EKF delivers strong financial results in the first unpredictable half year
With a profit of DKK 486 million, EKF performed well in the first six months of a year in which the COVID-19 crisis created a new reality for Danish export businesses.
EKF Denmark's Export Credit Agency has just presented its half-yearly report recording a surplus of DKK 486 million generated in part by guarantees for large-scale green projects. In addition to its normal operations, EKF was busy launching new schemes in extension of the Danish Parliament's business relief packages, and then initiated a drive to reinforce its own organisation.
"Although 'corona' headlined much of the first six months of the year, we have maintained a high level of activity, including large guarantees for clean energy projects. Meanwhile, the majority of the projects involving EKF have proved resilient. This is the reason why we achieved a decent half-year surplus, and are ready to intensify our efforts for Danish exports," explains CEO of EKF Kirstine Damkjær.
In the spring of 2020, Danish companies were impacted by an unprecedented major crisis, with their liquidity coming under severe pressure from loss of revenue ensuing from the national lockdowns imposed worldwide. And when crises impact exporters, export credit agencies like EKF typically have a great deal to attend to.
Facts at a glance: About EKF's COVID-19 schemes
In spring, EKF launched new government guarantees as part of the Danish Government's business relief packages. The Liquidity Guarantees can be issued to small and medium-sized businesses and large corporates that have suffered or expect to suffer a major loss of revenue as a result of the crisis. These guarantees, which are currently set to run for the rest of 2020, could pave the way for new SME loans totalling DKK 1.25 billion and loans to large Danish exporters totalling DKK 7.1 billion.
Another helping hand to trade and industry was a sovereign guarantee fund of DKK 30 billion, which acts as a lifeline for the private trade credit insurance (TCI) market by ensuring that the TCI providers are able to maintain their usual insurance capacity during the COVID-19 crisis and the remainder of 2020.
TCI is a key element in facilitating sound, friction-free B2B trade, but was suddenly at risk of becoming unattainable from when the crisis broke out. EKF administers the sovereign guarantee fund availed of by the four private credit insurers in Denmark: Atradius, Coface, Euler Hermes and Tryg Garanti.
"In times of crisis, it is important that we are agile in adapting so that we remain capable of delivering for export businesses in the face of unprecedented shocks. In the first six months, for example, we had to move fast to operationalise the schemes EKF administers on behalf of the government in extension of the Danish Parliament's business relief measures."
Clean energy transition claims the lion's share
Despite the unpredictability of the first half of the year, EKF managed to sustain a high level of activity with new guarantees, bonds and loans issued to Danish export companies to a total of DKK 16.6 billion. According to EKF's CEO, the guarantees for clean energy transactions account for a large share of the results.
"Guarantees for green investments make up 70 percent of EKF's total transactions, and green transactions certainly accounted for the lion's share in the first six months. This includes EKF's involvement in financing large-scale wind farms in both the North Sea and Taiwan; projects that besides creating and retaining jobs in Denmark, contribute to reducing carbon footprints around the globe."
With a large guarantee for Changfang & Xidao Wind Power Co. Ltd. in Taiwan, EKF helped to finance the fourth offshore wind farm in Taiwan in just three years. The project is expected to go into operation from the start of 2024, supplying power for over 600,000 Taiwanese households.
Similarly, EKF issued a large guarantee to Seagreen, a new offshore wind farm off the east coast of Scotland. By 2022, when it is fully built, its capacity of 1.14 GW could cover the power consumption of around one million British households with green electricity.
”At EKF we have high ambitions to play a key role in driving the transition to a green economy and CO2 emissions reductions. Over their useful life, the two wind farms in Taiwan and the North Sea are projected to generate 54 million tonnes of emissions reductions all told. These reductions are achieved when the clean energy technologies displace the more pollutant technologies that are also still currently in operation. This is a virtuous spiral," Kirstine Damkjær explains.
EKF gears up its organisation
EKF's half-year report was presented in the wake of the announcement of the new high-profile appointments within EKF's organisation. On 28 August, EKF welcomed Peder Lundquist, who joined EKF as COO and Deputy CEO from a position as Head of division and member of the executive management group of the Danish Ministry of Finance.
A few days later, on 1 September, EKF appointed two managing directors for Clients & Sales in the shape of Thomas Hovard, former COO of Global Distribution and Client Services, Saxo Bank, and Peter Boeskov, back in Denmark after many years in London where he was most recently a partner and consultant with the advisory group The Principal Alliance and the corporate finance advisor Richmond Park Partners.
"The COVID-19 crisis has clearly demonstrated that export businesses now have to navigate a complex and highly changeable global arena. We have an important responsibility for ensuring that we are capable of responding to their needs at all times. With Peder, Thomas and Peter on the team, we are geared to deliver even stronger results for Danish exports and the clean energy transition, and I take pride in our ability to attract such strong profiles to EKF," says Kirstine Damkjær.