Arendals Fossekompani (AFK) Q2 2024 earnings summary

Executive summary

• Group revenue rose 20% year-over-year to NOK 1,682 million, driven by Volue, NSSLGlobal, and AFK Property, but profitability declined due to major impairments and lower electricity prices.

• Operating profit fell to NOK -660 million from NOK 148 million, mainly due to Commeo and Ampwell impairments.

• Portfolio optimization included discontinuing Commeo, selling Vergia, and a planned Volue delisting, focusing on less capital-intensive businesses.

• Announced voluntary cash offer to acquire and delist Volue at a 51% premium to last traded price.

• Quarterly dividend of NOK 1.00 per share to be paid in September.

Financial highlights

• Q2 2024 revenue: NOK 1,682 million (up 20% YoY); operating profit: NOK -660 million (down from NOK 148 million); net loss: NOK 807 million.

• Operating margin: -39% (Q2 2023: 11%); equity ratio: 34% (Q2 2023: 45%).

• Operating cash flow: NOK -90 million (improved from NOK -277 million in Q2 2023).

• Total available liquidity at parent level: NOK 1,960 million as of June 30, 2024.

• Share price at quarter-end: NOK 153.0, down 16% year-over-year; market cap NOK 8.4 billion.

Outlook and guidance

• 2024 revenue expected to exceed 2023, but operating profit to be lower due to impairments and lower hydropower profits.

• Volue anticipates higher revenue and operating profit in 2024; long-term organic growth target of 15% and increasing adjusted EBITDA margin.

• Tekna and ENRX expect stable or flat revenues with improved operating profit; NSSLGlobal expects higher revenue, stable profit.

• AFK Vannkraft expects lower revenue and profit in 2024 due to lower power prices; AFK Property expects higher revenue and profit as Bryggebyen project progresses.

• Focus on optimizing existing portfolio, limited new investments at AFK level in the near term.