Third-quarter report January-September 2018
2018-11-20 - Alelion Energy Systems AB
Continued sales growth in an increasingly significant market!
Comments by the CEO
Alelion Energy Systems operates in a market positioned exactly in the intersection of several important trends and decisive questions within energy and environment. This regards the unavoidable phasing out of fossil fuels and the transition to electrification, but also about sustainable methods for society to generate and distribute sufficient energy when the changeover takes place. The answer is lithium-ion and smarter energy management – areas where we hold a leading position and anticipate strong growth ahead. During the third quarter our sales continued to increase and at the same time we were proactive in taking an even more central role in what is unquestionably one of the most exciting and promising markets.
Lithium-ion technology is still in its infancy but is beginning to come to the fore in more and more areas. What began as an attempt to move away from fossil fuels for passenger cars has developed into the cornerstone for a future and far more sustainable energy system. And it is a market that is steadily growing – according to the consultants McKinsey it is expected to grow by 30 per cent annually with a turnover of more than 100 billion US$ by 2025.
Successes in a steadily growing market
Alelion is a forerunner in lithium-ion technology and can be described as one of the most experienced in the field, even though we have been operating for barely 12 years. We began by developing lithium-ion batteries for industrial trucks where the major environmental and financial benefits compared with the traditional lead acid batteries soon gave us a leading position and some of the world’s biggest industrial truck manufacturers became our customers. This market is far from saturated – and is only one of several large and steadily growing segments for our products and our technology. Over the year we have for example established important new co-operations and received orders for high voltage batteries from two different global manufacturers of heavy vehicles, among them German Kamag. This growth is reflected in our figures – during the third quarter our sales increased by 26 per cent to a turnover of in total 33.2 MSEK (26.3 MSEK) where our acquisition Caterva contributed with just over 1.2 MSEK. Cleared from acquired units sales increased by +21 per cent.
That such an exciting market attracts new operators is only to be expected and that also applies to the increased competition we are seeing. During the third quarter this meant that profitability grew at a slower rate compared with the equivalent period the previous year. We both anticipated and forewarned about this development which we will be far better equipped to deal with at the start of next year when we launch our new generation of products and we also start manufacturing in our own factory. The steadily growing market is also putting pressure on suppliers of battery cells who are finding it more difficult to meet demand. We can see the initial signs of cost inflation among suppliers, something we manage through continually reviewing our supplier base and our cost levels. Alelion has access to technology for impedance measurement that we have developed and patented ourselves, allowing us to quickly determine battery cell quality, which in turn provides us with more and more cost effective supplier alternatives.
Making smarter use of energy
Lithium-ion technology opens for the phasing out of fossil fuels and the transition to more sustainable use of energy. But equally important are the opportunities this technology brings with it for a smarter use of energy through what is called energy management.
Put simply this can be summarised as software systems that contribute to optimizing charging and discharging energy stores in lithium-ion battery, whether these are in industrial trucks, various types of vehicles or in households with their own energy sources such as solar or wind energy.
These systems open for lower costs and lower environmental impact and make investment in lithium-ion batteries still more profitable. Through acquiring Caterva, Alelion has developed Alelion Intelligent Energy System, AIES, a patented and leading energy management software system. Thanks to this system’s major environmental benefits and efficiency rates it has drawn the attention of the EU body European Institute of Innovation & Technology, EIT, which has granted Alelion support for continued development. Tests of the system carried out with customers show that in an average case the customer’s energy costs can be reduced by 30 per cent and carbon dioxide emissions by as much as 90 per cent. At the same time this provides Alelion with an even closer understanding of the customer’s business and the opportunity to contribute to its development.
Focus on growth
Alelion is currently taking proactive steps to take a far greater role in the market for lithium-ion technology. One step is building our new factory in Hisingen, Gothenburg, Sweden’s first factory for large-scale production of lithium-ion batteries. Another is the intensive development work with AIES within Caterva. A third is the important launch of our new generation 3 batteries that will be launched when the new factory starts up production at the end of the first quarter next year.
These are all steps demanding considerable resources and capital but they are also steps that will give us completely new and far greater opportunities to grow in what is and will be one of the absolutely hottest markets in the foreseeable future.
CEO Alelion Energy Systems AB
The complete report is attached to this e-mail or can be read at: