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Danske Commodities to Expand as Volatility Boosts Trading Profit

Danske Commodities A/S, a closely held Danish energy trader, plans to hire 51 more people this year after boosting profit 77 percent in 2012 as wind and solar power boosted price volatility.

The Aarhus, Denmark-based company added 34 people in the first quarter, taking the total workforce to 265 after more than doubling it last year, Torben Nordal Clausen, Danske Commodities’ chief executive officer, said by telephone. Net income rose to 217.7 million kroner ($38.2 million) in 2012 as revenue climbed 53 percent from a year earlier to a record 9.3 billion kroner, the company said in an e-mailed statement today.

Solar and wind generation in Germany has increased 80 percent over the past three years, according to data compiled by Bloomberg. Danske Commodities boosted bilateral power trading 178 percent last year as the share of renewable power in Europe rose, increasing price swings.

“As long as we have volatility in the market we will continue growing,” Nordal Clausen said. “The first quarter of this year was the best in our history because of the volatility in the marketplace.”

European utilities have seen profit margins squeezed as slower economic growth erodes energy demand and increasing amounts of renewable electricity damps prices. RWE AG (RWE), Germany’s second biggest utility, reported a 0.8 percent decline in annual earnings on March 5 while EnBW Energie Baden-Wuerttemberg AG (EBK), Germany’s third-largest utility, said on March 1 that 2012 profit fell 4.3 percent on a weaker performance in power generation and trading.

‘Huge Demand’

Danske Commodities, which buys and sells power, gas and emission permits in 31 countries, started trading in Ireland, Lithuania, Turkey and Albania last year, Nordal Clausen said. The hires will be across the organization, including trading, business development and software development, he said.

The company focuses on near-term power and gas with about 90 percent of trading settled within 24 to 48 hours and Germany is its most profitable market, Nordal Clausen said. Revenue from buying and selling power rose 42 percent to 900 million euros ($1.18 billion), he said.

The gap between the highest and lowest price for electricity deliverable the next day in Germany widened to 155.85 euros a megawatt-hour on the European Energy Exchange AG in 2012 from 54.67 euros in 2011.

Volatility makes it challenging for generators to decide when to produce electricity for the best price, Nordal Clausen said. Danske Commodities processes about 500 million excel lines of data each day about solar, wind and hydropower production and consumption to advise electricity generators, he said.

“We provide power plants with advice on how to optimize production and last year we increased the income of our partners by 50-200 percent,” he said. “There is a huge demand in the market for this product.”

To contact the reporter on this story: Rachel Morison in London at rmorison@bloomberg.net

To contact the editor responsible for this story: Lars Paulsson at lpaulsson@bloomberg.net

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