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Daldrup & Söhne AG transforming into drilling and geothermal energy operator

Daldrup drilling rig on site in Geretsried, Germany (source: Daldrup & Söhne AG)
Alexander Richter 6 Jun 2018

In its reporting on the financial results for 2017, German drilling service provider and plant operator Daldrup & Söhne AG updates on its transformation and its geothermal power plants of Landau, Taufkirchen and Neuried.

In the release of its financial results for the 2017 fiscal year, German Daldrup & Söhne AG, specialist for drilling and environmental development services, deep geothermal power plant services and power plant operator, reported having generated a total output of EUR 43.0 million – around $47 million (2016: EUR 39.5 million) in the 2017 financial year according to Group-level audited figures. At EUR 24.8 million, sales were down on the previous year (EUR 31.1 million), as a large drilling project in the Netherlands – which has since been invoiced – could not be finally invoiced.

The 2017 fiscal year was characterized by a very good order situation for all four business divisions. Furthermore, the trial operation for starting power production at the geothermal power plant in Landau was successfully started. Daldrup took over another 50 percent of the power station from Pfalzwerke AG, bringing its total shareholding to 90 percent. On the Group-level, Daldrup generated earnings before interest, taxes, depreciation and amortization (EBITDA) of EUR 4.7 million (previous year: EUR 4.6 million). Earnings before interest and taxes (EBIT) amounted to EUR 1.1 million (previous year: EUR 951,000). The EBIT margin in relation to total output was 2.6%. The Daldrup Group thus exceeded the forecast target for the 2017 financial year with a total output of EUR 43 million and achieved the targeted EBIT range of 2% to 5% of total output. Overall, this results in consolidated net income of EUR 20,000 (2016: EUR 152,000). Earnings per share (EPS) thus amounted to EUR 0.00 (previous year: EUR 0.03).

Good start into the 2018 fiscal year, order situation at record level

Due to the excellent order situation, the Group’s Management Board expects total output of around EUR 40 million and an EBIT margin between 2% and 5% for the current 2018 fiscal year. For the first time ever, the forecast also include sales of EUR 5 million and an EBIT contribution of around EUR 1 million from the geothermal power plants in Landau and Taufkirchen (both in Germany). The current fiscal year started strongly for all business divisions. As of the the end of May 2018, the order volume reached an all-time high of EUR 49 million. For 2019, the demand from companies, investors, private sector associations and municipalities for the products and services of Daldrup & Söhne AG appears to remain strong. As of the end of May 2018, the order pipeline was filled with orders valued at around EUR 98 million from reliable bidders and investors.

Regular operations at geothermal power plants in Landau and Taufkirchen projected to start in 2018

Trial operations at the Landau power station started during the fourth quarter of 2017. The productivity rate has been highly satisfactory so far. The formal transition to regular operations should be possible shortly, during the current financial year. In the first quarter of 2018, the Taufkirchen power plant started to supply electricity to the public grid as part of the system and test operation following the installation of the new heat exchanger. Another heat exchanger is scheduled to be added as early as the second half of 2018, so that electricity production will gradually be transferred to full capacity based on current projections.

The Neuried power plant project is expected to be developed quickly this year, following the expected approvals from the relevant authorities. The goal is to be able to start constructing the drilling site with a financing project partner in a proprietary location during the current fiscal year. Following a public referendum and consultation with the local partners, the geothermal heating plant project in Puchheim, Bavaria, is projected to be built in 2019 and 2020.

With the Taufkirchen and Landau power plants the first significant milestones in the transformation of business activities from a drilling services provider to an independent medium-sized energy provider has been realized. Continuous cash flow from the sale of electricity and heat will sustainably stabilize the earnings and liquidity situation of the Daldrup Group.

Josef Daldrup to take over as Chief Financial Officer

CEO Josef Daldrup will take on the position of Chief Financial Officer (CFO) responsible for Controlling, Finance, Investor Relations and Business Development on an interim basis. The Management Board contract with former CFO Curd Bems has been renewed until March 15, 2019. Bems will be responsible for the development and operation of geothermal power plants as well as the development of new projects.