2G Energy AG Revises 2025 Forecast Amid Eastern Europe Delays and ERP Transition

2G Energy AG has revised its financial forecast for the 2025 fiscal year, lowering sales revenue expectations to EUR 380-400 million from the previously projected EUR 430-440 million, though this still represents potential growth of up to 7% compared to the previous year. The temporary slowdown stems from two primary factors: delays in incoming orders from Eastern Europe, particularly Ukraine, and a temporary decline in service volume resulting from the company's ongoing ERP system changeover in Germany. The company also anticipates a reduced EBIT margin of 6.5-8.0%, down from the previous forecast of 8.5-9.5%, attributed to lower sales volumes and one-time expenses associated with the ERP project implementation.

Despite these short-term challenges, the company reported encouraging performance in other markets, with incoming orders in the third quarter outside Ukraine exceeding the previous year's quarter by 30%. CEO Pablo Hofelich explained that the original plan involved filling production capacity with large-volume, low-variant orders during the fourth quarter while simultaneously managing the ERP implementation and ambitious growth targets. The Ukrainian market unexpectedly failed to materialize as anticipated in late summer 2025, with no relevant tenders for short-term combined heat and power deliveries awarded in the second half of the year, contrary to management expectations based on previous year patterns.

The ERP changeover has now been transferred to regular operations at German locations, enabling the company to leverage further rationalization potential. However, German service operations continue to experience challenges as the new material planning and resource planning system has not been fully implemented, leading to temporary decreases in delivery and service volumes during the third quarter and October compared to the previous year. CFO Friedrich Pehle noted that while the company has historically offset fixed cost increases through faster sales growth and contribution margins, the expected growth of up to 7% in the current financial year will not be sufficient to maintain or increase the previous EBIT margin levels.

Market performance outside Ukraine shows significant strength, with Germany achieving 91% year-over-year growth in incoming orders during the third quarter, driven largely by German biogas producers abandoning their wait-and-see attitude following the launch of an attractive subsidy program known as the biomass package. The rest of Europe excluding Ukraine achieved 38% growth compared to the previous year, while North American markets continue to show positive development despite the expiry of the Inflation Reduction Act in the United States on December 31, 2024. The management remains convinced that the data center market and newly established joint venture rental business will more than double sales in the United States over the medium term.

The company maintains its optimistic outlook for 2026, keeping the sales revenue forecast unchanged at EUR 440-490 million with an expected EBIT margin of 9.0-11.0%. This projected growth will be supported by positive effects from the German biomass package, planned gains in the heat pump segment, the Demand Response product launch, and significant expansion in service volume. For 2027 and subsequent years, specific projects in the newly targeted data center markets in Europe and North America, combined with the German biomass package, are expected to secure continued growth. The management considers the potential of the biomass package particularly significant, as this flexibilization program specifically provides for the construction of additional CHP units totaling 2.8 GW by 2033, increasing current installed output of 6.6 GW by 42%.

2G Energy AG continues to benefit from key macroeconomic energy trends in G20 countries, including increasing grid congestion, strong expansion of data centers requiring independent energy supply, growing importance of large heat pumps, and rising demand for gas engine-powered generators. In Germany, the new federal government has confirmed the need to realize at least 20 GW in new gas-fired power plants in the relatively short term, providing additional growth opportunities for the company's diversified energy solutions portfolio. The company's strategic focus remains on achieving annual growth of at least 10 percent plus inflation through continued development of group structure, ERP system implementation, heat pump division expansion, assembly capacity increases, and establishment of a separate Data Center division.