The Board of Directors of Otovo ASA has approved a new cost program that is estimated to reduce costs by NOK 200-225m per year. As part of the program, the number of employees will be reduced to around 200, from a total of 366 at the beginning of this quarter (down ~46%).
The cost reduction measures will encompass all countries and functions. This will bring costs down to a suitable level for current installation volumes, as communicated on 20 August (Q2 earnings release).
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The selection of affected employees will happen in September, with a majority of departures occurring in the coming weeks, and with severance payments expected during the third quarter. The bulk of cash improvements from the program are anticipated to have taken effect by end of year 2024.
Approximately NOK 150m of the 200-225m annual savings will result from reductions in employee count, affecting payroll and capitalized R&D. An additional NOK 50-75m will be saved in general & administrative costs and marketing.
For comparison; in Q2 personnel cost (payroll and capitalized R&D) was NOK 80m (approx. 320m annualized), while marketing and general and administrative costs amounted to NOK 55m (approx. 220m annualized), meaning that the personnel costs are to be reduced by 47% and other costs reduced 22-34%.
Increasingly, Otovo’s projects across Europe are managed from the Shared Service Center in Madrid. By concentrating our teams, we are able to efficiently allocate resources to the markets where capacity is required. We are able to maintain local insights, and also gain efficiencies in execution across all of our markets. Our technology platform, which is the same in all of the countries where Otovo is present, enables us to focus on our essential functions, and reduce idle capacity, even as the solar demand varies locally.
These reductions affect more than half of current employees through downsizing and changes in job location. This is not unlikely to impact sales and installation times in a transitionary period.
Andreas Thorsheim, CEO of Otovo, remarks:
– These are necessary reductions in cost levels to bring the company to profitability in the current market environment. Combining the ongoing portfolio sale and the improvements we have done in partnerships, hardware offerings and sales method over the last year improve our robustness for 2025, says Andreas Thorsheim, CEO.
Several European solar markets have seen a dip in 2023-24, after the expansion of demand in the wake of the energy crisis of 2021-22. Solar installation costs have reduced significantly in this period, helping profitability even as some markets see tougher financial conditions for homeowners and lower electricity prices.
– The importance of residential solar for the energy transition in Europe is indisputable. Otovo’s unique platform has shown to be the most efficient way to purchase and install solar, batteries, energy management systems and EV chargers, Thorsheim adds.
Disclosure Regulation
This information is subject to the disclosure requirements pursuant to section 5-12 of the Norwegian Securities Trading Act.
Metrics used in this notice are defined in the attached financial report.
About Otovo: For homeowners, Otovo is the easiest way to get solar panels on the roof, and batteries in the home. Otovo is a marketplace that organizes hundreds of local, high quality and qualified energy installers. The company uses its proprietary technology to analyze the potential of any home and finds the best price and installer for customers based on an automatic bidding process between available installers.
Follow us on investor.otovo.com for reports, financial calendar, contact details and more.
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