Vow ASA - Q3 trading update: inflation and increased cost in supply
chain result in loss in the quarter
Vow ASA (“Vow” or the “company”) has reassessed
cost and margin in its portfolio of projects. Inflation and higher
costs in the supply chain for some projects in the Maritime
Solutions segment has accumulated to NOK 35 million which will be
charged to the company’s accounts in the third quarter 2023.
Including these one-off effects, the EBITDA result in the quarter
was negative NOK 15.5 million. Revenues were NOK 254.6 million, up
from NOK 194 million in the third quarter 2022, an increase of 31
percent.
Vow continues to steadily grow its business. Revenues in the
first nine months this year was NOK 703.5 million, up 18.5 percent
from NOK 593.6 million in the same period last year. The growth is
a result of increased demand for the company’s technology from
customers across a wide range of industries.
The relevance and attractiveness of its solutions is clearly
visible in the company’s order backlog, which was NOK 1.1 billion
at the end of September 2023 and all of Vow’s main markets remain
strong. In addition to the firm backlog, shipowners have placed
options on the newbuild series being equipped with Scanship systems
amounting to NOK 932 million in likely future revenues related to
the Maritime Solutions segment.
“We have for a long time been very busy delivering large
projects, and we are of course proud that we have been able to
deliver to our customers on time. But we are also deeply regretful
for having to inform about such significant one-time effects on our
margins,” said Henrik Badin, CEO of Vow ASA.
“In the same period, we have strengthened the capacity and
quality of the organisation. We have finalised the implementation
of a new ERP system which is giving us better visibility and
control. I am particularly grateful for having Tina Tønnessen
onboard as new Chief Financial Officer since May this year.
Together with her team, she has been instrumental in this work,”
Henrik Badin added.
Positive outlook
The review of the project portfolio confirmed that all projects
are progressing well. Some contracts with subcontractors have
already been renegotiated to better terms, and that the quality of
the company’s order backlog is good. Other margin improvement
initiatives have also been identified, and are currently in the
process of being implemented.
Revenues for the full year 2023 is forecasted to exceed NOK 900
million, and the EBITDA margin for the full year is estimated at
2-4 percent, including the negative effect in the third
quarter.
Vow’s current backlog holds potential for significant cash flow
going forward owing to the strong demand from customers in multiple
industries, and the company is currently actively bidding and
positioning for major contracts in cruise, and circular solutions
for end-of-life tires, sewage sludge, metallurgy, and renewable
energy. Securing new orders while at the same time maintaining
healthy margins will be imperative going forward.
The company’s financial position remains strong, with available
liquidity for the group amounting to NOK 72 million at the end of
September 2023.
Vow Group (Amounts in NOK million) |
Q3 23 |
Q3 22 |
YTD 23 |
YTD 22 |
2022 |
Revenues |
254.6 |
193.7 |
703.5 |
593.6 |
782.8 |
EBITDA before
non-recurring items |
-15.5 |
25.1 |
14.1 |
78.4 |
92.2 |
EBITDA before non-recurring items margin |
-6.1% |
12.9% |
2.0% |
13.2% |
11.8% |
Order backlog |
1 095 |
1 326 |
1 095 |
1 326 |
1 190 |
Business segment
information
Industrial Solutions (Amounts in NOK million) |
Q3 23 |
Q3 22 |
YTD 23 |
YTD 22 |
2022 |
Revenues |
110.7 |
78.9 |
258.4 |
262.4 |
304.3 |
EBITDA before
non-recurring items |
2.7 |
11.9 |
2.2 |
36.7 |
37.7 |
EBITDA before non-recurring items margin |
2.4% |
15.1% |
0.9% |
14.0% |
12.4% |
Order backlog |
535 |
488 |
535 |
488 |
441 |
As expected, Industrial Solutions secured several key contracts
and work orders in the third quarter. The Rhode Island project is
well underway and delivered positive gross margins in the third
quarter. Further, an expansion of the Follum project was awarded by
Vow Green Metals. As a result, revenue has increased in the
quarter. The margin has started to improve compared to the previous
quarter, which was impacted by capacity costs, and is forecast to
continue to improve.
Demand for Vow circular and low carbon technologies and
solutions is strong, as evidenced for instance by the
front-end-engineering design (FEED) agreement for a major
international pyrolysis project announced in September. Vow has
also seen strong interest and several contracts awarded by heat
intensive industry for CHE technology for electrification, heat
exchange and heat recovery solutions.
Maritime Solutions (Amounts in NOK million) |
Q3 23 |
Q3 22 |
YTD 23 |
YTD 22 |
2022 |
Revenues |
94.3 |
82.4 |
308.0 |
249.6 |
358.6 |
EBITDA |
-15.1 |
18.1 |
28.5 |
58.4 |
76.9 |
EBITDA margin |
-16.0% |
22.0% |
9.2% |
23.4% |
21.4% |
Order backlog |
560 |
839 |
560 |
839 |
749 |
Maritime Solutions continued to deliver a strong topline, driven
by high activity and completion of projects. The EBITDA result was
heavily impacted by the one-time effect mentioned above. For
full-year 2023, the EBITDA margin is expected to be slightly above
the margin year-to-date.
Reports and remarks by the large cruise operators indicate that
this industry has recovered fully from the 2020-21 shutdown, and
that the operators are contemplating investments in fleet renewals
and expansion to meet expected increase in number of passengers.
Vow’s current backlog in this segment includes confirmed contracts
to 2029, and tendering activity is high.
Aftersales (Amounts in NOK million) |
Q3 23 |
Q3 22 |
YTD 23 |
YTD 22 |
2022 |
Revenues |
49.6 |
32.4 |
136.6 |
81.6 |
119.9 |
EBITDA |
5.7 |
3.6 |
18.7 |
8.0 |
14.0 |
EBITDA margin |
11.4% |
11.2% |
13.7% |
9.9% |
11.7% |
Activity in the Aftersales business is closely correlated with
the number of cruise ships in operation. Revenues and EBITDA are
expected to remain steady through the remainder of the year.
Note: More information about status, markets and outlook will be
presented when Vow welcomes analysts and investors to a Capital
Market Update in November. Details about time and venue will be
shared shortly. The session will also be streamed and available
online.
For more information, please contact:
Henrik Badin, CEO, Vow ASATel: +47 90 78 98 25Email:
henrik.badin@vowasa.com
Tina Tønnessen, CFO, Vow ASATel: +47 406 39 556Email:
tina.tonnessen@vowasa.com
About Vow
Vow and its subsidiaries Scanship, C.H. Evensen and Etia are
passionate about preventing pollution. The company’s world leading
solutions convert biomass and waste into valuable resources and
generate clean energy for a wide range of industries.
Advanced technologies and solutions from Vow enable industry
decarbonisation and material recycling. Biomass, sewage sludge,
plastic waste and end-of-life tyres can be converted into clean
energy, low carbon fuels and renewable carbon that replace natural
gas, petroleum products and fossil carbon. The solutions are
scalable, standardised, patented, and thoroughly documented, and
the company’s capability to deliver is well proven.
The company is a cruise market leader in wastewater purification
and valorisation of waste. It also has strong niche positions in
food safety and robotics, and in heat-intensive industries with a
strong decarbonising agenda.
Located in Oslo, the parent company Vow ASA is listed on the
Oslo Stock Exchange (ticker VOW).
The information is such that Vow ASA is required to disclose in
accordance with the EU Market Abuse Regulation. This information is
subject of the disclosure requirements pursuant to section 5-12 of
the Norwegian Securities Trading Act.
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