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Magnora ASA’s recent earnings call for the second quarter of 2025 revealed substantial financial losses, with an operating loss of 27.8 million and a negative EBITDA of 24.4 million. Despite these challenges, the company’s transition to a 100% renewable energy portfolio and strategic expansions were highlighted. According to InvestingPro data, the company maintains a strong financial foundation with more cash than debt on its balance sheet and a healthy current ratio of 1.94. The market reacted with a 1.9% decline in stock price, reflecting investor concerns over financial performance.
Key Takeaways
- Magnora reported significant financial losses in Q2 2025.
- The company achieved a 65% portfolio growth over the past year.
- Magnora completed its transition to a 100% renewable energy company.
- The stock price fell by 1.9% following the earnings announcement.
- Magnora maintains a strong cash position with 375 million NOK available.
Company Performance
In Q2 2025, Magnora faced financial headwinds with a reported operating loss of 27.8 million and a negative EBITDA of 24.4 million. Despite these losses, the company has continued its strategic focus on renewable energy, achieving a 65% growth in its portfolio over the past year. InvestingPro analysis reveals impressive revenue growth of 206% in the last twelve months, with analysts forecasting continued sales growth this year. The transition to a fully renewable company underscores its commitment to sustainable energy solutions. Discover 8 more exclusive InvestingPro Tips and comprehensive financial analysis in the Pro Research Report.
Financial Highlights
- Q2 EBITDA: Negative 24.4 million
- Operating Loss: Negative 27.8 million
- Profit Loss: Negative 22 million
- Cash Balance: Approximately 375 million NOK
Market Reaction
The market responded negatively to Magnora’s financial results, with the stock price declining by 1.9% to close at 23.65. Based on InvestingPro Fair Value analysis, the stock appears fairly valued at current levels. Trading at a P/E ratio of 4.75 and offering a significant dividend yield of 20.08%, the stock has attracted analyst attention with a strong buy consensus. This places the stock closer to its 52-week low of 18.7, reflecting investor concerns over the company’s financial health despite positive operational developments.
Outlook & Guidance
Looking forward, Magnora aims to expand its renewable energy portfolio to 10 gigawatts by the end of 2025. The company expects to sell between 600 and 725 megawatts in 2025, with project prices ranging from 0.5 to 1.5 million per megawatt. Magnora is also exploring opportunities in the data center market, which could provide additional revenue streams.
Executive Commentary
"We believe there are very interesting opportunities going forward as we’ve seen many distressed IPPs in Europe," a Magnora presenter stated, highlighting potential growth avenues. Another executive emphasized, "Our business model nurtures a commercial and result-oriented culture," underscoring their strategic focus on early sales and project returns.
Risks and Challenges
- Financial losses could impact investor confidence and stock performance.
- Nordic electricity market challenges, including low wholesale prices, may affect revenue.
- The transition to renewable energy requires significant capital investment and strategic execution.
- Potential macroeconomic pressures and regulatory changes could impact operations.
While Magnora’s financial performance in Q2 2025 presents challenges, the company’s strategic focus on renewable energy and portfolio expansion offers potential growth opportunities. With an overall Financial Health score of "GOOD" from InvestingPro and strong return metrics over the past decade, investors will closely watch how these initiatives translate into financial recovery in the coming quarters. Access the complete Pro Research Report for detailed analysis of Magnora’s growth potential and financial outlook.
Full transcript - Magnora ASA (MGN) Q2 2025:
Company Presenter, Magnora: Good morning, and welcome to Magnora’s q two presentation 2025 here in another beautiful summer day in Oslo, Norway. Highlights and subsequent events. We continue to grow our portfolio, 65% up the last twelve months, 7% over the last quarter. We’ve now reached eight gigawatt, and we’re closing in on the 10 gigawatt goal of 2025 end of twenty twenty five. We’ve completed the transition to become 100% renewable company, selling our remaining shares in Hermana Holding after bid from existing Magnolia shareholders in June.
We signed the first site in Germany and the letter of intent with the leading European infrastructure investor for our German projects, as well. We see really high demand in particularly Germany and Italy for best projects. Magnolia, Italy strengthened its partnership and we’re scaling up for the Maxi auctions, but we also see an opportunity for trading markets in Italy and ramping up our team. Our portfolio grew 125% during the quarter, up to close to 450 megawatt. We received confirmation on grid connection in 02/1930, and there are new terms out for the CFT auctions from AR seven.
So that’s quite interesting from fifteen years to twenty years, so that could be beneficial for our potential owner of the Magnolia offshore wind project in Scotland. We have no red flags. Magnolia South Africa initiated a new sales process for onshore wind and solar project of 250 megawatt each combined 500 megawatt with optional BES. And we had, after the quarter ended, financial close to Global Ec, of the project we sold in 2023. The largest best project in Africa so far for our duration, 153 megawatts, 612 megawatt hour best projects.
And this competence we can use in Europe. Some interesting market observations in q two in s e two in Sweden, there are five hundred hours alone of negative prices. And, on a yearly basis, that would be two thousand hours and, due to multiple factors. If you see in Germany, we the the the increase in negative hours provide great opportunity for best projects, which are trading at really, really high multiples as we see. So this is based on high average prices and battery costs falling dramatically.
So indexed, you see that battery prices has fall 86% from 2013 to 2024. Other interesting, aspects is that wholesale prices in The Nordics, are the lowest in Europe. This is contrary to what’s written in Norwegian media, but they’re back to levels seen in 2020. This is due to a lot of, rain, warmer climate last year at least, and little softer demand due to less hydrogen, battery factories, and other expected factors that would drive demand. At the same time, you see that the data center sector is growing really, really fast in The Nordics and also Norway.
And, there have been some interesting factors in Finland in particular, and we also see this in Sweden with the growth of electrical boiler, used for for peak, effects, for especially district heating and others that would mitigate demand maybe for some best in The Nordics, but would drive up demand. So over the last two years, Finland is close now to two gigawatts of electrical boiler capacity, which will absorb a lot of electricity when in use. On the European level, you see multiple targets and initiatives, together with initiatives in Germany and other places. You €100, support from EU for clean energy projects, the same amount in in Germany. So we see very strong regulatory backing and support for renewable energy, and the timing for BESS in particular is now, and also combination with some solar and and onshore wind and and offshore wind in Europe.
Our business model, we remain asset light, diversified, no construction or balance sheet risk. Our goal is always to have five times return on our projects and project portfolios. And we have zero debt, low cash burn, and a solid cash position. Combined with our credit line, we have NOK $373,000,000 available cash at quarter end Q2 last month. Our return since 2020 is 22% return on equity on average, and returned over 1,000,000,000 in in, in cash and equity shares in Hermano to our shareholders.
So, average annual share return has been 34%. We have a capital distribution program continues, with dividend and buyback. The board will be more likely to buy back shares with lower share price and, increase dividend, at higher share price, basically. So we increased our share buyback program, last quarter as well. So we’re gonna use that when we have available cash.
And next slide, our summary of q two. We see 10 to 20 times return on best projects, trading above €200,000 per megawatt for projects available this year to go on grid. We have project portfolio above eight gigawatt. I mentioned the growth rate in our land bank. We have strong, growth opportunities in Italy and Germany and are in discussion with multiple infrastructure companies and energy companies.
Strong cash position, zero debt. Portfolio growth quarter over quarter, since 2023. We expect to sign a lot of new projects in particular in Italy and Germany, but also in South Africa going forward for the rest of the year. Our portfolio is divided across best where we have the highest focus now together with onshore wind in South Africa, but also then solar PV. And we’re currently assessing data center opportunities in combination with the assets we have, but also maybe for certain new assets, I’ll get back to that.
Onshore wind, we have a pragmatic approach. We’re not evaluating any new projects on offshore wind, either in bottom fixed or floating wind. And, the goal now is just to mature and farm down the Scotswim project, and we’re have been in discussion for quite some time, and it’s a very interesting project in our portfolio. Our business model, I’ve gone over this before, small investments and then add cash as we see that the team is able to secure land and sell or sign up with customers early on. This, culture nurtures commercial culture and result oriented culture.
Our business model more in detail, market intelligence, new markets. We’re currently looking at other new markets as well. In Europe, project development, this is our core competence. Landowner agreement, grid connection, market contact engagement, environmental assessment, permits, and over, executive design of, wind parks or solar parks, and then we partner or sell our projects. We might be able to help with stuff also in the construction phase if that’s needed from the client, but typically they have their own organization.
So, our strategy has simple rules. We always insist on early sales. We would try to keep a strong war chest, when we have big projects in our portfolio and wanna have a good negotiating hand with potential clients. We, see the business as cyclical. As I mentioned, the factors the negative prices, electrical boilers in Finland, the market changes quickly.
And we’re always trying to forecast where we have growth over the next two to three years because there’s always something new that’s very exciting. And we have a team that survey and analyze and try to find people to capture these opportunities. Next slide. We have high risk in our portfolio, but we spend very little money compared to the CapEx in these projects. So together with the farm down projects to in Helios and all of our portfolio, we have around 200 projects.
So this provides a great diversification, and we mitigate that risk by always having something available for the market. Our clients typically buy the projects at ready to build, but in BEST we now see that they wanna buy before ready to build and even at grid deposit phase. So the markets go cyclical, sometimes they wanna buy very early and sometimes they wanna PPA when market is softer. And this is different from market to market from Sweden to South Africa to Germany and Italy constantly. We have a good client base and we see that a lot of our clients wanna buy more stuff from us.
When we’ve sold once, we also are in discussion with many of these names regarding new opportunities and new markets. So, here you see a box ticked off on which product and and technology we focus on in each each market. Onshore wind is a great technology. It’s very profitable if you find the right project, but it’s really hard to find market that really wanna embrace that technology in our core markets. But we’re always watching out for new growth opportunities, but now we have a very high focus in in South Africa on that.
I’m very excited about the sales process we’re currently in. So some business, update portfolio update. Strong market interest in Germany. We’ve signed the first letter intent They’re with a very interesting client, who we know well. We’ve expanded the team to accelerate the project development.
We’ve secured, the first land on municipal municipal owned land in Germany, and, we have a grid application in as we speak. In Italy, we’re working closely with a with a co developer in the Southern part of Italy, we’ve engaged more people now. So we’re also growing our portfolio in Northern Italy for the trading market. We’re well positioned, we believe, for the upcoming auctions in ’26 and ’27. In The UK, we’re advancing the grid agreement dialogues.
There’s a upcoming reform. We have good projects. We have 150 megawatt of solar PV and best projects, which we really hope now that could be ready for sale and clients buying in the second half of twenty twenty five. We waited for this quite some time now. In South Africa, we have continued portfolio growth.
We expect to sign a lot of new land in the second half. It was a little slower in q two than q one. We have a fully permitted 250 megawatt 250 megawatt onshore wind and solar project, which also could include, BESS. And we’re working on smaller packages to other, customer segments. We see a growing market, sort of hybrid spot market there developing, a lot of exciting capital flowing in and, very aggressive buyers, especially on the onshore wind side.
And on the onshore wind, we’ve had a very high focus from day one. It takes time. High entry barriers for onshore wind. We entered South Africa 2021. It takes four or five years to have a good portfolio.
Now we have that portfolio. We have the first project to sell, and we have projects to sell every year to 2030 based on what we see now in our pipes. So we’re very excited about this. In Scotland, we’re positioned for grid in 2030, as mentioned, one of the first Scotland projects. They have very attractive CFDs.
They were the news out earlier this week about longer duration CFDs. We’re working on a farm down plan. We see improved supply chain. We see, we see ease in in cost, as I mentioned, and we also see that Chinese vendors are entering the market, also easing the supply chain more, which we think is beneficial for multiple of the parties and customers we speak with. In Norway, we have a solid pipeline growing to over 2,000 megawatt.
We have 30 megawatt ready for sale, and we also sold the shares in Hermana, 40,000,000. In Sweden, we see really slow progress on our offshore wind project. You probably have to wait for a new election. Then And we have the earn outs from Helios and Avalara where we don’t control, neither news flow or anything else. We just sit there and wait and and and and collect the earn outs when when we when the, milestones are reached.
The next, thing I would like to mention so you are a little better educated on what’s happening in the data center space and how it could be interesting for the Magnora platform. So, data center is a high growth market due to artificial intelligence, and a lot of US and European players think the Nordic market is a good market, but we also see interest in Germany and Italy and in South Africa. So, strong value proposition for data center. It has a good strategic fit balancing the, power consumption supply in in Europe, and it has a strategic fit with our existing portfolio, not in all projects, but in some. A little bit about the data center power demand.
So, have forecasted, that the data center market in in The Nordics alone will consume 62 terawatt hour by 2050. And, looking at the numbers in 2030, it’s up by, three up threefold from 11 terawatt hours to 28. And in Denmark alone today, their supply of electricity is around six terawatt hours. So by 2030, half of Denmark’s supply will be used in Nordic context on data centers. So even though the markets have been a little soft the last two years in Nordics, you see very strong pent up demand and very little increase in supply.
So we think solar could have a really good fit in the mix in Nordics, going forward as offshore wind is moving very, very slow, in particular in Norway and Sweden and Finland. Next slide. So what’s the difference between data centers and a battery project, onshore wind project, and solar PV? So mainly it’s the fiber connection. The other things you need to fix is power connections, site identification, building, environmental permits, technical management, project execution.
So this could be similar ready to build market and it could fit many of our projects. The regulation for data center, it has to be on a industrial property and that could be a little different for wind and and solar. But very, similar to what we do and we think some of our projects in our global portfolio could fit really well with the demand for data centers. We have one person in Magnolia who worked with the Google data center in Sheehan, for six years. So we have a good knowledge about this market.
A little bit about the German market. There, it’s a little different from how we work in worked in Sweden or South Africa. We, the municipalities need to approve due to multiple reasons, so we work very closely with the municipalities before we sign land between we we know where we wanna get the land, but we’re in dialogue with the municipalities. And then with the with the land and with the municipality backing, we then apply for grid. If not, our portfolio could grow much faster.
So the the the team in in, Germany, just to showcase how we work and what we do, we have people with experience from BESS and solar and wind previously, then they have experience from commercial real estate development. There’s a person with a PhD in electrical engineering for the same layout and technical planning, and people have worked with multiple transactions before. So it’s gonna be a very exciting market because CapEx is full, negative prices have increased a lot or low prices, and the average price for electricity in Germany is very high. So I created great trading market. So very few projects available.
We’ve spoken to the biggest clients in the world. We’re interested in Germany and Europe. They’re very excited about any project we have potentially. So this is some of the best thing we’ve seen since the start. Best in Germany.
A little bit about South Africa. We’ve closed in then on the first best project. There was a commercial close in June by Global Equity and Ministry and a financial close in, July. Then, we’re working on our flagship onshore wind project, 250 megawatt, in combination with 250 megawatt solar. They might be sold separately or together.
We’ve had dialogues for quite some time, and multiple customers are interested, and the South African market is short of onshore wind projects. Our team in South Africa has a background from onshore wind, so this is our really our core strength. Prices, obtained for for onshore wind projects could be three to four times higher than the typical return for PV and best, which is also good for the business in itself. So strong growth in South Africa and we expect the land bank to pick up in q three and q four. In Italy, the the main consumption is in North and most renewable is in South.
And that creates a capacity market issues, so the government have have, are launching three separate auctions for for Bess in in, Italy. And these are bankable contracts, which Bess asset owners thinks are think are very interesting. So, I mentioned the merchant interest in Northern Italy also has an interesting opportunity that we’re working on. We’re scaling the team, hedging the portfolio. We have a mixed, portfolio with different maturities, so we work very, very similar.
Very experienced managing director in our Italian business. We worked with Solar and Best before. Regarding financials, EBITDA negative 24.4, primarily due to lower operating revenue following the one off legacy business milestone in q one of, Hermana Penguins revenues. Operating loss, negative 27.8. And, most of the cost first half have been to Magnolia Offshore Wind for the for the Met Ocean Boy and the environmental study and those costs stop in q one, q two next year.
So these are costs related to the maturing of the project. Then we also have ramping up cost in Italy and Germany. So, as we face down or face out cost in offshore wind, we will increase that in particularly Germany and Italy going forward, but this is gonna be backed by farm down in in Scotland and sale of best projects in Italy and and Germany. Profit loss, negative 22,000,000 for q two. Operating activities, negative 28.2.
And investment activities proceeds from the sale of Hermana Hermana shares and then then finance activities related to buyback and dividend. So the cash balance ended the same at the end of q three as q one. Together with our credit facility, we have 375,000,000 approximately available. Little bit about the consolidation of how we drive cost, allocate for cost in our our p and l. Management own shares in the company, outlook.
So what’s gonna happen forward? Very strong folks on farm down on sales. We’d like to go into new market, but we’re always careful before we have sales in new markets we recently entered. And then we’re looking very closely on data centers in combination with what we have already. And we’re on well on track for 10 gigawatt by end of twenty twenty five.
And we believe we have a sustainable recurring project development business for many, many years ahead. Quarterly dividend, 18.7 per share, 0.187 NOK. So the financial position and cash flow, we will buy more shares depending on the share price and, cash coming into the business. We have a strong focus on the cost we in sourced last year, our accounting and and we closely track every cost item on a continuous basis. But we see now that we receive some improved supply chain ease of costs due to lower activity in many countries in in Western Europe.
The guiding 10 gigawatt portfolio by end of twenty twenty five. We’re still, believe in the 600 to seven twenty five megawatt in 2025. We see the average price, in each market we’re on between point 5 and 1,500,000.0 per megawatt. I mentioned higher number for Germany for best, and you know that there are lower premium for best and solar in South Africa. So so there are deviations in some products in some markets depending on the timing and the maturity of those projects.
With that, I would like to thank you for your attention to our message. We believe there are very interesting opportunities going forward as we’ve seen many distressed IPPs in Europe over the last twelve to eighteen months. And we believe that the negative prices will continue to increase as data center demand will take some time to pick up and this will position our portfolio really, really well with a focus on onshore wind in South Africa and best in Europe, and also the farm down and the earn outs from our previous sales. So with that, I would like to thank you for your attention and wish you a great summer going forward. Thank you.
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