Earnings call transcript: Scatec Solar OL’s Q2 2025 sees revenue rise, stock dips

Scatec Solar OL reported a strong increase in revenue for the second quarter of 2025, with consolidated revenues rising by 12% to NOK 1.3 billion and proportionate revenues climbing 51% to NOK 2.3 billion. The company’s impressive 25.26% revenue growth over the last twelve months reflects its strong market position. Despite these gains, the company’s stock experienced a slight dip of 0.19%, closing at 103.0, down from its previous close of 103.2. According to InvestingPro data, the stock is currently trading near its 52-week high, with a market capitalization of $1.61 billion. The market reaction appears tempered by uncertainties, including geographic concentration risks and the absence of specific EPS data.

Key Takeaways

• Consolidated revenues increased by 12% to NOK 1.3 billion.
• Proportionate revenues surged 51% to NOK 2.3 billion.
• Corporate debt was reduced by 26% since Q3 last year.
• Stock price dipped slightly by 0.19%.
• Expansion in renewable energy projects continues.

Company Performance

Scatec Solar OL demonstrated robust performance in Q2 2025, with significant growth in both consolidated and proportionate revenues. The company continues to expand its footprint in the renewable energy sector, particularly in battery storage and solar projects. This growth aligns with broader industry trends favoring renewable energy expansion driven by cost reductions and increasing demand.

Financial Highlights

• Revenue: NOK 1.3 billion, up 12% year-over-year.
• Proportionate Revenue: NOK 2.3 billion, up 51% year-over-year.
• EBITDA: NOK 1 billion, a 10% increase from the previous year.
• 12-month rolling revenues: $6.3 billion.
• 12-month rolling EBITDA: $5.4 billion.

Market Reaction

Despite strong financial performance, Scatec Solar OL’s stock price experienced a slight decline of 0.19% in pre-market trading. The stock’s movement contrasts with its 52-week high of 107.4 and low of 68, suggesting a cautious market sentiment. Factors contributing to this sentiment include geographic risks and the absence of detailed EPS data.

Outlook & Guidance

Scatec Solar OL aims to double its installed capacity to 9 GW within the next two years. The company projects power production for 2025 to be between 4,000 and 4,300 GWh, with EBITDA estimates ranging from $4.15 to $4.45 billion. Furthermore, Scatec plans to target $4 billion in asset sales by 2027, indicating a focus on streamlining operations and enhancing capital structure.

Executive Commentary

Thierry, an executive at Scatec, emphasized the company’s scale of operations, stating, "We are executing at scale with two gigawatts under construction and more than three gigawatts in backlog." Financial Executive Hans Jakob highlighted the company’s financial strategy, noting, "We continue to strengthen our capital structure."

Risks and Challenges

• Geographic concentration risks in Egypt could impact operations.
• Uncertainty due to the absence of specific EPS data.
• Potential market saturation in key regions.
• Macroeconomic pressures affecting renewable energy investments.
• Supply chain disruptions could impact project timelines.

Q&A

During the Q&A session, analysts inquired about the progress of asset sales and the performance of battery projects in the Philippines. The company addressed concerns regarding geographic concentration risks in Egypt and confirmed ongoing discussions for the farm-down of the Obelisk project.

Full transcript - Scatec Solar OL (SCATC) Q2 2025:

Thierry, Primary Presenter/Executive, Skatek: Good morning, everyone, and welcome to our second quarter presentation. I’m truly excited to present strong financials, additional growth and also excellent progress on our projects in construction. This means we continue to make significant progress on our strategic objectives, both in terms of growing our renewables portfolio and also in terms of strengthening our balance sheet. Let me start with a summary of the quarter, and then I will hand over to Hans Jakob to take us through the financials. On total our total proportionate revenues increased to SEK 2,300,000,000.0 and our EBITDA to SEK 1,100,000,000.0.

This represents an increased activity level across all our segments. Our projects under construction are progressing well with revenues close to SEK 1,000,000,000 in the quarter, and we’re still also recognizing gross margins at the high end of our guided range of 11.4%. I’m also very pleased with the development of the backlog that is now at all time high of 3.2 gigawatts, and this is after adding close to one gigawatt of solar and BES in South Africa during the quarter. In Egypt, we reached financial close and first drawdown on our Obelisk project during the quarter. And further, we signed a PPA for 900 megawatt of onshore wind in the country.

And finally, in terms of the balance sheet, we continue to focus on debt reductions. We repaid $300,000,000 in the quarter, and we repaid another $850,000,000 after the quarter end. And with this, our now interest bearing debt, gross debt on corporate level is down to 6,800,000,000.0 which is a significant reduction relative to where we were one year ago. Now in terms of power production. We generated nine forty gigawatt hours in the quarter.

This is an increase of 10% if we adjust for divestments during the year. This is driven by good hydrology in The Philippines and also in Laos and also positive contribution from the new project in operation in Botswana, the first phase of our Madeira solar cluster. Revenues based on this increased to just above $1,300,000,000 This is obviously then driven by the increase in the generation, but it’s also related to a onetime effect in The Philippines relative to the formal award of our higher tariff on our ancillary services contract. And then adjusted for divested assets, this is an increase of 48% relative to the same quarter last year. Now let’s take a closer look at The Philippines.

The Philippines delivered a strong quarter, both in terms of power production, ancillary services and also in terms of financial contribution. Power production reached 106 gigawatt hours, which is 67% higher than last year. This is due to strong hydrology with high water levels in the reservoirs coming into the quarter and also good water inflows during the quarter. And based on this, revenues reached $493,000,000 in the quarter. The underlying net revenues doubled from last year to $262,000,000 with power sales increasing to $49,000,000 and ancillary services increasing to $230,000,000 In addition, we are pleased to have received, as I just said, formal regulatory approval for a higher awarded rate on our ancillary services contract.

And this has a retroactive effect of $231,000,000 as you might remember, these contracts or this tender was executed back in 2023, and we have been then accumulating this since then. EBITDA based on this increased to SEK $448,000,000, and this is also reflecting good OpEx controls in our operations in The Philippines. And importantly, batteries now play an important role in the market, specifically in terms of addressing the reserves market, and we are working to increase our portfolio of batteries in the country. We have two battery projects in construction, and we also have a number of mature battery projects in our pipeline. And in general, this quarter highlights the earnings potential of the flexible asset portfolio that we have in The Philippines as we have different technologies and several market segments to play in as we see varying opportunities across the market.

Then in terms of construction. We currently have close to two gigawatts of solar and battery storage under construction in six different countries and at various stages. And since last reporting, we have had strong progress across the portfolio, and we have recognized close to NOK1 billion in revenues in the quarter. In South Africa, Grodfontein is almost finalized and we expect COD within the next couple of weeks. And in Tunisia, construction is progressing well.

And also here, we expect COD later this year. In Brazil, we reached financial close recently, and we expect also here COD in 2026 in the 2026. And this is also the case for Botswana, the second phase of the Madenaria cluster project and also for our best projects in The Philippines. While in terms of Muguba, our first battery project in South Africa, we expect this one to come into operation during the 2026. Finally, the Obelisk project in Egypt will be built in two phases, which are expected to be finalized in the first and the second half of next year.

And I’m very excited about the rapid progression here and proud of the team that is making this happen, and we will also show a short video of this a bit later in the presentation. I will now zoom out a bit and talk about the totality of our growth portfolio. And we continue to expand our near term growth portfolio. In addition to the two gigawatts that we have under construction, we now also have an all time high backlog of 3.2 gigawatts, and this is after adding another major solar project and a stand alone BEST project in South Africa. These growth projects will more than double our installed capacity over the next two years to more than nine gigawatts relative to the 4.2 gigawatts that we currently have in operation.

And in addition to this, we do have a large pipeline of 7.7 gigawatts of maturing quality projects, and these are across different technologies. Notably, this also includes the wind project in Egypt, where we just recently signed a PPA for 900 megawatts, which is a very mature project, but still in our pipeline. In addition to this, we also have significant early stage greenfield development activities. And these projects that are not yet visible in the pipeline, they will move into the pipeline as they continue to mature. All in all, we believe that this portfolio of growth opportunities forms a solid basis for the growth in the years to come, not only until 2027, but also beyond 2027.

We expect hybrid and pure battery projects to play an increasingly important role in the energy mix in our markets going forward, and this is driven by significant cost reductions and further innovations, and renewable can take a larger and larger part of the energy mix in the markets where we operate. At Skatek, we stand at the forefront of these developments with a solid track record and good experience in doing both battery projects and also combining battery and solar projects. As you see, the majority of our near term growth is coming from South Africa and Egypt. So let me also briefly touch a bit more on these two countries. Firstly, South Africa, which has been a core market for Scaltech for many years.

It continues also to be a market where we see significant growth opportunity going forward. We now have a total of 2.1 gigawatts of solar and two gigawatt hours of batteries in operation, in construction and in backlog. And in addition, we have also realized developed and realized the two fifty eight megawatt Round four project, which is close to Uppington, and this adds to our track record in the market, and this is a project that we divested in 2023. This summer, we announced an additional award of eight forty six megawatts solar in the REAP Round seven as the authorities reallocated capacity from wind to solar in that auction, and this is our biggest award in South Africa to date. We were also awarded another sizable battery storage project, 123 megawatt, four ninety two megawatt hours Haribes project.

South Africa is a very attractive market for us based on our track record, our integrated and capital light business model and also the long term very attractive growth perspective in the market. Here, we can have low net equity contributions based on a 51% ownership stake, based on 90% leverage of the project and also based on the full EPC scope that we are realizing these projects with, and this enables us to capture value with a very low capital employed related to the projects that we pursue here. Further, our corporate PPA platform, Lara Energy, targeting the private market is also progressing well and will further diversify our offtake structures in the country. And Lyra Energy also just received a trading license, which shows that this platform is also progressing very well. All in all, we believe we are well positioned to capture further attractive growth in the market.

Now over to Egypt and our largest solar and battery storage project to date, the 1.1 gigawatt and 200 megawatt hours Oblisk project in Egypt. And here, I’m incredibly impressed by the rapid mobilization of our team related to this project. Here, we are really moving fast. In this video, we are showing both the massive scale of the plant and the significant progress our team has made during the last few months of construction activity. The first phase, the half of the solar capacity and all the batteries is expected to reach COD in 2026, while the remaining, the second half of the PV capacity will be installed and reach COD in the 2026.

And the site is about 20 square kilometers. We now have over 1,500 people working on-site and have recorded over 1,000,000 safe working hours. The safety of our people is top priority, obviously, not only here, but across our portfolio and across our sites globally. Pile ramming has reached 40% completion for the first phase and construction activity is ramping up. On average, we expect to install 200,000 PV modules on a monthly basis going forward on this site.

Substation works are on track, which obviously is crucial for us to ensure that we meet COD according to our schedule. So Obelisk will drive significant EPC revenues and margins in 2025 and also in 2026. And with that, I will hand over to Hans Jakob to take you through the financials.

Hans Jakob, Financial Executive, Skatek: Thank you, Thierry. And it’s a privilege to say that we have delivered strong results driven by the higher power production, the high D and C activity, and it’s a strong quarter in The Philippines, also complemented by the ancillary services rates recognized the retroactive effect. I’ll take you through the group financials and the performance of the operating segments, and I’ll also share the progress we are doing on strengthening our capital structure. Starting with group level performance. We delivered strong results in the quarter.

The consolidated revenues were up by 12% to NOK 1,300,000,000.0, EBITDA reached NOK 1,000,000,000, up 10%. And to the right, you see the proportionate figures. Revenues increased by 51% to NOK 2,300,000,000.0, and the EBITDA grew by 19% to NOK 1,100,000,000.0. Now let me take you through the segments, starting with Power Production. So the Power Production segment delivered a strong quarter.

Revenues reached $1,300,000,000 up 26% from the same quarter last year. EBITDA was $1,100,000,000 a 27% increase year on year. This is mainly driven by the strong performance in The Philippines and the retroactive effect. On a twelve month rolling basis, you can see positive development over the past quarters, which shows both the underlying growth and strong contribution from divestments. We have delivered more than $6,300,000,000 in revenues and $5,400,000,000 in EBITDA.

Overall, we are very pleased with the value generated from our operating assets. In our Development and Construction segment, activity levels continue to increase. Proportionate revenues were $976,000,000 and the EBITDA, 49,000,000. Keep in mind that the second quarter last year, we realized a contingency of $122,000,000 from Kennaert, positively impacting the EBITDA. The quarterly revenue shows variability depending on project phasing, but the trend from the last twelve months confirms the long term strength and scalability of our D and C business.

It gives a clearer picture of the strong momentum we are building. Over the past year, D and C revenues have reached $400,000,000 with a steady increase over the last four quarters, and we aim to continue. Rolling EBITDA ended at 139,000,000 with strong contribution from high margin projects and disciplined cost control. The increasing trend reflects higher activity levels across several geographies with Obelisk and Egypt at the forefront. With a strong backlog moving into construction, we expect D and C to remain a key engine of our continued profitable growth.

At the end of the quarter, we had available liquidity of $400,000,000 The reduction is mainly driven by the repayment of debt and interest, partly offset by distributions from power plants. Let me explain some of the main movements. We received $327,000,000 in distributions from power plants, invested net $119,000,000 in growth projects and paid $293,000,000 of interest and $582,000,000 in debt repayments. Additionally, we increased the RCF capacity by $50,000,000 to $230,000,000 during the quarter, and it is currently undrawn. We continue to strengthen our capital structure.

Net corporate debt increased to $600,000,000 from $5,200,000,000 in the first quarter. The increase is mainly driven by the change in cash, while gross corporate debt was reduced by 600,000,000 including a $300,000,000 repayment and favorable FX movements. The cash position and the net interest bearing debt will vary over time dependent on cash movements. On project level, the net debt increased by $200,000,000 to $13,600,000,000 Project debt in operation was reduced by $600,000,000 and we drew $800,000,000 on new debt for projects under construction. Now look at the progress on deleveraging.

In Q3 last year, we set a clear strategy to rotate assets and reduce corporate debt, targeting to strengthen our capital structure towards 2027. I’m pleased with our progress on reducing corporate debt. Step by step, we are making repayments while ensuring we have strong liquidity position and headroom to advance growth initiatives. During the quarter, we repaid $300,000,000 of vendor debt to Nordflend, while foreign exchange movements also reduced the gross corporate debt by another $300,000,000 We repaid $85,000,000 remaining under one of the term loans after reporting date, bringing our current corporate debt down to $6,800,000,000 This happened after the quarter and also affects our liquidity position. We have now reduced the corporate debt by 26% since the strategy update in the third quarter last year.

These reductions reflect our continued commitment to capital efficiency and balance sheet strength, and they position us well to finance growth without increasing corporate leverage. Let me share the outlook for 2025. For the full year, we estimate power production between four thousand and four thousand three hundred gigawatt hours, slightly reduced from last quarter, mainly due to curtailments in Brazil and Ukraine. It is worth mentioning that the impact on EBITDA is marginal as majority of the curtailments are refundable. We keep our estimated full year 2025 EBITDA unchanged with a range of 4.15 to $4.45 While FX has had a positive effect on our corporate debt, it also affects our EBITDA negatively.

This effect is, however, offset by over performance in the quarter, and we retain our full year 2025 EBITDA estimate. For the third quarter, we expect a total power production between eleven hundred and twelve hundred gigawatt hours and EBITDA in The Philippines between $280,000,000 and $380,000,000 based on normal hydrology and strong contributions from ancillary services. In our D and C segment, we currently have a remaining contract value of $6,000,000,000 and gross margin estimate of 10% to 12% on average across the portfolio of projects under construction. For Corporate, we expect a full year EBITDA of $115,000,000 to $125,000,000 negative, in line with previous estimate. These estimates reflect strong base of operating assets, high construction activity and a healthy cost control, a good start of the year position us well for 2025 targets.

And now I welcome you back, Thadde, to provide the summary of the key points.

Thierry, Primary Presenter/Executive, Skatek: Thank you, Ans Jacob. To summarize, this has been a very strong quarter for Skatek. Firstly, we have delivered solid financial results with significant year on year growth in both revenues and EBITDA. And this is driven by strong power generation, strong results in The Philippines and also increased activity across our D and C portfolio. Second, we are executing at scale with two gigawatts under construction and more than three gigawatts in backlog.

The near term growth is set to substantially increase our operating portfolio over the next two to three years. And finally, as Hans Jakob also pointed out, we are making solid progress on our capital structure. Through divestments and refinancing, we’ve reduced corporate debt, extended our maturity profiles and also strengthened our financial flexibility significantly over last year. So all of this reinforces the robustness of our platform and our strategy of self funded profitable growth. And with that, we can move to Q and A.

Moderator, Skatek: Thank you, Tayo. Yes, we will start with questions here in the room, and then we will take questions from our online listeners. So just raise your hand, and Bravi will bring you the microphone. Any questions from the audience here?

Anders, Analyst/Questioner: Thank you. Can you give us an update on your asset sale progress or portfolio or efforts or yes?

Thierry, Primary Presenter/Executive, Skatek: Yes. We as you know, we have already recognized 2,600,000,000.0 in proceeds from asset sales since we set out with our target to achieve NOK 4,000,000,000 in proceeds in the period through 2027. And we have currently a number of processes ongoing, but obviously, we will wait with saying something specific until contracts are signed.

Anders, Analyst/Questioner: Thank you. I also have a question on The Philippines. Because you’re providing guidance on a quarterly basis on The Philippines on EBITDA contribution for the upcoming quarter. And you have, at least during the first half, beaten that guidance very significantly, both in Q1 and Q2. So I was wondering, it that difficult to have visibility on the EBITDA contribution in The Philippines for you as well?

Is it that difficult?

Thierry, Primary Presenter/Executive, Skatek: I think what has surprised us positively, and you can recognize that, is the earnings potential of the battery systems that we have in The Philippines. I mean, at the end, the battery systems are I mean, currently, they are 26 megawatts. And so it’s relatively limited in sort of in relation to what we have on the hydropower side, but still earnings potential with good prices in the resource market has been a positive surprise also to us. So that’s and that is obviously something that we will take into consideration when we provide guidance and outlook and estimates going forward.

Anders, Analyst/Questioner: And a final question for me. Can you with that in mind, what kind of payback times are you do you have for the battery investments when they are performing as well as they’re doing in The Philippines?

Thierry, Primary Presenter/Executive, Skatek: I’m not going to give you a number of years or months, but it’s short.

Anders, Analyst/Questioner: It took you weeks or

Moderator, Skatek: Thank you, Anders. Any more questions from the audience here? No? Then we will move over to the questions, the online questions. We have one question from Jurgen Lande, Danske Bank.

Good morning. Related to the curtailments in Ukraine and Brazil, can you provide some more color on why this has emerged now? And is this a one off for the 2025 or a more persistent feature going forward?

Thierry, Primary Presenter/Executive, Skatek: Yes. As you will have seen from the guidance, we are keeping the financial outlook intact, and we are reducing the gigawatt hours outlook related to the curtailment situation. And this is due to the fact that the curtailment situation is not new, but we see that it is probably continuing longer than what we had expected. But also, as Hans Jakob said, this is curtailment that we are mostly compensated for.

Moderator, Skatek: One question from Sindre, after start, related to Grootfontein. You already mentioned it, Taye, but it’s about when do we expect COD for Grootfontein?

Thierry, Primary Presenter/Executive, Skatek: Yes. As we indicated, we are expecting COD within the next few weeks. Previously, we have indicated that it will come in first half. It’s a bit delayed relative to that. The delays are not due to the poor performance on our side.

Moderator, Skatek: We have one more question about asset sales. I think we have been through that. Then one from two questions from Vegard Nygard. Given that Skatec has a significant pipeline and several large projects in Egypt, how do you assess the geographic concentration risk? Is there a point where you would set a limit on how much exposure you want to have in a country?

Thierry, Primary Presenter/Executive, Skatek: Do you want to take it?

Hans Jakob, Financial Executive, Skatek: Yes, I can take it. First of all, I’m amazed by this video. I think it’s fantastic to see the industrial progress we are making in this country. I think we can be proud about the legacy around Ben Van and being a significant operator with a high level of confidence in the country. And we see, as Thadde also alluded to, new opportunities lately, 900 megawatt wind added to our pipeline.

Is this a problem? If it is, it’s a luxury problem. We will look closely at ownership stakes in these projects. And of course, we have approached divestments or reducing ownership stakes in other geographies. And I think it’s better to talk about real transactions, as Thadde said, than speculating.

But I think we can be very pleased with the development in Egypt overall. And just to cure the curiosity in the third quarter, we will also give a strategy update including covering Egypt.

Moderator, Skatek: Second question from Egerd. Could you give an update on the farm down process for Obelisk project? Will there be a separate market announcement once an agreement is reached?

Thierry, Primary Presenter/Executive, Skatek: Yes. The farm down of the Oblis project is progressing well. And yes, there will be announcements when we sign contracts on that.

Hans Jakob, Financial Executive, Skatek: Advanced discussions ongoing.

Moderator, Skatek: Thank you. We have one from Andreas Niveniorn, Nordea. Another one on divestments. I’m not sure if you want to give some more color, but could you please provide some color on the remaining investments you are targeting? Are you aiming to conclude the last divestment in 2025?

Thierry, Primary Presenter/Executive, Skatek: Yes. I think as we just said, we will not give specific updates on individual investments or exactly when they’re going to happen. You will see the announcements and our target of 4,000,000,000 by the 2027 stands firm.

Moderator, Skatek: One question from Anis Skaja from ODDO BH. Could you give us an update on CapEx levels in solar and storage? Are you seeing increase in model prices after the very strong decrease?

Thierry, Primary Presenter/Executive, Skatek: There has been on module prices, there has been some fluctuations, but there are no significant changes we’ve seen over the last three to six months. And I think we gave an update on what we had seen over the last couple of years, a couple of quarters ago, where we’ve seen significant reductions on the module prices. On battery prices, we continue to see price decreases on batteries.

Moderator, Skatek: One more question. Thomas Ness from Sparbanken. Should we expect quick rotation of assets built in noncore markets, such as the Botswana project and the Romania project? A lot on asset rotation today.

Thierry, Primary Presenter/Executive, Skatek: Yes. This will depend on a number of different elements. I think, first of all, some of the smaller markets today can grow into larger markets, and then it might make sense to build a larger portfolio. So we will assess every asset individually. But clearly, markets where we will not continue to see a significant growth potential going forward.

In those markets over time, we will look to divest the assets.

Moderator, Skatek: We have so far no more questions. So we maybe just wait. Sometimes there is a time lag, but otherwise we will just end the presentation now. Okay. Yes.

Thank Thank you very very thank you.

Thierry, Primary Presenter/Executive, Skatek: Thank you. Thank

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