caleb.
Caleb Solomon, Analyst, SEB: Okay. That's clear. Thank you. And just a follow-up question. As you said divestments this year is going to be centered in Finland and The U.
K. How do you think the mix is going to look for the projects you divest this year? Because mostly in the late stage portfolio, what you have there is battery and wind. Is it fair to assume it's going to be fiftyfifty then?
Perrik Gerson, CEO, Arise: Yes. We will definitely, we are aiming for some best projects. And that has something that we have been focusing as you have a bit you can develop fairly quick and it's fairly quick to realize. So BEST (NYSE:BEST) definitely we expect some transactions on. But also we have some solar that also could be not in The Nordics but we expect something to happen on that as well in The UK or can happen happen.
And also, we have some wind as well. So we have a bit of a mix, both best solar and wind. If we should, yeah, Marcus, it's a bit difficult to have, yeah, to split. We have a number of alternatives. Exactly.
Markus Larson, CFO, Arise: Time will tell. But maybe worth mentioning that The UK transactions market is a bit different to the Swedish one, like, Hamster Solar, to it. So so it it it's not it's not totally necessary to to actually develop them all the way to to to to be a construction ready. But there is much more appetite for for, you know, somewhat projects that are in somewhat early stages or portfolio projects and so on. So
Perrik Gerson, CEO, Arise: Yeah. And it's a bit, I would say it's in The UK and there are more and more utility transactions in The UK versus what we have seen so far in The Nordics. So it's a bit, different, market behavior, I would say. But I would, that we would realize in the range 1,000,000 per megawatt as planned.
Caleb Solomon, Analyst, SEB: Okay. So it's fair to assume you're probably going to divest something from the early stage portfolio as well, not just the late stage in The U. K. Specifically?
Perrik Gerson, CEO, Arise: Yes.
Caleb Solomon, Analyst, SEB: Okay. And on the production segment this quarter, operating costs per megawatt seems to be slightly higher or it has been slightly higher in the past three quarters despite Lebau coming in, which I imagine having a lower unit costs. Is that simply due to lower utilization year over year or am I missing something?
Perrik Gerson, CEO, Arise: I would say part of that explanation is that we have done some extraordinary maintenance. Basically, we have improved quality in part of
Markus Larson, CFO, Arise: the fleet when it comes to
Perrik Gerson, CEO, Arise: a lot of connected to blade bearings, basically replaced quite poor quality blade bearings with high quality. So we expect, we expect that number to decrease in the coming during the year. And we also expect that we have some positive effects from doing this improved quality.
Caleb Solomon, Analyst, SEB: Okay. And just one last one for me. If I heard you correctly, you said that you've secured hedges for Q4 this year and Q1 next year. And sorry if I missed it, but what price levels and what volumes are we talking about here?
Perrik Gerson, CEO, Arise: Yes, we've done the first tranches and we always working. And normally, we try to build up portfolios over time in tranches. We have done Q4 above €60 per megawatt hour and Q1 twenty six, above 70.
Caleb Solomon, Analyst, SEB: And how much volume are we talking here?
Perrik Gerson, CEO, Arise: Quite small volumes, around 10% for the quarters. But this is something
Caleb Solomon, Analyst, SEB: Okay. That's it for me. Thanks.
Perrik Gerson, CEO, Arise: Thanks,
Conference Moderator: The next question comes from Hannah Grimborg from Handelsbanken.
Hannah Grimborg, Analyst, Handelsbanken: Yeah. Hi. Hannah here. So I have a couple of questions. And the first one is, with electricity prices being materially higher outside of The Nordics, wouldn't it be interesting to focus development outside of the Nordics?
Or how do you view that? I mean, is the Nordic market really as attractive? And the second thing is, if you could say anything about the project sales in 2025, should we expect that to be back end loaded or if you could give any details there?
Perrik Gerson, CEO, Arise: Yes. Starting with power prices and markets sort of focus on development, I would say that we are already doing that since we have a quite big focus in The U. K. And we expect to have some outcome from that as well during the year. We are looking into other markets as well.
But we should also be aware of that we take a snapshot right now how the Nordic markets look in comparison to Germany, for instance. And over time, that this could change rapidly. And I think in the long run, we are optimistic about The Nordics as well as we see. One thing is that we see that we expect that demand will pick up even though it has been a lot of negative attention for the green green change in industry. We believe that that will pick up again.
And on top of that, there are some question marks on quite big scale offshore wind as well for the period to come. So all in all, we are quite bullish on Nordics as well and we believe that Nordics will be a good market for our production but also for development in the coming years. But with that said, we are looking into other markets as well. And we really like to be a bit diversified since, for instance, now we have a bit we have a bit slow market in Sweden that we can capitalize from other markets instead. That was the first question.
And the second was,
Markus Larson, CFO, Arise: yeah. On the project side is 2020, '5 will pay out back end distribution?
Perrik Gerson, CEO, Arise: Yeah. I think I would say that the majority will be back loaded. But we have some hope that we will have something in the first half of the year as well to come. So I wouldn't expect that we have everything in quarter four. I think we will have we will see some results before that this month.
Hannah Grimborg, Analyst, Handelsbanken: All right. And just one last question. I think you maybe mentioned this, but in that case I missed it. But just when it comes to selling project, how how the prices developed there the last quarters? Is it still relatively unchanged from the beginning of 2024?
Or how does that look?
Perrik Gerson, CEO, Arise: I would say that 2024 was a quite challenging market in general. Obviously, you didn't see many transactions in 'twenty four and that was the reason by low power prices in combination with interest rates, I would say, or return requirements. We believe that we will see better conditions for this year versus last year. We're actually quite convinced about that return requirements with some delay following interest rates down. And we see, as explained earlier, we believe that we will see some pickup in power market as well.
And that should suggest that we would have some better development margins in 'twenty five. Obviously, looking at The UK, we already have higher prices. I would say that we have already now decent premiums in The UK, but also it's a quite competitive market. But all in all, we have higher expectations for 25%. Yes, sorry, yes.
Hannah Grimborg, Analyst, Handelsbanken: Okay. All right. Great. Thanks for that, Dan. That was it for me.
Conference Moderator: The next question comes from Matthias Ehrenborg from Redeye. Please go ahead.
Matthias Ehrenborg, Analyst, Redeye: Yes. Hello, Frederic and Markus. Matthias here from Redeye. Obviously, a very solid development in the Development segment where the portfolio keeps growing and maturing. I think this gives great support for your 24 to 25 targets.
But then I was hoping that we could sort of start off by dissecting the Q4 numbers. Is it fair to assume that you have revenue recognition from FASIKAN and Schoal Baden in the same range as you have reported historically? Or has there been some sort of pass through costs related to these projects in this quarter? Or are those related to Paje Schoal, which I was supposed to drive the earnings in this quarter? Because I mean, we have seen quite deep increase in both revenue and the cost.
Markus Larson, CFO, Arise: Yes. Hi, Matthias. Yes, that's kind of difficult to foresee, foresee this. The revenue recognition is as previously. What the the the cogs you're you're right when you said when you talk about the pass through, I think we had also in q three this, the the grid works we're doing for falls account, which, where we have a subcontractor and then that's passed passed on to the falls can we inform.
So so that, affects the external costs and the revenue. So there is no EBITDA impact. That's probably around around 15,000,000 sec. And then the pie chart and transaction, you can see it was kind of 15,000,000 SEK as a share purchase price. And then we we were also reimbursed for for, kind of intra group loans or basically prepaid CapEx, which was 30,000,000 SEK three-zero.
So that's in the cost of projects and in the revenue. So I guess that's the bridge to your number.
Matthias Ehrenborg, Analyst, Redeye: Okay. Excellent. Yeah, that makes good sense. Thank you for that. So just to summarize, the gross margin, if you want to call it that, is weaker, but the gross profit gross profit in total, those numbers stay the same pretty much for these products.
Okay, great. You mentioned that the Finnovir is progressing, but the grid connection is still somewhat uncertain in terms of capacity. You also mentioned now that you could come to build a product in two stages. Could you shed some light on what this could look like in reality in terms of timing and capacity and sort of the transaction structure wise if that changes anything?
Perrik Gerson, CEO, Arise: Yes. We expect to have the line concession in legal force second half this year. I would probably my guess would be a bit late second half but it's a possibility that we will manage to do a transaction with FINOBARIA already this year anyhow. We'll see. The reasoning behind the two step approach is that we now got some more clarity on capacity and we have capacity for the first, for the first leg around 100 megawatts and then we have some got some information that there will be more capacity available.
I think it's twenty, thirty. So was it one or three? Yeah. Something like that for for the second where we will have another, where we can fill up with the remaining part of the maximum capacity in the wind farm, which is around another 200 megawatts. So we expect to have 100 megawatts as a starting point, which means that we will take part of the site.
And then the next step will be the remaining part roughly four or five years later.
Matthias Ehrenborg, Analyst, Redeye: Okay. And in terms of profit potential for this project, I know you don't want to be too specific perhaps and maybe it's difficult to tell. But I mean comparing Finobayag to the number that you referred to in your report of 1,000,000 per megawatt, is it possible to do a comparison for this project to that number or perhaps even relative to the Falscan transaction that took place last year since it's also in SE2?
Perrik Gerson, CEO, Arise: Yes. Of course, it's very much depending on the development on power prices and perhaps not the power prices in short term. It's also very much about what happened with the long term forecast. But looking back, we have seen that the correlation between the short term market and the long term forecasts are quite high. So as I expect, we will see some improvements also in the long term forecast given that our scenario will be the reality which we believe and hope.
So as I think there are some upside potential on valuations there given that we see what we expect there, so some improvements on power prices. And also, the other part that has had quite a big impact is the return requirements. And, of course, if you see a percentage lower return requirements, that will have a big impact as well. So the hope we have at least is that transaction will be more than 1,000,000 per megawatt.
Matthias Ehrenborg, Analyst, Redeye: Okay. Great. Thank you very much for that input. Sounds promising. Regarding Schallwallen, that project progressing according to plan, would you say?
And what's your strategy for your equity stake in this project once it has been commissioned?
Markus Larson, CFO, Arise: Yes. It's more or less according to plan. A couple of months later, maybe, than what we foresee in the early construction. When it comes to our stake, I would say that we, if we don't have any immediate thoughts on kidney for a longer period of time and given the minority, that it's it's a minority stakeholder 9%, we were somewhat in the hands of the owner. Right?
If if they would set if they would sell, the project, if it's a good valuation, then I would expect us to tag along really. So it's I think the answer is pretty much we see it we really see it as a financial investment at the moment. So it's we keep it forever at sometimes a 9% stake, probably not, right?
Matthias Ehrenborg, Analyst, Redeye: Okay. Yes, understood. Final question for me here before I get back in line and we'll hopefully get back with a few other questions in the end. But since Q1 twenty eighteen, '20 '8 quarters have passed, of which 20 where production has been 5% under budget or worse and only two quarters where production has been 5% over budget or better. The total production during this period was also 12 lower than the budget on average.
I know wind conditions haven't been exactly great during this period. I mean, they've been quite weak
Perrik Gerson, CEO, Arise: to
Matthias Ehrenborg, Analyst, Redeye: be clear. But what are your thoughts on these numbers? And what expectations should investors have about the production going forward?
Perrik Gerson, CEO, Arise: Yes. Obviously, we had if you look back to the recent years, we had quite poor wind years definitely. We did some analysis. I think it was three years ago when we looked back and did a more deeper analysis looking back ten years. And that analysis showed that we were basically on par.
But if you would add the recent years, we will definitely be below par. I would say it's a bit early to say with the availability data for this year so that things become worse when it comes to wind resource. I think that's too early to have that conclusion. I think, yeah, basically, that's it. Do you have anything to add, Markus?
Markus Larson, CFO, Arise: No, really.
Perrik Gerson, CEO, Arise: So we done some work on this, obviously. But, it's difficult to say, really, if we see if it's the climate change or whatever it is or if it's just a coincidence that we have a few years with less wind, difficult to say.
Matthias Ehrenborg, Analyst, Redeye: I understand. So but in general terms speaking, you feel quite confident in your budget as such given the the P50 scenario where there's most likely wind speeds that you anticipate. But of course wind speeds will deviate during the year but
Perrik Gerson, CEO, Arise: We don't see any reason to change. We have done the homework and we had even external calculations or analysis on this. We don't see any reasons today to do some changes. But obviously, if this clearly will be that we can see a trend, but I mean, to, of course, consider to adjust the numbers or do another analysis based on a new set of data.
Matthias Ehrenborg, Analyst, Redeye: Okay. Thank you very much for your answers. I will get back in line.
Markus Larson, CFO, Arise: Thanks, Andreas. Maybe I could chip, so while we're waiting for the next question, maybe I could chip in two questions from the from the feed, from, Darwin Wieberg. I was wondering why the profit after tax for the full year is higher than profit before tax. The reason is basically that in Q3 twenty twenty four, in Q3 this year, we recognized previous tax losses carry forwards on the balance sheet, which gave a kind of positive tax effect of SEK 37,000,000. And then from, Robert Clark Saenz, who wants us to elaborate a bit on opportunities in Ukraine and how they are progressing and in light of the recent weeks talks of peace negotiations, what timeline we do envision from a potential end of conflict to projects being initiated and realized?
And I think if if I start, Peryuk, and you may say, Bin, I mean, in Ukraine at the moment, given the circumstances, we have consciously been running it extremely capitalized with a clear focus on the Western parts of Ukraine where we're trying to kind of secure our position and secure a portfolio or at least leads to a portfolio at this moment. And until a potential end of the conflict, we wouldn't invest heavily in the projects, I would say. But on the other end of your question, if there is a potential end of the conflict in terms of timeline, the permitting is much, much faster than The Nordics, for instance, when it comes to wind. So I think we're kind of ready to hit the ground running if that would happen. And then I think we're talking, you know, maybe one one to two years time that we would have would be able to to realize projects.
In that case, do you agree, Frederic?
Perrik Gerson, CEO, Arise: Yeah. Yeah. Yeah. As you say, the realization times will be shorter and the the demand will be extremely on a much higher level versus what we see here obviously with what's happened with the infrastructure in Ukraine. So basically, the whole idea is to be established in Ukraine when things when the market opens up.
And of course, at the moment, the risks are on a different level versus the rest of Europe. Yeah. But we can see I think we have some development currently. So we'll see during the year if we can add something to the portfolio officially as well.
Conference Moderator: The next question comes from Matthias Ehrenborg from Redi. Please go ahead.
Matthias Ehrenborg, Analyst, Redeye: Yes. Hello, again. Just a few final questions for me on the financials very briefly. The total loss carryforwards amounted nearly CHF500 million by the end of twenty twenty three. I want to recall according to your annual report.
Is it fair to say that the loss carry forwards by the end of twenty twenty four should sit at around CHF $350,000,000 given that you have reported nearly CHF 150,000,000 in net profit for 2024?
Markus Larson, CFO, Arise: That give or take that should be a correct more or less correct number, yes.
Matthias Ehrenborg, Analyst, Redeye: Okay, great. And allocated costs on a group level are down around SEK 6,000,000 year over year. Is this due to FAS again being behind the numbers last year?
Markus Larson, CFO, Arise: No, the reason for that at least the major reason for that is lower outcome in the variable remuneration program compared to last year.
Matthias Ehrenborg, Analyst, Redeye: Okay, great. And also net financials were quite positive this quarter which we also saw last year. Would you just want to shed some light on why that is the case?
Markus Larson, CFO, Arise: Yeah. So, the net financials, we have the kind of interest income on the cash position as Sherwagland and the shareholder loans to Sherwagland, some effects, negative effects on, on the bond and the, the other, the production financing, partly offset by the effects on cash. And then we also have a, the milestones, the milestones that are recognized to the sellers of where we have made a fair belt kind of fair value recognition of that which has decreased that position. And the reason is not that the projects are being delayed but the actual payments will be more deferred than.
Matthias Ehrenborg, Analyst, Redeye: Okay. Can I just get back to the point of why, has anything been paid out as of today to in relation to that transaction?
Markus Larson, CFO, Arise: No. It has not. So it's a discount. Okay.
Matthias Ehrenborg, Analyst, Redeye: Okay. And relating to the CapEx in your report, what was the main driver behind that? If I could recall, it was around 50,000,000 or something like that.
Markus Larson, CFO, Arise: Yes, exactly. That's somewhat, I wouldn't say, out of the ordinary, but it's somewhat higher than what you would expect going forward. And mostly, that's explained by grid connection fees that has been paid during the quarter. Positive take on that is that we're talking on very well progressed projects. So I would say, you know, if we're at half of that maybe it would be more of a kind of recurring basis.
Matthias Ehrenborg, Analyst, Redeye: Okay. Excellent. Thank you very much for the answers and that was it for me. Have a happy Valentine's Day and a great weekend. Thank you.
Perrik Gerson, CEO, Arise: Thanks. You too, Matias. Thank you, Matias.
Conference Moderator: The next question comes from Orian Rodin from Carnegie Investment Bank. Please go ahead.
Matthias Ehrenborg, Analyst, Redeye: Yes. Hi, everyone. A lot of questions have been answered. But if you look on the late stage development portfolio, the total number there is quite different from kind of your short term guidance. On what timeframe would you say that this late stage development should materialize in if you were to decide?
Perrik Gerson, CEO, Arise: Yes, yes, I mean, the definition we have is that those are projects that can be realized within two to three years. So within a two to three year time frame, those can be realized. And when we have them in late stage, we also feel certain that these projects will happen.
Matthias Ehrenborg, Analyst, Redeye: So two to three years, that's the timeframe you are having in mind here?
Perrik Gerson, CEO, Arise: Yes.
Matthias Ehrenborg, Analyst, Redeye: Okay. Thank you. That's what it was for me.
Perrik Gerson, CEO, Arise: Carry on.
Conference Moderator: There are no more questions at this time. So I hand the conference back to the speakers for any closing comments.
Perrik Gerson, CEO, Arise: Thank you very much for listening. Yes, some final comments. All in all, looking back at 2024, we experienced quite challenging markets, but I think our eyes show strength by delivering good results in this market environment, both when it comes to power markets but also transaction markets. So we are quite happy about the outcome really. We are doing well as a company and we look forward to 2025 as well.
And we expect 2025 to be another good year for the company. With that, we say thank you very much. Happy Valentine's Day and a good weekend.
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