Enviro in the red in 2023, now positioned for profitability

Scandinavian Enviro Systems AB (Enviro) has published its financial results for 2023, and these figures reflect the expense involved with setting up a new recycling solution for end-of-life tyres. The Swedish firm achieved net revenues of SEK 13.9 million (£1.1 million) during the year, a 73.8 per cent increase on 2022 revenues. Operating results were still in the red at SEK -93.6 million (-£7.1 million) and earnings after tax were SEK -92.3 million (-£7.0 million) (2022: SEK -83.6 million).

The company attributes the additional SEK 8.7 million year-on-year loss to higher external costs of SEK 7.0 million, mainly accrued in connection with legal fees and consultancy support as well as costs in connection with a new short-term loan taken out in early 2023. Personnel expenses, at SEK 7.8 million, where higher than in 2022 due to additions to the workforce in both the parent company and its joint venture subsidiary. In addition, depreciation was SEK 1.4 million higher and the finance net SEK 1.0 million positive compared to the same period last year due to higher interest revenues. Gross profit increased by SEK 6.2 million year-on-year mainly thanks to an oil delivery during Q1 2023.

Investment decision strengthens finances

Enviro and joint venture partner Antin Infrastructure Partners reached a final investment decision for their plant in Uddevalla, Sweden in February, with Enviro receiving SEK 53 million as a first payment for costs incurred, half in cash and the remainder as an ownership share in the joint venture. “This strengthens our finances, and after the share issue last spring and the final investment agreement, we have secured financing for the company’s operations for 24 to 30 months counting from May of last year,” states Enviro.

“While the final investment decision for the plant in Uddevalla may not have been made in the fourth quarter of 2023 but the first quarter of 2024, it was all the effort in 2023 – and the fourth quarter in particular – that laid the basis for it,” comments Fredrik Emilson, Enviro’s chief executive officer. He adds that this investment decision not only clears the way for construction of the plant in Uddevalla to start, but also that binding delivery contracts at an aggregate value of SEK 2 billion (£152.5 million) have entered force.

“The contracts that our joint venture with Antin Infrastructure signed show tremendous interest in the products that will be produced in the forthcoming plant,” Emilson continues. “Major players in the tyre and oil industry are literally lining up to purchase the carbon black and oil that will be recovered. The fact that competitors in both the US and Europe have experienced difficulties in getting their operations up and running has made already significant interest in our products even greater, since it reduces access to recovered products from end-of-life tyres.”

1 million tonnes by 2030

With the joint venture now remunerating Enviro for costs incurred to date, the company is now looking ahead to its plan of establishing further plants in Europe that, by 2030, will provide an annual total recycling capacity of one million tonnes of end-of-life tyres. These future plants belonging to the joint venture will have an estimated standard capacity of approximately 34,500 tonnes of end-of-life tyres per annum.

“Our ambition is to standardise the layout and construction of these production facilities (both the plants and the technology itself) to thereby facilitate construction and operation of new plants as well as maintenance and further development,” explains Emilson. “This meant that in 2023 we put a great deal of effort into our procedures and plant layout, as well as the technology, in order to not only produce the right quality efficiently but also to do so in a plant that is as cost-efficient and suitable as possible. Standardise and modularise are terms of prestige in our efforts to ensure a successful global roll-out of our technology.”

Further information about Enviro’s 2023 financial results is available here.