Skatec (LYB) Q4 2025: Backlog Expands 73%, Locking in Multi-Year Growth Visibility

2026-01-30 | By EarningsIQ Research

Skatec’s fourth quarter capped a year of disciplined execution, as the company’s project backlog surged 73% and operational progress drove a 22% EBITDA lift for 2024. Margin-rich power production in the Philippines, new project wins in South Africa and Romania, and ongoing debt reduction signal a business model now positioned for self-funded growth. 2025 guidance reflects both volume expansion and embedded upside from regulatory tailwinds, with a sharpened focus on core markets and opportunistic entries abroad.

Summary

• Backlog Acceleration: Skatec’s construction and backlog pipeline rose sharply, securing multi-year revenue visibility.
• Margin Expansion via Philippines: Ancillary services and new capacity unlocked robust EBITDA and cash flow leverage.
• Balance Sheet Discipline: Ongoing divestments and refinancing reduced net corporate debt, supporting future self-funded growth.

Performance Analysis

Skatec delivered proportionate revenues of 2.7 billion NOK and EBITDA of 1.4 billion NOK in Q4, both up roughly 70% year over year, driven by strong power production, new project contributions, and asset sales. The Philippines stood out, with ancillary services and improved hydrology boosting segment EBITDA by 85%. Power production volume increased 48%, as new plants came online and existing assets performed at high availability, underlining the operational leverage embedded in Skatec’s asset base.

Development and Construction (DNC) revenues reached 1 billion NOK, with a gross margin of 12%, reflecting robust project execution and a healthy mix of backlog. Cash flow to equity from power production was 1.1 billion NOK, bolstered by proceeds from South African asset transactions and Philippine refinancing. Full-year 2024 results show total proportionate revenues of 7.9 billion NOK and a 39% rise in power production EBITDA, cementing the company’s transition to a larger, more profitable operating base.

• Philippines Ancillary Services Surge: Revenues and EBITDA in the Philippines soared on higher volumes and reopening of the reserves market, supporting overall margin expansion.
• Backlog and Pipeline Scale: Projects under construction and backlog reached 2.7 GW, a 73% year-over-year increase, with 10 GW in the broader pipeline.
• Debt Reduction Momentum: Net corporate debt fell by 1 billion NOK in Q4, reflecting disciplined capital recycling and deleveraging.

Skatec’s integrated model—combining development, construction, and asset rotation—continues to unlock both margin and capital efficiency, with the business now anchored in higher-quality, recurring cash flows and lower leverage.

Executive Commentary

Strategic Positioning

1. Backlog and Pipeline Expansion

Skatec’s 2.7 GW of projects under construction and in backlog marks a step change in forward revenue visibility. This expansion is anchored in core markets but includes opportunistic wins in South Africa and Romania, with the latter benefiting from EU support and favorable grid access. The 10 GW pipeline further extends Skatec’s growth runway beyond the next two years.

2. Integrated Business Model Leverage

Skatec’s model—spanning development, EPC (engineering, procurement, construction), and asset rotation— enables it to capture returns across the value chain. Management targets an average equity IRR of 15% on power production, with an additional 15% uplift from DNC margins, resulting in anticipated integrated project returns of 30% for the 2.7 GW under execution. This approach allows Skatec to self-fund growth and recycle capital efficiently.

3. Portfolio Optimization and Capital Discipline

Ongoing divestments and proactive refinancing have reduced net corporate debt, with 75% of divestment proceeds earmarked for deleveraging. The planned 1 billion NOK bond issue will address upcoming maturities and extend the debt profile, supporting financial flexibility as the operating base scales toward 7 GW.

4. Margin Tailwinds from Market Dynamics

Module and battery prices have declined 66% and 58% over two years, making renewables more competitive in Skatec’s target markets. Management expects these low input costs to persist, enhancing project economics and reinforcing the company’s competitive positioning in new bids and tenders.

5. Social and Environmental Impact

Skatec’s projects have now avoided 24 million tons of greenhouse gases and created 22,000 direct jobs, underscoring the dual mandate of value creation and local impact. The company’s track record in job training, education, and healthcare investment strengthens stakeholder alignment and supports project execution in emerging markets.

Key Considerations

Skatec’s Q4 results highlight a business transitioning to scale, with an expanding backlog, disciplined capital allocation, and a sharpened focus on high-return core markets. Several factors stand out for investors tracking the company’s multi-year trajectory:

Key Considerations:

• Execution on Backlog Conversion: Timely progression of 2.7 GW under construction will be critical for delivering forecasted EBITDA and cash flow growth.
• Regulatory Upside in Philippines: Approval of higher ancillary service prices could provide retroactive and ongoing margin expansion.
• Debt Maturity and Refinancing: The planned bond issue and use of divestment proceeds are key to maintaining a healthy balance sheet and funding growth without equity dilution.
• Opportunistic Market Entry: While 80% of business remains in core markets, Skatec’s selective approach in new geographies like Romania could drive incremental returns if risk is managed.

Risks

Execution risk remains elevated given the scale and geographic diversity of the backlog, with potential delays in permitting, construction, or regulatory approvals posing downside to guidance. Currency volatility, especially in emerging markets, and uncertainty around ancillary service pricing in the Philippines could impact earnings trajectory. Skatec’s opportunistic forays outside core markets, while potentially accretive, introduce incremental risk if local dynamics are misjudged.

Forward Outlook

For Q1 2025, Skatec guided to:

• Power production of 900 to 1,000 GWh
• Philippines EBITDA of 170 to 230 million NOK based on normal hydrology and current pricing

For full-year 2025, management provided:

• Proportionate power production of 4.1 to 4.5 TWh, generating 3.75 to 4.05 billion NOK in EBITDA
• Development and Construction margin guidance maintained at 10-12% for projects in backlog

Management highlighted that guidance includes contributions from Ukraine, Uganda, and Vietnam through Q1, and anticipates upside from regulatory approval of higher ancillary service prices in the Philippines. No gains from asset sales are included until transactions close.

• Majority of DNC revenues expected to be recognized in 2025 due to project timing
• Further deleveraging targeted via asset rotation and refinancing

Takeaways

Skatec’s Q4 and full-year performance reinforce the company’s evolution into a capital-disciplined, backlog-driven renewables platform with embedded margin and cash flow upside.

• Backlog-Driven Growth: The 73% increase in backlog and pipeline scale provides multi-year visibility and positions Skatec for continued EBITDA and cash flow expansion.
• Margin and Capital Efficiency: Integrated project returns, cost declines, and proactive debt management underpin a self-funded growth model less reliant on external capital.
• Execution and Regulatory Watchpoints: Investors should monitor construction milestones, ancillary service pricing approvals, and balance sheet management as key drivers of Skatec’s forward valuation.

Conclusion

Skatec exits 2024 with a fortified backlog, robust operational momentum, and a sharpened focus on capital efficiency. The company’s ability to convert pipeline into profitable projects, while managing execution and regulatory risk, will define its trajectory in 2025 and beyond.

Industry Read-Through

Skatec’s results highlight several sector-wide trends: Renewables developers with integrated models and disciplined capital allocation are best positioned to capitalize on falling input costs and rising demand. The sharp drop in module and battery prices is making new projects more competitive, while regulatory tailwinds in ancillary services and contract-for-difference schemes (CFDs) are providing margin uplift opportunities. Competitors operating in emerging markets should note the importance of local presence, stakeholder engagement, and flexibility to pursue opportunistic growth outside core geographies. Balance sheet strength and the ability to recycle capital through asset sales are increasingly critical as the sector scales.

LYB Utilities Renewable Energy Project Backlog Capital Allocation Ancillary Services Deleveraging