#12 - Business news from the Economic Mission of the French Embassy in Denmark [fr]
#12 - Business news from the Economic Mission – 26.05.2021
Disclaimer - The Economic Mission strives to provide accurate and up-to-date information and will correct, to the extent possible, any errors that are brought to our attention. However, it cannot be held responsible for the use and interpretation of the information contained in this publication.
Record number of unpaid rents among companies
The coronavirus crisis has caused a new record of unpaid rents among companies, totaling DKK 4.5 billion (€ 610 million). Property Denmark, which represents approximately 85% of the commercial real estate market, has seen a 65% increase in arrears between March and April. Store arrears account for 60% of the total amount. Jannick Nytoft, CEO of Property Denmark, warns that the situation will not be sustainable in the long term: individual settlement agreements between landlords and tenants and compensation schemes will not solve the problem, he says. With the reopening of the society, however, the situation should begin to improve. If not, Jannick Nytoft urges municipalities to eliminate (or at least reduce) the "cover charge" they levy on commercial properties. Berlingske
Hempel acquires Farrow & Ball
Danish paint manufacturer Hempel recently acquired the British paint and wallpaper company Farrow & Ball. As a result of this transaction, Hempel’s turnover is expected to increase by DKK 800 million (€ 108 million). A few months ago, Hempel acquired Australian Wattyl, which generated more than $1 billion (€820 million) in sales. Hempel’s objective is to double its turnover by 2025, notably through acquisitions, to reach DKK 22 billion (€3 billion). Hempel is expected to become a world leader in four segments: household paints, and surface protection for the marine, infrastructure and energy industries.Finans
Pork production expected to reach a record high in 2021
According to a forecast by the agricultural trade association Landbrug & Fødevarer, pig production of Danish farms is expected to increase by 1.2 million pigs in 2021 to a record 33.7 million pigs. Of these, 18.5 million are expected to be slaughtered in Denmark, and 15.2 million exported alive. Thus, Danish slaughterhouses are expected to receive an additional 1 million pigs this year (same increase as in 2020), enabling them to achieve their highest production level in 6 years. By 2020, pork exports from Danish slaughterhouses had increased by 120,000 tons (to 1.92 million tons), with the export value reaching a record DKK 35.8 billion (€4.8 billion). Finans
Agreement in Parliament for a new Life Science strategy
The government and a large majority in Parliament have reached agreement on a life sciences strategy to give new impetus to this growth sector in Denmark. The life sciences industry comprises companies in the pharmaceutical, biotechnology and medical sectors. In Denmark, there are about 1,500 such companies, with an average growth rate of 10% per year (five times higher than other sectors on average). Denmark also has a life science cluster of international scope: the Medicon Valley (in the Øresund region) is home to many public, private and academic players in the biotech sector. Over the next two years, DKK 270 million (€36 million) will be devoted to strengthening Denmark’s position in this field. The agreement contains a total of 38 initiatives, including public procurement, data security, public-private collaboration, and R&D.Berlingske
Sustainability of Danish companies questioned
A new report from Industriens Fond and the Academy of Technical Sciences (ATV) concludes that many Danish companies will have to take the green transition more seriously in order for Denmark to achieve truly sustainable production. The report focuses on five sustainability parameters: CO2, water, energy, waste, and other resources. It points out that too much attention has been paid to CO2 emissions - which are indeed decreasing - at the expense of the other parameters, where little improvement has been observed. Indeed, Danish companies’ consumption of water, energy and other resources, as well as their production of waste, is steadily increasing. Thomas Hofman-Bang, CEO of Industriens Fond, calls on Danish companies to develop an action plan and strategy that go beyond reducing their CO2 emissions to achieve fully sustainable production Berlingske
Approval of the Vineyard Wind offshore wind farm in the United States, developed by Copenhagen Infrastructure Partners and Avangrid
Twenty-four miles off the coast of Massachusetts, Vineyard Wind is the first large-scale offshore wind energy project in the United States. It will generate electricity for more than 400,000 New England homes and businesses with a capacity of 800 MW. The project is being developed by Denmark’s Copenhagen Infrastructure Partners and U.S.-based Avangrid, which will work with Danish companies Semco Maritime and Bladt, among others. The U.S. authorities had postponed the project several times by requesting additional regulatory analysis: originally scheduled to begin in 2019, the construction of Vineyard Wind will finally be able to begin, and should be completed in 2023. This project marks the beginning of the offshore wind market in the United States (expected to reach 25 GW by 2029). According to Lone Dencker Wisborg, Danish ambassador to the United States, Danish companies can play a major role. Several other developers, such as Ørsted, Shell and Equinor, also have large offshore wind farm projects underway in the United States.
Launch of H2RES, Ørsted’s first green hydrogen project
Ørsted has launched the construction of its first green hydrogen project, H2RES. The 2 MW plant, to be built in Avedøre Holme (Copenhagen), was developed with Everfuel, NEL, Green Hydrogen Systems, DSV Panalpina, Hydrogen Industry and Energy Grid. It has received funding of DKK 34.6M (€4.7M) from the Danish Energy Agency’s Energy Technology Development and Demonstration Program (EUDP). According to Anders Nordstrøm, head of Ørsted’s hydrogen activities, this project is important for decarbonizing sectors that cannot use electricity. In addition, Per Fogh, an analyst at Sydbank, points out that green hydrogen could prove to be an important competitive parameter in future tenders for offshore wind power (Ørsted’s main business). Ørsted has also announced its intention to develop nine green hydrogen projects in Europe.
Mærsk Drilling develops CO2 storage project in the North Sea
Mærsk Drilling is currently developing the "Greensand" project, in partnership with Ineos, Wintershall Dea and Geus, to store millions of tons of CO2 in empty oil fields in the Danish part of the North Sea. The goal is to have the first field ready by 2025 and then inject 3.5 million tons of CO2 per year by 2030. CO2 capture and storage technology is an important part of the government’s climate plan and the goal of reducing emissions by 70% by 2030: in April, the government launched the first funding pool for CO2 storage in the North Sea (DKK 197m, or €26m), and a national strategy is expected to be presented before the summer. This is also a great opportunity for Danish companies, which could potentially be among the global pioneers in this field. The global carbon storage market was worth $1.75bn (€1.4bn) in 2019, and is expected to reach $6.13bn (€5bn) by 2027. Børsen
Dan-Unity CO2: creation of the world’s first CO2 transport vessel
The two companies Evergas and Ultragas, headed by two former CEOs of Mærsk, have joined forces to found Dan-Unity CO2, whose objective is to build the first CO2 transport vessels. A partnership has been launched between Dan-Unity CO2 and Carbfix, an Icelandic project to sequester CO2 in basaltic rocks: the Icelandic subsoil is believed to contain space to store 2,500 gigatons of CO2, the equivalent of 55 years of global emissions. Dan-Unity CO2 vessels will also be used by Mærsk Drilling for its CO2 storage project in the North Sea. Each Dan-Unity CO2 vessel is expected to cost approximately $50-60 million (€41-49 million). With the technologies to capture, store and transport CO2 already in place and well known, Evergas CEO Steffen Jacobsen says that all that is needed are political decisions to give large emitters an incentive to invest in capture facilities rather than simply paying taxes for their emissions. Indeed, while a ton of CO2 emitted costs about €45, the cost of storing a ton of CO2 in the Icelandic underground is €100.
A "summer" aid package to boost the tourism, culture and entertainment sectors
A DKK 1.65 billion (€220 million) aid package has been adopted by a large political majority to help particularly hard-hit industries get back on their feet after months of closure. The package allocates DKK 295 million (€40 million) to the tourism sector (especially for large cities), DKK 110 million (€15 million) to domestic travel, DKK 400 million (€54 million) to affected industries (such as hotels and aviation), DKK 330 million (€44 million) to cultural, sports and community activities (especially for young people), and DKK 165 million (€22 million) to vulnerable people (the disabled, children, young people and the elderly). However, the Horesta professional association denounces the lack of ambition of this aid package: according to them, the restaurant, hotel and tourism sectors need more compensation, as their activity has still not returned to normal despite the reopening. According to Dansk Erhverv, the package should be used, for example, to reduce the price of tourist attractions in the major cities, as well as to attract foreign tourists to Denmark.
Increasing life expectancy and demographic trends
The Danish population is expected to increase from 5.84 million today to 6.3 million in 2050, due to a positive natural balance (difference between births and deaths) and immigration. In the coming years, the elderly will represent a significantly larger proportion of the population, due to the increase in life expectancy. By 2050, the number of people over 80 in Denmark is expected to more than double to 617,000 (10% of the population) from 282,000 today (5%). The number of people over 100 is expected to triple by 2050 to 4,300 (from 1,200 today). Conversely, the proportion of the population in the youngest age groups is not expected to change much over the next few decades. Thus, the prospect of an increasing number of elderly people will pose an economic challenge to the Danish welfare system. Carsten Holdum, economist at PFA, notes, however, that Denmark is well placed to cope with this development, not least because of the rising retirement age in Denmark, and the record level of pension savings per capita.