OX2 AB (publ)

STO:OX2

Earnings Call Transcript 2021-Q4

[Operator]

Welcome to the OX2 webcast based teleconference Q4 2021. [Operator Instructions] Just to remind you, this conference call is being recorded.Today I'm pleased to present CEO, Paul Stormoen and CFO, Johan Rydmark. Please begin your meeting.

[Paul Stormoen, Chief Executive Officer]

Excellent. Thanks. And welcome, everyone for this Q4 2021 Presentation of OX2's result.Starting at Page 3. My name is Paul Stormoen. I'm the CEO of OX2 and I'm joined by Johan.

[Johan Rydmark, Chief Financial Officer]

Johan Rydmark, CFO, looking forward.

[Paul Stormoen, Chief Executive Officer]

Good. And Page 4, the agenda for today will be highlights of the year and quarter we have just put behind us. I will also go through the portfolio updates. Johan will then take us through a financial review. And I will come back and talk about the market outlook and there will be ample time for Q&A following the presentation. During the presentation feel free to email [e-mail] with questions. Otherwise there will be an audio open after the presentation.So without further ado, presenting OX2 as the European leader in renewable energy on Page 5. OX2's product remains to be operating wind farms onshore and offshore as well as solar PV farms. We have over the last 17 years established a product, which is now today well known. Looking back at last year, we had SEK 5 billion of revenue. We can today also present a SEK 455 million EBIT result, which then concludes on the 9.1% operating margin. We will hear more about the details from the financials from Johan very shortly. That puts us, in total, when we look at the sales volume accumulated at 3.2 gigawatts since the beginning in 2004.The business model has been generating kind of a lot of free cash over the last years and that has been invested in the pipeline and the organization which is now growing rapidly. In the middle of this page. You see we land the year at more than 17 gigawatts. And we will take a bit further look at what that consists of. And to the right you'll see our geographical presence today, covering most of Europe. And we will also be talking a bit today about what that actually means for OX2 as a company to be in such a large market and having the access to both projects and organization in these markets.So without further ado diving into on Page 6, our highlights from 2021. When we summarize the year, main themes we would like to talk about. Development portfolio saw very strong growth, +4.7 gigawatts net. In addition, we see that the permitting continued to be across all markets the bottleneck which puts us in a very strong position to further capitalize for more development ending the year at 17.4 gigawatts of portfolio. Close to 100 projects, which is a large amount that we will continue to develop over the coming years.Looking at sales. We ended the year at 719 megawatt, significantly above the guidance at 500 plus, and this is also more than a doubling of the new sales in 2020. We also saw that we had this steady stream of projects that was sold. We're seeing that we're constantly decreasing our exposure to individual projects which is, of course, a catalyst for a more stable contact with the market and also stable stream of revenue and profit.Looking at the expansion which we have talked a lot about, new markets is a core part of OX2's business model. And we last year could conclude on Italy and Romania as 2 very exciting markets. And we continue with the target to expand further in South and Eastern Europe.We also 23rd of June last year, listed at the Stockholm new market growth market. And we have been working throughout the quarter on uplisting to the main market. The listing gave us a strong capital injection and we have a good cash balance to capture opportunities in the volatile market. And this is also part of the plan to fuel our growth going further.OX2 is a competence organization. What we can attract and keep as talent is of course core to the business. Last year we saw plus 95 new members of the OX2 team here coming back to the importance of having a good reach throughout Europe because there's a lot of competence in the renewables field when we have growth targets as we have and the need for new colleagues. So very happy to see that the organization is growing very healthily.So summing in a bit on Q4. We're looking at Page 7. Continued progress in the development portfolio. We saw good movements in and across the early mid and late stage phases that we divide the portfolio in, highlights we could mention 150 megawatts of projects in Poland, both PV and onshore wind, winning the auction. And we have also announced during the year several projects having applied for license in Southern Sweden offshore wind of significant volumes.We had strong sales in Q4, 483 megawatts, that was one very large project and Finland that we will come back to and one project also in Poland. So the construction is of course something Johan will go deeper into as well, what impact that has on the on the financials. But overall very strong traction in a portfolio that is growing 1.3 gigawatts of total construction portfolio end of the quarter, and we did hand over 159 megawatts as we had announced in the Q3 earnings called during Q4. So all of the 5 projects were completed and 4 of them handed over during the quarter, the 5th fixed was handed over in beginning of January. And as mentioned, good progress on preparation for the Nasdaq main market listing.So looking a bit at Page 8 and a deep dive into the 22 gigawatts we have across development, construction and TCM. We have announced during the year some projects in the offshore portfolio that is on the pre-early. So we don't kind of include them just yet in the portfolio, but they are of significant size and we expect to be able to add them to the portfolio within short. Otherwise, we have had good traction in the early stage space. We as you know, have a view that the portfolio should be of high quality projects with a good probability of succeeding with, meaning that we are taking projects out if we do not see and feel comfortable about the projects being able to move forward. So that has been some adjustments in the portfolio during the year. We will come back to that.Then just a word on the construction portfolio as well, standing at 1.3 gigawatts. A lot of projects, all going according to plan. But still there are impacts seen from both COVID and supply chain challenges.The TCM grew its portfolio just during the quarter by 20% and stands at 3 gigawatts.So coming back a bit to the changes on Page 9 to what was done in -- during the quarter. So we had 500 or almost megawatts of projects sold. We did clean up a bit due to -- or decisions in the portfolio. So we had about 400 megawatts of discontinued projects. Then we had 700 megawatts of new additions and here you see that the acquisitions continue to be a main pillar of OX2's business model. So we will come back to how much we invested and how that forecast looks forward.So on page 10, a couple of examples from the development portfolio. We're very happy to being able to start long-term greenfield again in Poland. The policy is now in, in kind of an area where we see good opportunities to long-term development also in Poland, where we started the project in the northeast of Poland called Kolno this year. It's part of the early stage portfolio currently.Klevberget is another project we announced that we acquired in November and we're just about to finalize the sale. So that project we -- this was a late-stage acquisition that will come into this year's sales expectations.Then a project we worked on for a number of years in Finland and combined them in a bundle, which then in fact improved the value of the combined projects, 60 megawatts, Kropuln and Storbacken in Finland was handed over after 2 years of construction period.Just moving on to page 11, where we have a detailed view on all of the projects we do have in construction, 1,329 megawatts, high activity during the year, as you'll see, with a lot of projects to be handed over, as much as 676 megawatt to be handed over during 2022. And we see good traction with the first one already completed and handed over, being the Polish project Zary. Further we have projects now added during the year and to be handed over in '23, '24 and as long as '25.Good. Couple of words on page 12. Lestijärvi is the largest onshore wind farm in Finland. We started construction of that project in November after less than a year of ownership from OX2. So during that year, we were able to optimize the project, increase the volume and we were marketing it during the fall as part of the OX2 standard product which is an operating wind farm and attracted a lot of attention across the world actually for this project.We ended up very happy with a customer consistent of regional and local consortium, a regional and local Finnish Energy Utilities. And construction has been started since November and its ongoing well. Our cooperation with Siemens who is delivering turbines for this project. It's also a well established one and we see good traction on all fronts of this construction during the first 2 months.So with that said, looking back to the agenda, I welcome Johan to talk a bit about the financials?

[Johan Rydmark, Chief Financial Officer]

Yes. Happy to do that. They look good.So moving on then to Slide 14. Right. It is a good development that we've seen, not only from an operational perspective, but also financially as you can see here on the key financial highlights. And what we are very satisfied with is that this development is because of strong performance across basically all parts of OX2. We've seen good progress in the development part, how we've been able to grow the overall portfolio, how we've been able to also mature the portfolio in a good way, which of course is promising for our future outlook.We've also seen good progress in the construction part of our business during of course challenges, challenging times with the pandemic, with global supply chain shortages. But here we've seen good performance and we've been able to keep our construction budgets in a good way, which is also of course behind the solid performance from a resource perspective. Also within the asset management part, good efficiency and good delivery.And I must say that I'm very proud to be part of this organization, and how we've been able to maneuver under these circumstances. And I think it's also looking at the results for the year and the quarter. An acknowledgment of the strong position that we have in the value chain, really at the core of the renewable energy transition and the strong business model that we have. If we look at the financials and the sales, Paul commented a bit on this as well, 483 megawatts sold in the quarter, comprising of the large Lestijärvi project in Finland, a new wind farm in Poland as well as small add-on sales to an existing project that we have under construction in Poland. For the full year 719 megawatts, significant increase when comparing this to the full year last year.Gross profit wise and this is something we have explained also on previous earnings calls, what is driving our gross profit. Well, it's a combination of the new sales of wind farms and solar farms, as well as the progress that we see in the construction portfolio and the asset management contracts that we're delivering on. And here, to remind everyone, there is a difference in the margins that we typically see. When we sell new wind farms and new solar farms, typically we see higher margins from that sale, where it is a more stable lower margin from the construction portfolio. And that is also driving the very strong figures here that we see on the gross profit, 22% in the quarter, 21% for the full year. We also guide a bit more explicitly in the report, in the outlook based on visibility we currently see in terms of margins where we see the 22. Based on current visibility, will end up in the range of what we've seen in 2020 and 2021.Operating income SEK 455 million for the full year, an increase compared to last year. And this should be seen in light of all the investments that we've done in growing the portfolio, maturing the portfolio and doing development on the portfolio and also gearing up our organizational capabilities to deliver on the growth that we see going forward. So very happy with the result we achieved.Acquisitions, we'll come back to this a bit more in detail, but happy to see that figure increased as well in terms of how much money we deployed there. We're not fully satisfied with the figure. We would like that to increase even more going forward as we also discussed a bit in the report.Moving on to the next slide, Slide 15. And if we dissect the P&L a bit, net sales, COGS, our operating cost, what does that all comprise of and how has that developed. Net sales, again, it's 3 parts; it is new sales of projects, it is our construction portfolio and progress there, as well as contracts under our asset management business. COGS, 3 components there, construction expenses, the largest part and then expenses relating to project rights when we sell projects that we have acquired as well as sales cost. And if we look at the gross profit, the gross margin, again, we believe this to be very good figure, the margin, and also an acknowledgement of the value that our customers put on our product. For sure, we've also been faced with increasing raw materials, increasing costs from the components going into our projects. But overall, we see that we are able to maintain good margin. And we also see good delivery in the construction portfolio where we've been able to keep our budgets and haven't been faced with any significant cost overruns despite the challenges that we of course also experience.Operating cost, development cost and personnel cost, I think, are the most interesting one to zoom in a bit on. And here you see significant increases for the year, very much in line with our strategy that we are investing to be able to deliver considerably more volumes in the future. But this is of course impacting our operating margin. And we'll continue to do so also in 2022 until we see increases relating to our volume targets. But despite that, we were able to deliver a 9% operating margin, which I think is a stellar performance.Moving on. A bit of a reminder on Slide 16. We are seeing quarterly fluctuations in our sales and in our earnings. And this again is then linked to the timing of new sales of projects, wind farms, solar farms, as well as the progress that we see in the construction portfolio.On the next slide, Slide 17, We have a bit longer time horizon and I think this is also how one should look at OX2 given that there are quarterly fluctuations where we see an increase over time in sales. Of course that link to that we're selling more wind and solar forms. We have larger construction portfolio that we're delivering on and the larger asset management business. Why we're not seeing an increase in sales in 2021 is linked to that we in 2022 handed over more than 400 megawatts, where we in 2021 handed over a bit more than 200.But again Paul mentioned that when looking at our construction portfolio, we currently have more than 1,300 megawatts in the construction portfolio, where we ended last year had some 600 megawatts. Of course this order backlog gives us good visibility in our sales outlook and sales growth that we envision in '22 and beyond.If we zoom in a bit on the right hand side here, the profit development. I've already commented on the positive gross margin development. But interesting to also look and put a bit of a perspective on the increase that we've seen and this is not taking into account the organizational growth, but only looking at the external development expenses and how that is impacting our operating margin here and now where we will see the benefit from these investments as the volume increase going forward.Moving on to the next slide. We have Slide 18. We have a very strong cash position based on the capital raised in connection with the listing. This enables us to act on the opportunities that we see in terms of project acquisitions. We deployed some SEK 227 million in the quarter. As I mentioned earlier, I have a bit of a deep dive on the next slide. We would like to see this increase and believe us to have good traction here in the screening pipeline.Changes in net working capital, negative figure this quarter. It was significantly positive previous quarter. We will see these type of swings based on the working capital in our construction portfolio. What we are very diligent and focus a lot on is how we go about structuring the sale of our projects, making sure that we continue to have an attractive cash flow profile in our construction projects. And this we see that we have also in the new projects that we sell, but there will be swings in the quarter -- in between quarters.On the next slide, project acquisitions. Very happy to see this development here, 3.4 gigawatts acquired during last year. Also very happy to see the diverse spread here, the number of markets where we're now able and have the presence to be comfortable in doing acquisitions and also across different technologies. SEK 424 million, significant increase compared to previous year. We also comment a bit more explicitly on this in the report where we guide for the period in '22 and beyond towards SEK 600 million and more. So we're not happy with how much we are able -- how much money we're able to deploy here now, but have good visibility and have a strong acquisition pipeline.On Slide 20, financial targets. With the development that we saw in 2021, we believe us to have made good progress in relation to our financial targets, having sold 719 megawatts. We also in the report provide some more explicit guidance in terms of volume for 2022, where we say that with the current visibility that we have in terms of the stage of our portfolio, we envision also volumes sold in 2022 to exceed 500.Operating margin in light of the investments that we're doing in development, in how we're growing the organization. We still are delivering close to our operating margin target, 9% in 2021. And with the scalability that we see, we are comfortable in that we will reach also our medium-term operating profitability and margin.With that, handing it back to you, Paul, a bit.

[Paul Stormoen, Chief Executive Officer]

Excellent. Thanks a lot, Johan. Exciting year. So on Page 21, we have the agenda.Summing up, looking a bit on the market, Page 22. We are continuing to see a very strong and positive feedback from more investments in the energy transformation. The product that we sell is being widely acknowledged among the sector participants as a leading part of the value chain. We have seen COVID-19 impacting our supply chain. We expect it to continue during 2022, but we also have good measures of how to handling this, both when it comes to cost and lead time.Permitting is, as I said in the very beginning, going to be the scarce resource in the whole energy transition. We do see more and more comments and expectations about increasing electricity demand. We do see the need to cut off fossil demand in the energy sector and renewables are the most scalable, the cheapest and the fastest way to add up for that gap as well as to welcome all new energy consumption into the electricity field. So we will continue to invest in the pipeline of the organization.And summarizing, on Page 23 here, Q4 sales traction was very strong as expected and planned. We saw good and strong net sales, operating profit development. As Johan said, we are close to the target even when we are investing heavily in this period until we get kind of a catch up from the sales that we currently invest in. So portfolio on the construction side, strong effort by the construction team to maintain safety and the quality on the construction sites. And this is something we see an increased focus on during the year.So if we look at 2022, we have made good progress in our main market listing process. So we hope to, as planned, to conclude that during first half of this year. We are growing our portfolio through both acquisitions and greenfield, I mentioned, we're now initiating greenfield once again in Poland, but acquisitions will for the foreseeing period be the main engine of portfolio growth. And we're very well positioned, both with competence and cash position in order to capture that part.We continue our geographical expansion. Hopefully, we will come and win new markets very soon. And we're looking to continue our focus on OECD markets, mainly Europe at this point in time, but we have also in our strategy announced more of a global focus over time. So that being a focus also in '22.And I know a lot of you have talked about the targets for '22 when it comes to volume. We're specifying here that we are expecting to sell more than 500 megawatts also in 2022. So that's a clarification from previous guidance. And when it comes to the medium-term targets, so what we see post the period of '24, that's still what we're investing to reach. We have good visibility on '23 and '24 targets, and the organization is working actively to ramp up in order to deliver on that already next year. So that is coming fairly soon now.And with that said, I think we can land on the Q&A page and hand it over to our operator for Q&A. And maybe Johan, you can [indiscernible] for this session.

[Operator]

[Operator Instructions] The first question comes from the line of Oskar Lindstrom from Danske Bank.

[Oskar Lindstrom, Senior Analyst]

I actually have 3 questions, if I may. Do you want me to pose them all at once or take them one by one with you?

[Paul Stormoen, Chief Executive Officer]

Yes. We'll try to catch up and write them down here, okay.

[Oskar Lindstrom, Senior Analyst]

All right. Just ask me to repeat them. The first one is, I mean, what gives you confidence that you will reach the target, the medium-term target of at least 1,500 megawatts of sales by 2023? I mean when I look at your development portfolio, you have 2.4 gigawatts in what you call late stage, which is, you say, up to 3 years before sale? And then you're going to sell at least, I guess, 500 of those next year. Are you going to be able to fast track some projects to move them into, to be able to reach those medium-term targets of 1,500 megawatts of sales by 2023?So that was my first question. The second question is, I mean, this quarter, for example, I think we've seen it also in the previous quarters, this year is that you've grown your development portfolio more through acquisitions of existing sort of mid to late-stage projects rather than through greenfield additions. Is this a mix change that we're seeing in how you source your projects?And if so, should we expect that to lead to lower gross margins in the years ahead? And then finally, my third question, I mean, you provide some guidance now for 2022. But as you've pointed out before, I mean, both sales and earnings are quite lumpy. Would you care to say anything about what we should expect for the first quarter here of '22? Those are all my 3 questions. Ask me to repeat if you're uncertain.

[Paul Stormoen, Chief Executive Officer]

Okay. Good. Thanks, Oskar. I think I'll catch the first 2 ones and then Johan will take the easy question about Q1 guidance. So confidence in '23 and '24 targets. We have a portfolio that we see is well suited to fit that kind of guideline of average 1,500 megawatts during '23 and '24. We also have shown during the last year that acquisitions is the main contributor to fast turnarounds, less than a year. So we will continue to develop that portfolio. We feel confident in guiding -- repeating the guidance '23, '24, 1,500 megawatts in average. And that is based on, A, the portfolio that we have very good visibility on and, B, our very good screening portfolio and our traction in acquisitions. So we can repeat that we have good confidence and visibility on those.On the second part, you see -- and you mentioned that we have good traction in the acquisition. That is, of course, something we have worked with mainly since 2013. We have fueled the most sales through acquisitions. So what you have seen of historic numbers from us is to the absolute majority project that has come through the acquisitions, and that is the margins also that you have seen historically and also last year. So just looking at last year's numbers, most of these projects, both in terms of number and volume or late-stage acquisitions actually. So no, I do not expect any change in the gross margin mix based on what we have done and performed on when it comes to the acquisition versus greenfield last year.

[Johan Rydmark, Chief Financial Officer]

Yes. And just to add to that, we also write that in the report in terms of the gross margin. And just like Paul said, with the projects that we now have sold most of them, like Lestijärvi, project that we acquired about a year ago now turned into sales and solid margins. Also Klevberget, you mentioned that, Paul, as well, and that's late-stage acquisition that we did at the end of the year that we're now envisioning to sell here [indiscernible]. In terms of -- thanks for that, Paul, taking the Q1 guidance, we don't provide specific guidance on quarters. What we can reiterate is, again, the large construction portfolio that we have, now the 1.3 gigawatt that we have, that we will deliver from where we are not envisioning any hiccups from based on the current visibility. And of course, that portfolio is now significantly, it's up 60% compared to what we had at our hands at the end of last year.

[Operator]

The next question comes from the line of Olof Cederholm from ABG Sundal Collier.

[Olof Cederholm, Research Analyst]

I have also a couple of questions, but I have even more than Oskar, so I'll just take them one at a time. So just the gross margin outlook, you talked about being in a range of then 16% to 21%. It's -- for us outside of the company, it's a pretty wide range. What are the key uncertainties that you see now? What can go right and you end up at 21% and what can go wrong and you end up at 16%.

[Johan Rydmark, Chief Financial Officer]

Yes, of course, we're dependent on the overall mix, and that's why we need to have, and we've had that broad range historically as well. And as you've seen, when looking at individual quarters, there are big fluctuations on the margins. And depending on the timing of the reaching of milestones in the construction portfolio, can have a significant impact on the gross margin.

[Olof Cederholm, Research Analyst]

The -- looking at development expenses and personnel costs, how do you expect them to develop from the Q4 level? Have we sort of reached a new level where you're comfortable with? Or would you still invest to increase those costs on a quarterly basis going into '22?

[Johan Rydmark, Chief Financial Officer]

Yes, there also, if you -- and I understand that you haven't had the time to read the report in all details yet. But there, we provide some more flavor on that as well, where we say that our external project development expenses and the continued growth that we will see in order to -- like Paul said here, we are looking forward to enter also further new geographical markets. We see that to be roughly in the range of double the cost base that we had in 2020 when we are at the end of the…

[Olof Cederholm, Research Analyst]

Yes, I missed that. On the Klevberget, what's a reasonable time frame for the sales process? Where are you roughly now?

[Paul Stormoen, Chief Executive Officer]

I can comment. We're well advanced.

[Olof Cederholm, Research Analyst]

I like that. The -- and then lastly, the acquisition pipeline, you mentioned you were unhappy with the pace you've had and that you're looking to spend SEK 600 million. When you look at your pipeline, can you -- is there a broad way to describe it in terms of mix between late-stage and mid-stage type of projects?

[Johan Rydmark, Chief Financial Officer]

I think we can put some more flavor. We're not unhappy. We're happy with the traction. We're happy with the projects we pick up. We don't pick up everything we see. We're very selective on what we take on board because we do want to have projects that match both the timing, the pipeline, the quality, the opportunities to improve value, et cetera. So the kind of the mix between mid and late stage, in even early stage in some markets continue to be, I would say, we talked about it, I think, in last quarterly call as well that for us to enter a market, it's important for us to add fairly kind of short-term value in order to really be a good market participant. So when it comes to maybe new markets, we're more selective of adding late-stage projects. In already existing markets, we're more than happy to kind of add projects across the full life cycle. But yes, we're quite eager to kind of capture the ongoing opportunities in sales as well. So we're very much focused on late-stage acquisitions. That said, we're not excluding anything, but maybe particularly pointing to late-stage focus in -- when doing market entries.

[Operator]

[Operator Instructions] The next question comes from the line of Eivind Garvik from Carnegie.

[Eivind Garvik, Research Analyst]

I have a couple of questions here. And the first one is on the margin picture and probably more long term. But I wonder a little bit about how gross margins could develop over time. And I think that I saw you all have lowered its guidance on profitability for 2022 to 2024. And I wondered how is this kind of applicable to you kind of talking a little bit more about the longer lines here? And the second question is, do you see kind of a near-term solution to what we see in terms of permitting and grid bottlenecks? Or will this continue to be kind of a long-term problem, which can, in worst case kind of limit your growth potential?

[Johan Rydmark, Chief Financial Officer]

Yes. In terms of -- if I start off, please jump in, Paul. On the margin, looking at the figures that we presented today, I think it's a good proof of the value that our customers put on the product that we deliver. I will not comment on [ ELS ]. I'm not that into the very specific business model. But we see good value being paid for our product. And we see that on a recurring basis, also with the visibility that we have on the wind farms and solar farms that we now are discussing with potential customers. And…

[Paul Stormoen, Chief Executive Officer]

But maybe just also saying that a very important part of the gross margin is, of course, to be able to deliver the projects throughout the construction period without unforeseen cost increases and delays. And we have proven over the years that we have a very strong construction team with very good control over both time and cost and, of course, quality when it comes to handing over, as Johan said, the product that is also widely acknowledged in the kind of customer market. So we do not see any signs whatsoever on kind of a decreasing margin for the part or the value chain that we operate in.And I think maybe that links also into the second part of your question here coming to permitting and grid constraints, et cetera. Yes, these are scarce resources. They have been scarce resources for a while. That's why it is important to have competent and qualified personnel on the ground in each geographies, being able to handle and solve creatively how the project can be optimized. And once again, we're putting a year behind us where we have demonstrated this and had very strong profitability in 3 core markets now; both Sweden, Finland and Poland. Okay.

[Eivind Garvik, Research Analyst]

And maybe just one last question for me here. Just a little bit about the cost on -- from Q4. Is there any other kind of one-off-ish cost from the quarter that is not related to kind of uplisting to the main market?

[Johan Rydmark, Chief Financial Officer]

No, I'm just thinking here. No. We have, of course, some preparation costs for the main market. I think we're right about that explicitly as well, yes.

[Operator]

The next question comes from the line of Anders Rosenlund from SEB.

[Anders Kirkhorn Rosenlund, Analyst]

Given the significant beat versus expectations in Q4 and questions you're getting both from sell side and buy side in various settings. Do you feel that the market is thoroughly understanding your business?

[Paul Stormoen, Chief Executive Officer]

I can maybe jump in on that one. Yes. Well, yes, our clients are very much understanding our business. The market, as we said already in June, I think, need to adapt slightly to what we deliver in terms of product and value chain position. But in the sector, when we look at kind of the renewable sector, I think you can ask anyone, and they feel very confident about what OX2 deliver and what type of position we have. But yes, I think you're pointing to a valid question here, Anders, that we're still a newly listed company. This is -- energy is a complex sector. But more than ever, I do feel that there is clarity and visibility on that.We are not kind of a -- we're not competing amongst the different energy sources. There is very much clarity on that there is a big need for new electrification or there is electricity production. And I think we will continue during the year to explain to the market, to our shareholders that this is exactly the part of the value chain that we operate in and that we benefit from. So we're very happy to have a new communication team onboard. We will continue to work on that towards the public market. But in the sphere, in the sector of renewables, we are very well acknowledged, both our capacity position and our product.

[Anders Kirkhorn Rosenlund, Analyst]

So maybe there will be a Capital Markets Day during the summer of 2022?

[Paul Stormoen, Chief Executive Officer]

I'm soft promising that. Yes.

[Operator]

There are currently no further questions at this point. I'll hand the conference back to you.

[Paul Stormoen, Chief Executive Officer]

Okay. Excellent. I think we have some questions from the IR e-mail address as well.

[Unknown Executive]

Yes. We are receiving some questions about offshore wind strategy. So question is, what is the strategy going forward when it comes to geographies and capacity?

[Paul Stormoen, Chief Executive Officer]

Okay. We have been fairly communicative with this during the year, and I also mentioned it here that there is a quite big volume of projects about to move into the portfolio coming mainly from Finland, where we see good opportunities to develop. We have announced operations outside of [indiscernible] with significant volumes and also in Finland with 2 projects where we have received permitting applications or applications to -- permit to start the application process on, but they will be included. So yes, Finland, we're very, very positive on. We also continue in Southern Sweden with more developments. I think we already yesterday or as late as yesterday announced another project reaching yet another milestone with significant applications being handed in.And then we have also announced that we're actively looking as well in the Polish seabed auction, what we can participate with there and looking positively to development basically all around [indiscernible] Baltic Sea. Of course, offshore is becoming more and more interesting in more jurisdictions now. We saw France announcing new offshore plans. We see Romania having good opportunities for offshore. We even see kind of a global opportunity for OX2 to participate in the offshore scene. But for now, for 2022, we will focus on kind of our core markets and the seabeds adjacent to those.

[Unknown Executive]

And then there's a specific question about the Swedish market and the Swedish government in relation to our offshore wind projects. What do you see there in development? Is that something you worry about?

[Paul Stormoen, Chief Executive Officer]

Quite the opposite, I would say, there's been a great kind of political agreement that offshore will play a big part of the future electricity mix in Sweden. And just recently, there were new planning assumptions distributed for a large part of the seabed and even more to come. So we have handed in our applications for our first 2 projects going directly to the government. So we expect them to handle these swiftly. And we do not see any kind of big concerns on that process. Of course, these are complex infrastructure projects that we will need to find agreements with the defense and the fish association, et cetera. So there is a lot of dialogue and contacts ongoing across several areas right now on these projects, but we see a very strong backing from both the opposition and the current political parties in place. Yes.

[Unknown Executive]

And here is a final question. It's about you commented on an updated goal for 2022. Can you please clarify?

[Paul Stormoen, Chief Executive Officer]

Yes. Okay. So it's not a new goal. It's a clarification of the goal that we presented last year, where we said that we would have average of 500 megawatts or more per year, '21 and '22. We have delivered more than 40%, above that in '21. So now we're clarifying that we do not intend to deliver below 500 megawatt, but rather above 500 megawatts also in 2022. So that's what we're geared towards, and that's what the whole team is working towards. But '23, '24 target remains, and we feel confident about this. And then the medium-term target of more than 2 gigawatts is also something we're now investing heavily to reach.

[Unknown Executive]

Okay. With that we're done with the questions from the mail.

[Paul Stormoen, Chief Executive Officer]

Excellent. So then I think we're ending our first public annual announcement or annual report and looking forward to the year to come. Thanks, everyone, for listening in, and see you all soon.

[Johan Rydmark, Chief Financial Officer]

Thank you.