Encavis: Drop in sales and earnings causes wind farm operator to reduce annual targets

Encavis AG has reduced its expectations for the full year after failing to meet earnings targets in the first half of the year.

The SDAX-listed company plans to generate sales of EUR 350 to 400 million ($370 to $424 million) this year, down from its previous forecast of EUR 380 to 430 million ($403 to $456 million) due to rising costs

The Hamburg-based operator of wind and solar farms also lowered its earnings before interest, taxes, depreciation and amortization (EBITDA) to EUR 210 million-240 million ($222 million to $254 million), down from EUR 250 million to 290 million ($265 million to $308 million).

In the first six months of 2023, Encavis saw a decline in revenue of 18% to EUR 170 million ($180 million), while EBITDA fell by 38% to EUR 87 million ($92 million). The company blamed the decline on "a challenging market environment characterized by high inflation, rising interest rates and geopolitical uncertainties."

Encavis management acknowledged the "significant impact" of soaring energy prices.

CEO Christoph Husmann said in a statement that "the war in Ukraine and its implications on the global economy and the energy sector in particular had a significant impact on our business."

Husmann added that the "sharp increase in energy prices led to a significant decline in our electricity sales revenue, while at the same time procurement costs rose." As a result of the drop in electricity sales revenue, Encavis has "adjusted its expectations for the financial year 2023."

The company said it is "exploring various measures to mitigate the impact of the current challenging market situation" and will remain focused on "disciplined cost management and the further optimization of our operations."

Encavis is a leading independent power producer (IPP) with a portfolio of more than 2.8 gigawatt (GW) of installed renewable energy capacity in 12 countries.