Alfen decides to adjust 2024 guidance and reassess mid-term objectives
ALMERE, THE NETHERLANDS – Alfen N.V. (AEX: ALFEN), a specialist in energy solutions for the future, today announces a slower anticipated market for 2024, causing a lowering of its 2024 outlook to €485-520m revenue and mid-single digit adjusted EBITDA margin.
Key points:
A number of large Energy Storage Systems deals originally anticipated to sign in Q2 are being postponed and will likely only contribute to 2025 revenue, causing ESS 2024 revenue to decline by approximately 20% compared to 2023.
Smart Grid Solutions is suffering from supply constraints for its concrete housings, leading to a 2024 expected revenue growth of approximately 5%.
Alfen decides to adjust 2024 revenue guidance from €590-660m to €485-520m and expects EBITDA margin to be mid-single digit as a result oflower expected revenues.
Alfen takes two one-offs totalling €11.1m for a provision and obsolete inventory.
Alfen will use H2 2024 to reassess financial objectives for the medium-term.
Alfen management will host a conference call today from 10:00-11:00 (CET). Registration link can be found on the company’s website in the Investor section under ‘Financial calendar’.
Adverse impacts on revenue guidance
The primary driver of Alfen’s lower revenue guidance is related to Energy Storage Systems (ESS), where a significant number of large deals, that were anticipated to sign in Q2, are being postponed. As previously communicated in the Q1 update, energy storage systems costs are declining more rapidly this year than in prior years*. This has had a slowing effect on customer decision-cycles. In addition, increased lead times to obtain and realize a grid connection in countries such as the Netherlands and Sweden are causing further delays. Q2 order intake is an important period for 2024 revenue, because deals closed after Q2 will primarily contribute to 2025 revenues given the lead times of major components. Alfen expects customer decision-cycles start to shorten once battery prices stabilize as demand for EVs increase in line with battery manufacturer’s expectations, as European and national stimulation programmes build up to their energy transition commitments. Alfen is well positioned to benefit from this with its strong and increasing qualified lead pipeline and continues to be seen as a preferred supplier in the market due its high quality & service offering. Alfen expects that revenue in ESS in 2024 declines with approximately 20%.
The second, relatively smaller impact relates to Smart Grid Solutions (SGS), where resolution of the previously reported moisture issue has led to an unforeseen bottleneck in the supply of the concrete housings for Alfen installations. For our supplier, reinforced concrete housings are more difficult to scale than originally anticipated and their production is constrained by an unavoidable maintenance period over the summer. The ramp-up of Pacto substations is therefore slower than anticipated in Q3. On the demand side, Alfen is observing a continuing strong market momentum in smart grids, with a healthy backlog. The market for grid operator substations is currently supply constrained, hence Alfen expects to continue the growth trajectory in Q4. Alfen expects to grow revenue in SGS in 2024 with approximately 5%.
The third impact relates to EV Charging (EVC), where Battery Electric Vehicle (BEV) sales in Europe are growing, however at a lower pace than expected. While the outlook for 2024 BEV sales was high single digit growth, Alfen observes 2% growth year-to-date until May**. Although there is no direct one-to-one relationship between BEV sales and Alfen’s revenue, this is an important leading indicator to take into account. Due to this temporary, yet noticeable market slowdown, Alfen has taken a more modest outlook for the second half of the year on quarter-on-quarter improvement. Alfen still expects to grow revenue in EVC in 2024 in the range of 5-10%. EV sales are likely to accelerate again in 2025 once affordable models are launched (starting end of 2024, continuing into 2025) and CO2 emission performance standards for cars will become ~15% stricter per 2025. This will lead to more EV sales, as most car manufacturers currently do not meet the 2025 targets***.