2G Energy AG — Earnings Release 2013

Nov 25, 2013

News Details

Corporate | 25 November 2013 07:30

2G Energy AG: Q3 2013 results in line with expectations; dynamic start to FY 2014 expected

2G Energy AG / Key word(s): Quarter Results/Market Report

25.11.2013 / 07:30

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Corporate News

2G Energy AG: Q3 2013 results in line with expectations; dynamic start to FY 2014 expected

– 9M 2013 revenue: EUR 65.8 million (9M 2012: EUR 68.3 million)

– 9M 2013 total operating revenue: EUR 81.6 million (9M 2012: EUR 80.9 million)

– 9M 2013 EBIT: EUR 0.3 million (9M 2012: EUR 4.0 million)

– Order book position grows to around EUR 80 million

– FY 2013 forecast confirmed: revenue of EUR 120 million to EUR 140 million, EBIT profit of EUR 3 million to EUR 5 million

Heek, November 25, 2013 – 2G Energy AG (ISIN DE000A0HL8N9), one of the leading German manufacturers of combined heat and power (CHP) plants, generated EUR 65.8 million of consolidated revenue during the first nine months (January 1 to September 30) of the 2013 financial year (9M 2012: EUR 68.3 million). Compared with the end of the first half of 2013, revenue of EUR 41.9 million, as expected, reflected a marked increase of 57%. Total operating revenue also grew during the third quarter, by 69% to EUR 81.6 million (9M 2012: EUR 80.9 million). The base of projects that have already been started increased more than 1.5 fold during the third quarter to reach EUR 15.8 million (June 30, 2013: EUR 6.4 million), underscoring the continued strongly seasonally-impacted capacity utilization at the financial year-end. The order book position for CHP systems stood at around EUR 80 million at the end of September 2013 (H1 2013: approximately EUR 60 million), with an around 27% export share. Approximately half of these orders will be shipped and accepted by customers, and thereby become recognized as sales, before the end of 2013. Service and after-sales revenue must also be taken into account. 2G will make a strong start to the 2014 financial year with an order book position worth around EUR 40 million (corresponding to 150 2G modules). Of these orders, approximately EUR 30 million comprises partially-completed work, and around EUR 10 million is composed of order overhangs. It is expected that further new orders will be received by the end of 2013.

2G reports EUR 0.3 million of EBIT as of September 30, 2013 (June 30, 2013 EUR -2.1 million). Overall, higher reserve costs for capacity reasons and extraordinary valuation-related items, as well as unexpectedly weak export demand – as communicated when the H1 report was published – burdened profitability during the first nine months of the year (9M 2012: EBIT of EUR 4.0 million). Consolidated net income after tax for the first nine months of 2013 stood at EUR 0.4 million (H1 2013: EUR -1.6 million). In line with the improved profitability during the third quarter, liquid assets rose from EUR 7.4 million as of the half-year stage to EUR 8.9 million as of September 30, 2013.

The Management Board confirms its FY 2013 forecast (which it adjusted at the end of September) of consolidated revenue of between EUR 120 million and EUR 140 million, and a profit before interest and tax (EBIT) of between EUR 3 million and EUR 5 million. Business in Germany, especially for natural gas-driven CHP systems, continues to grow, as expected, and a demand recovery on foreign markets is identifiable during the second half of 2013. The Management Board assumes that the Group will return to its growth path during the 2014 financial year.

Demand for CHP systems to provide independent and efficient electricity and heat supplies is rising. Customer groups such as municipal utilities, energy supply companies and industrial operations are increasingly opting for the benefits offered by independent, cost-efficient and environmentally-compatible energy supplies. CHP systems are the key to a successful energy revolution because they represent supply security, the sparing utilization of resources and predictable energy costs. Their successful development in Germany provides a blueprint for many countries in Europe and overseas.

More lively demand from export markets; Germany remains strong in natural gas market; capacity expansions drive biogas market recovery

2G has experienced more lively demand and a good new order intake trend (currently together 50 systems on order) over the past months, especially from the United Kingdom, Italy and the USA. From Italy (18 systems), 2G is again experiencing brisk demand after concluding a registration and contract award procedure. 2G’s product offering includes an agenitor 408 with 300 kW electric output, which is especially adapted to the Italian biogas market’s needs. The 300 kW class is very viable for plant operators as a result of statutory changes. The market for natural gas-driven CHP’s is becoming increasingly attractive for investors thanks to a high spark spread.

In the USA (18 systems; 50/50 split between biogas and natural gas projects), the start of economic recovery is being accompanied by a demand revival, and the order books of US sales and service unit 2G Cenergy are filling up. These orders relate mainly to larger projects with average system output of around 500 kW. In Europe, the average system sold by 2G has approximately 250 kW output. Further major orders for modular biogas-driven CHPs in the waste and materials recycling area are in the final project phase. 2G Cenergy is expanding its sales and service network on a targeted basis, including through cooperation ventures with resellers, engineering offices and through industry-specific networks, as well as through working with associations. The company plans as a next step to create sales bureaus on the West and East coasts, as well as in the Midwest. Following its own market survey, 2G assumes that it commands an approximately one-third share of the US market for biogas-driven CHPs (based on the last 24 months’ new biogas projects). As far as the USA is concerned, 2G expects continuous organic growth and sales revenue growth in line with overall CHP market growth. A subsidy backdrop for CHP systems similar to that in Europe – although especially in Germany as a result of the German Renewable Energies Act (EEG), which has fed through to boom-type growth – is not expected in the USA. 2G is currently having its CHP systems for the US market undergo UL certification (industry norm). UL certification makes approvals procedures for more rapid grid connection easier. 2G is assuming that it will receive such certification by the end of the first quarter of 2014.

In the United Kingdom (14 systems for biogas operation), an attractive subsidy backdrop for biogas plants continues to exist, allowing 2G’s CHPs to be sold directly through its subsidiary and through German biogas system-builders as resellers. 2G is focusing on the Europe and America regions. These core markets exhibit clear growth potentials until 2020 – as also backed up by independent studies – and attractive risk-opportunity profiles.

Growth on the German market, especially for natural gas-driven CHP’s, remains good. Orders came particularly from industrial customers, municipal utilities, major energy suppliers and energy contractors (IPPs, Independent Power Producers). Municipal utilities, as special-purpose operations, are investing in decentralized, efficient and cost-favorable energy supplies for cities, communities and their citizens. Major utility companies are beginning to convert their power plant business models to smaller, decentralized, flexible and manageable CHP technology. This is also the precondition for utility groups to participate in the creation of infrastructure for so-called virtual power plants (VPPs). Electricity generated from wind and solar is to be networked with electricity derived from CHP’s within such VVPs in the future, as well as with – temporarily and on a continued basis – fossil fuel-fired power plants, in order to create constant electricity supplies via control centers. CHP plants play a key role here, as only they can act efficiently as offsetting and stabilizing factors on a minute by minute basis. Industry and the housing sector are also increasingly discovering the economic benefits of independent electricity and heating/cooling utilization. 2G has installed CHPs for Merck, Kraft Foods, Metro and Zentis, among others.

In mid-November, 2G presented for the first time its agenitor 408 CHP with 360 kW electric output, at the leading agricultural trade fair, Agritechnica in Hanover. The V8 engine equipped module offers 42.5% electric efficiency. Either natural gas or biogas can be utilized as fuels. Interest from both German and foreign specialists at 2G’s 140 m² stand was extremely lively across the entire product range. For the first time, the company also concluded CHP purchase agreements directly at the trade fair.

Legal basis clarified for repowering biogas plants in Germany

With a ruling to define the term ‘plant’ in the case of biogas systems, the German Federal High Court at the end of October created the preconditions for repowering plants in Germany. Legal security had previously been lacking as to which payments under the German Renewable Energies Act (EEG) were to be attributed to a biogas-driven CHP following a general overhaul, or replacement investment and re-dimensioning – for instance after attaining a lifetime output of around 60,000 operating hours. The legislator had failed to create a regulation that determines how the higher electricity volume of a new CHP compared with an old system can be compensated. In its ruling, the Federal High Court speaks of an ‘expanded term’ for ‘plant’. In other words, the EEG payment rates are also applicable for replacement investment and re-dimensioning measures for the year when the original biogas system went into operation. 2G is assuming that, over the coming quarters, biogas system operators will make greater investments in repowering their plants from the initial boom years of 2004 to 2006.

2G Energy AG company profile

2G Energy AG is one of the internationally leading providers of CHPs for decentralized combined heat and electricity supplies. 2G’s product portfolio offers electrical output between 2G kW and 2,000 kW for operation with natural gas, biogas or biomethane. 2G has successfully installed more than 4,000 modules in 25 countries to date. Its customer base spans agricultural and industrial operations, local authorities, the housing sector and large energy utilities. The high level of satisfaction among the company’s customers is closely connected with its dense service network and the high technical quality and performance of 2G power plants. Through combined heat and power generation, such plants achieve total efficiencies of between 85% and far higher than 90%. 2G is consistently expanding its technology leadership through continuous research and development work. Along with the construction and manufacturing of CHP systems, the company, which is based in Germany’s Münsterland region, offers comprehensive solutions ranging from planning and installation through to service and maintenance.

In the context of Germany’s new energy policy, CHPs within smart grids – so-called virtual power plants – are becoming rapidly important due to their predictable availability. 2G Energy (ISIN DE000A0HL8N9) is listed in the Entry Standard of Deutsche Börse AG. The share capital amounts to EUR 4,430,000, and is split into 4,430,000 shares. As of June 30, 2013, the company’s founders held 56.0% of the shares, with the free float amounting to 44.0%. In the 2012 financial year (January 1 to December 31), 2G Energy generated EUR 146.5 million of revenue, EUR 16.6 million of earnings before interest and tax (EBIT), and EUR 11.3 million of net income. The company currently employs 486 staff.

Forthcoming dates in 2013

December 10, 2013 Prior Börse Capital Market Conference, Frankfurt-Egelsbach

Further information: www.2-g.de

IR contact

2G EnergyAG

Benzstr. 3, 48619 Heek

Telephone: +49 (0) 2568 93 47-2795

Fax: +49 (0) 2568 93 47-15

E-mail: ir@2-g.de

Internet: www.2-g.de

End of Corporate News

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Language:	English
Company:	2G Energy AG
	Benzstr. 3
	48619 Heek
	Germany
Phone:	+49 (0)2568-9347-0
Fax:	+49 (0)2568-9347-15
E-mail:	service@2-g.de
Internet:	www.2-g.de
ISIN:	DE000A0HL8N9
WKN:	A0HL8N
Listed:	Freiverkehr in Berlin, Düsseldorf, Stuttgart; Frankfurt in Open Market (Entry Standard)

End of News	DGAP News-Service

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