2G Energy (DE:2GBG) continues to diversify its activities by developing export markets and service revenues, so that it is less exposed to changes in the regulatory environment for renewables and CHP in individual markets. Strong domestic demand for biogas modules with a flexible output for use, balancing renewable energy sources that are inherently variable supported 16% revenue growth during H118. This improvement enabled 2G to post a positive first-half result, the first since 2012.
Strong growth in service revenues de-risks business
Group sales increased by 16% y-o-y to €84.1m, although the headline number was distorted by €8.4m exceptionals. Stripping this out, sales grew by 5%. Growth was driven by a strong increase in sales of biogas modules in Germany and in service revenues. Despite the surge in domestic product sales, exports constituted 46% of all CHP sales and 24% of service sales, showing that the company is becoming more resilient to changes in the regulatory environment in individual markets. It was also pleasing to note that management’s initiative to improve monetisation of services was successful, as the development of service revenues gives additional protection from potential downturns in demand for CHP equipment and a mechanism for removing some of the seasonality in sales. Service revenues grew by 21% year-on-year to 46% of the total. EBIT, which was not distorted by the exceptional item, moved from a loss of €0.5m in H117 to a €1.1m profit.
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