Strong revenue growth for Topsoe despite challenging market environment
In the first half of 2022, Topsoe’s revenue increased by 10 percent to 3.21 billion Danish kroner (USD$430 million) versus 2.91 billion kroner in 2021. When adjusted for currency changes, mainly U.S. dollar driven, Topsoe’s revenue increased by 5 percent. This was driven by a strong demand for Topsoe’s energy-transition solutions, especially in its renewable business.
As the invasion of Ukraine was initiated earlier this year, Topsoe stopped doing business in Russia, which negatively impacted its revenue and growth. Growth excluding Russia was 17 percent and 11 percent in fixed currencies.
“The first half year has been affected by geopolitical tensions and uncertainty stemming from the war in Ukraine,” said Roeland Baan, Topsoe CEO. “Despite this, we have been able to deliver 11 percent growth outside Russia. We continue to experience a strong demand for our energy-transition solutions and see solid growth in our renewable business.”
Revenue growth was supported by strong order intake, which resulted in the backlog increasing by 21 percent to 4.38 billion kroner.
Topsoe is strongly positioned to lead the transition to a greener future with an 80 percent win rate of contracts globally to turn waste and biomass into low-carbon renewable diesel for trucks and cars and with an increased interest in solutions for sustainable aviation fuels (SAF). It continues to experience significant strategic wins within renewable fuels, especially in the U.S. market.
“Momentum to speed up the energy transition has never been bigger, as it serves a dual purpose—to accelerate the development and industrialization of sustainable solutions to support the energy transition, while also increasing our energy independency and energy security,” Baan added.
Earnings before interest and taxes (EBIT), before special items*, declined by 26 percent to 387 million kroner. One of the main reasons for the decline was margins being pressured by less favorable product mix, supply-chain challenges as well as a continued pressure from raw material, energy and logistics costs (i.e., inflationary pressures on margins). The situation is being addressed through price adjustments, which are expected to have a positive impact in the second half of 2022.
Another reason was operating expenditure. Topsoe remains committed to the green transition and continues to upscale the Power-to-X organization to deliver on its ambitions. As part of developing new solutions, it has invested 9.2 percent of revenue in R&D, which is in line with last year.
Finally, the decision to discontinue business in Russia impacts EBIT negatively.
Supply-chain challenges, business-continuity initiatives Topsoe expects that the high level of uncertainty stemming from geopolitical tensions will continue.
As many other companies, Topsoe is expected to face implications of the reduced flow of natural gas from Russia and is preparing for alternative sources with which natural gas can be replaced, for example liquified natural gas (LNG) at its production facility in Denmark.
Enforced push for green transition backs Topsoe’s strategy As a result of the war in Ukraine, a consensus to safeguard energy independency from Russia has been established throughout Europe with concrete initiatives, such as REPowerEU, accelerating the development towards new energy sources such as green hydrogen, green ammonia, biofuel and synthetic fuels.
Political momentum, including the U.S.’s Inflation Reduction Act, backs Topsoe’s strategy, underlining the importance of its role in the green transformation.
Topsoe expects that global climate targets, together with speeding up independence from unreliable energy suppliers, can help push forward growth opportunities across the value chain, and that this will positively back its ambition to take the lead in decarbonization solutions.
Setting targets for reducing GHG emissions Topsoe has set clear targets to measure progress. Topsoe’s 2022 mission is to reduce customers’ greenhouse-gas (GHG) emissions by 12 million metric tons. The mission reflects Topsoe’s commitment to the United Nations’ sustainable development goal no. 13 on climate action and Topsoe’s declared ambition to take the lead on decarbonization.
Topsoe is also committed to reducing its own carbon footprint and has set ambitious climate targets in line with its commitment to the Science Based Targets initiative. It is Topsoe’s ambition to achieve net-zero GHG emissions in its own operations within this decade.
Major events in the first half of 2022
Jan. 10: Topsoe signs 45-million-euro funding deal with European Investment Bank to drive green-energy transition
Jan. 14: Indaba Renewable Fuels awards contract to Topsoe, which will deliver technology to convert renewable liquids to SAF
April 29: Topsoe announces decision to fully exit Russia and Belarus and closing down its Moscow office
May 9: Topsoe signs joint declaration on ramping up electrolyzer capacity to boost green-hydrogen production in EU
May 18: Roeland Baan, Topsoe CEO, participates in North Sea Summit, where heads of governments from Denmark, Germany, the Netherlands, Belgium, and Ursula von der Leyen, president of the European Commission, agree on increasing offshore wind capacity to 150 gigawatts by 2050
May 23: Topsoe announces its continued commitment to build the world’s largest electrolyzer production facility and reveals location
June 17: Topsoe launches its target of reducing its customers’ GHG emissions by 12 million tons in 2022 alone
Topsoe is headquartered in Denmark, with 2,100 employees serving customers all around the globe.
*For 2022, significant income and costs that cannot be attributed directly to the group's ordinary operating activities have been reclassified to special items. The impact in the first half of 2022 is 40 million kroner relating to the close-down of the Russia office.