The green energy company reported a negative EBITDA of NIS 49 million for January-September, all of which is attributed to the American Cubix, in which it owns 92%. Solgreen announced significant efficiency measures in the US
In February 2021, Solgreen’s share reached a peak of NIS 39.4, which reflects a market value of NIS 1.1 billion, but since then it has fallen by 77% compared to the Tel Aviv-Cleantech index, which lost only about 40% in the same period. Today Solgreen’s market value, which has fallen from the beginning This year by 65%, stands at NIS 265 million.
Solgreen, which is controlled by Generation Capital (56.6%), reported a loss of NIS 35 million in the third quarter – more than double the loss in the corresponding quarter. In the first nine months of the year, the company lost 129 million shekels compared to a loss of only 27 million shekels in January-September 2021. The value of the cash in the company’s possession also dropped at the end of the quarter by 75% compared to the corresponding period to the extent of 68 million shekels.
The decline in the share value comes at a time that appears to be positive for the green energy companies. Since Russia’s invasion of Ukraine last February, wholesale electricity prices in Europe have jumped by more than 100%, and this is due to the significant decrease in the amount of natural gas imported from Russia. The shortage of natural gas in Europe caused energy prices to rise worldwide, as natural gas producers began to liquefy it and export it to Europe, instead of selling in the markets where they operate, so that the price of electricity in the US also rose from 14.14 cents per kWh in September of last year to 16.32 cents a year Then. Since the green energy companies’ electricity production costs do not depend on natural gas prices, but their revenues do, the profitability of each kilowatt that these companies produce has increased significantly.
Due to the increase in energy prices, European countries have in recent months begun to limit the rate that energy companies receive for the electricity they produce, primarily the green energy companies. The first to limit the tariffs was Poland, in a decision that led to the fall of the shares of the Israeli green energy companies active in the country. And now also Italy, where Solgreen is active, has limited the electricity tariff to 60 euros per megawatt.
According to market estimates, the Italian regulation had a certain effect on the decline in Solgreen’s share value, but the bulk of the decline is still attributed to the company’s losses in the US. Solgreen purchased 20% of Cubix a little over a year and a half ago for a value of $145 million. The American company specializes in establishing and selling solar systems to home and business customers in the USA. Since then, Solgreen has continued the American adventure and realized the conversion loans according to the agreement between the companies, so that today it owns 92% of Cubix, which continues to lose consistently, and even dragged Solgreen as a whole into losses.
Solgreen recorded a negative EBITDA (profit/loss before tax, interest, depreciation and amortization) of NIS 49 million for the period January-September 2022 compared to a negative EBITDA of NIS 2 million in the corresponding period. However, looking at Solgreen’s activity without Cubics, the picture changes. Solgreen’s EBITDA in the first nine months of 2022, without Cubex, stands at NIS 46.4 million – a 132% increase from the same figure in the corresponding period.
Cubix’s loss alone amounted to NIS 38 million in the third quarter of this year compared to a loss of NIS 30 million in the corresponding quarter. In the first nine months of this year, Cubix lost NIS 173 million compared to NIS 68 million in the corresponding period. In a presentation to investors, Solgreen reported its intention to take significant efficiency measures in the American company.