Goldman Sachs-backed Danish energy trader sees profit plunge
COPENHAGEN, June 4 (Reuters) - Danish energy trader InCommodities, backed by Goldman Sachs, on Tuesday reported a plunge in its pre-tax profit for 2023 to 136 million euros, just 10% of its record profit seen a year earlier, as energy markets returned to calmer waters.
In 2022, the Aarhus-based company, which trades power and gas in Europe, the United States and Asia, had recorded a profit before tax of 1.4 billion euros ($1.52 billion).
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Goldman Sachs and selected investors own a 15% stake in the company while its four founders and employees own the rest, according to its annual report.
"There's no doubt that 2023 was a return to more normal risk levels in the market in contrast to 2022, where obviously gas prices and fuel prices in general sparked a fury in the market," CEO Jesper Johansen told Reuters.
In 2022, Energy traders benefited massively from the volatility in the wake of the war in Ukraine and the need to replace high volumes of lost Russian gas but have since seen earnings drop as markets have normalized.
Gas trading volumes at InCommodities fell to 947.7 terawatt hours (TWh) from 1,569 TWh in 2022, while power trading volumes fell to 213.7 TWh from 237.0 TWh.
InCommodities said it has allocated a significant portion of its profits towards strengthening its equity position, to ensure it can handle financial risks as those seen in 2022 more effectively.
The turmoil in the energy markets in 2022 led to increased margin calls that required substantial capital buffers and even saw some bankruptcies among energy traders.
"There's a new geopolitical situation after 2021-22 and that's completely reshaped the global energy landscape. It's become more unpredictable," Johansen said.
For Europe, dependency on other regions of the world in terms of energy supply poses a risk that is likely to persist in the coming years and decades, he added.
The company is also focusing on finding other opportunities in renewable energy trading, Johansen said.
InCommodities launched its Renewables Asset Management unit specialising in power purchase agreements for renewable energy in 2023.
By the end of the year, its activities in Germany had risen to 1,210 megawatts (MW), from 410 MW at the launch, and there are plans to expand the business to the Nordics, Japan and Australia this year, the company said.
($1 = 0.9217 euros)
(Reporting by Nora Buli in Oslo and Stine Jacobsen in Copenhagen; Editing by Louise Heavens)