Energy costs hit Genan amid “record-high” turnover

Viborg, Denmark – Tire recycler Genan has seen its earnings significantly impacted by high energy prices, despite “record-high” sales last year.

Genan saw revenue increase 4.6% year-on-year to €62 million during 2022, as the group recycled 400 kilotonnes of end-of-life tires (ELTs) last year.

Earnings, however, dropped from €3.5 million in 2021 to €1.5 million in 2022 – mainly due to increases in energy costs and freight prices.

Another contributor to lower earnings was a decline in steel prices from an “exceptional high” in 2021, said Genan, which recovers steel and recycled rubber from ELTs.

“[The year] 2022 turned out to be a most challenging year – for us as well as for many other companies,” said CEO Poul Steen Rasmussen.

“The price of electricity multiplied at extremly short notice, especially during the third quarter of 2022,” the Genan leader said.

In that period, Rasmussen said, the group’s electricity bill went from €700,000-800,000 per month to €2.2 million.

At the same time, the group faced “a considerable increase” of freight rates, which reduced competitive edge of Genan in many export markets.

To mitigate the effects of high energy costs, Rasmussen said Genan had employed automatic on/off systems at all plants – spread across Denmark, Germany, Portugal and the US.

The systems automatically shut down when the price of electricity have reached a certain level.

“Otherwise, production would have continued at full speed at a staggering cost level,” the CEO explained.

Such cost increase, continued Rasmussen, could not have been compensated for by “an energy-surcharge or price increases.”

Genan is now also considering expanding its renewable energy resources, including solar panel installations at tire recycling plants.

Looking ahead, the Danish recycler says it has “a more positive outlook” for 2023.

“Visbility is still low in respect of both raw material prices and cost level,” said Genan.

However, it added, indications are that the increases will decline in general over the next few years.

For instance, Genan noted that energy and freight prices “seem to have stabilised” at a lower level than in 2022.