Results

Results for HY 2022

Contribution

The production in the first half of 2022 was mainly composed of activities for Hollandse Kust Zuid, Dogger Bank A, Hollandse Kust Noord and Dogger Bank B. Total production for the first half of 2022 ended at 89 Kton (88 Kton in HY1 2021). We manufactured 74 monopiles and 55 transition pieces in the first half of 2022, compared to 102 and 3 respectively in 2021. Realised contribution, adjusted for contribution from marshalling and other, of 612 per ton was in line with the first half of 2021 when it was 614 per ton. Results in the first half of 2022 saw lower margins on subcontracted work being offset by incremental marshalling and logistics related work.

Steel is a pass-through cost for Sif. Therefore, contribution, compared to for example revenues, is a better performance indicator for comparison year-on-year.

Gross profit, (adjusted) EBITDA, net profit

Gross profit per ton was affected by higher energy costs, increased sickness-leave and lower efficiency as a consequence of the tight labour market and challenge to find experienced workforce. EBITDA was reported at 19.1 million (HY 2021: 20.2 million). Adjusted with 2 million for non-recurring expenses relating to the strategic plans to expand manufacturing facilities, this resulted in adjusted EBITDA of 21.1 million (237 per ton) compared to 20.6 million (234 per ton) for the first half of 2021. Depreciation in the first half of 2022 was higher compared to the same period in 2021 due to depreciation of investments for marshalling activities and of leased transportation equipment. Net profit consequently was 2.5 million lower compared to the same period in 2021.

At the end of the first half of 2022 Sif employed 220 FTE temporary workers (194 FTE end of June 2021) and 368 FTE permanent staff (388 FTE end of June 2021). High absence of permanent staff due to sickness and difficulties to replace departing staff, resulted in more temporary workers in the first half of 2022.

Net debt and solvency

On balance sheet date, Sif had no external debt (excluding lease liabilities). This is in line with 30 June 2021. The cash position amounted to 57.6 million (61.7 million at the end of the first half of 2021). The leverage ratio at the end of June 2022 was 0. For covenant purposes, net debt is stated on an IFRS16 excluded basis. The leverage covenant as of end of 2021 is fixed at 2.5 until the current credit facility reaches maturity on March 31, 2024. Solvency covenant going forward is >35%. With 51% solvency at the end of June 2022, Sif complies with its covenants.

Operating working capital

The demand for operating working capital defined as current operating assets minus current operating liabilities was -/- 42.0 million (-/- 56.9 million at the end of June 2021).

Current operating assets include inventories, contract assets, trade receivables and prepayments. Current operating liabilities include trade payables and contract liabilities.

Wind park Maasvlakte 2 at Rotterdam

Order book tons and Outlook

Todays order book for the remainder of 2022 includes an estimated 2022 full year production of 174 Kton. This implies an expected production of 85 Kton for the second half of 2022 where we will mainly manufacture for the Dogger Bank B project. We have secured sourcing of steel and energy as far as we could. A new framework agreement with steel supplier Dillinger Htte is being negotiated and certification of steel from alternative suppliers is in progress for a back-up scenario against the background of uncertain and volatile steel markets. We expect a level of adjusted EBITDA for the full year 2022 that is slightly higher compared to adjusted EBITDA of 39.4 million in 2021.

The order book for 2023 and beyond has 263 Kton contracted work and 19 Kton under exclusive negotiations. This does not yet include 400 Kton production from launching customers with whom we are in exclusive negotiations and which are subject to timely realization of the expansion plan.

The number of tenders in process for monopiles with diameters larger than 9 meters is massive which underpins the overheated market demand. The upscaled ambitions for production of sustainable energy by various European countries, the USA and Asia, imply the total offshore wind supply chain will face high growth rates for the years to come with the biggest challenge to manage the fast growth from a human resources, suppliers and investment perspective. A clear and long term transparent governmental tender pipeline and tender award process is key to assure political ambitions are met to some reasonable extent especially for the period till 2030. Despite all investment initiatives from existing suppliers and new entrants the risk of undersupply of foundations for offshore wind farms remains realistic.

artist impression of expanded facilities