#13 - #14 - Business news from the Economic Mission of the French Embassy in Denmark [fr]
#13 - #14 - Business news from the Economic Mission – 11.06.2021
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.
New forecast : Danish government confident of economic recovery
Growth is expected to reach its highest level in 15 years, with GDP rising by 2.4% in 2021 (0.3 percentage points higher than the April forecast) and 3.6% in 2022. Although the growth forecast for 2022 has been revised downwards slightly, the government remains very optimistic overall. Among other things, it expects exports to reach their strongest growth in over 10 years (+5% in 2021 and +6% in 2022). "With the roll-out of the vaccines and the gradual reopening, we are now seeing the result of the hand-in-hand work of the government and the Folketing (Parliament), and above all of the historic fiscal effort supported by Danish employees and businesses," said Finance Minister Nicolai Wammen. Finans
Government economic forecasts for 2021:
• GDP growth: + 2,4%
• Private consumption growth: + 2,7 %
• Export growth: + 5,1 %
• Import growth: + 6,2 %
• Increase in consumer prices: + 1,1 %
• Increase in house prices (on purchase): + 11,2%
Similarly, the economists of the Confederation of Danish Industries (DI) forecast growth of 2.5% in 2021 and 3.5% in 2022. According to the FH trade union, GDP growth will be 2.2% in 2021 and 3.4% in 2022.
Both organisations indicate that private consumption will be one of the main drivers of the Danish economic recovery: DI expects private consumption to reach its highest level since 1994, with an increase of 3.6% in 2021 and 5% in 2022.
colai Wammen. Finans
Demographic forecast: population increase in large cities
According to the latest demographic forecasts from Danmarks Statistik, the map of Denmark is likely to become even more mixed in the coming years, with a relative decline in the peripheral cities and an increase in the population of large cities. In total, 28 of the country’s 98 municipalities are likely to lose residents by 2035. The largest percentage declines are expected in the municipalities of Lolland, Lemvig, Struer and Morsø. In contrast, Denmark’s major cities are expected to experience significant population increases within 15 years: +13% of inhabitants are expected in Copenhagen, +12% in Aarhus, +8% in Aalborg and +6% in Odense Berlingske
Danes are the most optimistic in Europe about their finances
Only 5.5% of Danes say they are struggling to make ends meet, according to new data from the European agency Eurofound. In neighbouring countries, such as Sweden, Germany and France, the proportion is much higher (11.1%, 16.3% and 27.6% respectively). The European average is around 24%. The Danish economic optimism can be explained, among other things, by the savings accumulated during the coronavirus crisis – Danes’ deposits in banks having reached a new record high – and the positive employment trend. According to Carsten Holdum, economist at PFA, there is still considerable potential for increased private consumption in Denmark. Finans
Inflation at its highest level since 2012
In May 2021, inflation in Denmark was 1.7% (compared to May 2020), its highest level since 2012. The increase is mainly due to higher tobacco, petrol and diesel prices, as well as higher rents. According to the chief economist of the Danish Chamber of Commerce (DE), Tore Stramer, inflation is expected to reach 1.25% over the year 2021. Although high inflation can have negative consequences for the economy, there are good reasons to believe that some of these price increases will turn out to be temporary, such as energy prices, according to economist Louise Aggerstrøm of Danske Bank. Finans
Brexit: decline in Danish imports from the UK
Until the 1970s, the United-Kingdom was Denmark’s most important trading partner. Since the Brexit, trade between the two countries has become more complicated: in the first four months of 2021, Danish imports of goods from the UK fell by almost 40% compared to the same period the previous year. In contrast, Danish exports of goods to the UK have remained stable. The reason for this is the need for Danish companies to complete customs documents, as well as the need for Danish consumers to pay customs and import fees. At PostNord, the number of parcels from the UK has fallen by 10-20%. However, a new European solution is expected to be in place by July, so that European customers of UK online shops will no longer have to pay fees.
On the other hand, trade in services between the two countries has also fallen over the same period (by about 16% for Danish exports to the UK), notably because of the lack of free movement of workers and the lack of an agreement on mutual recognition of professional qualifications. Berlingske
Recommendations from the seven Vækstteams to stimulate regional growth
Over the past three months, seven expert groups have prepared recommendations to unlock new growth opportunities in all regions of the country. To follow up, DKK 500 million (€67 million) has been allocated in the Finance Act under the REACT-EU programme. Among other things, the potential of each region has been identified as follows:
North Jutland: Green industries of the future ;
Central Jutland: water technology;
South Jutland: development of green energy systems in the North Sea;
Zeeland and Islands: biosolutions and green infrastructure;
Fionie: robots, drones and maritime transport;
Capital Region: life sciences and wellness technologies;
Bornholm: exploitation of green energy from offshore wind turbines in the Baltic Sea.
The Danish Business Promotion Council, which is responsible for providing Danish companies with the best development opportunities, is responsible for the actual implementation of the funds allocated to these recommendations.
Record contract for Green Hydrogen Systems
Danish company Green Hydrogen Systems, which is currently preparing its IPO, has just signed the largest contract in its history to launch the commercialisation of its electrolysis technology. Green Hydrogen Systems has signed a framework agreement with France’s Lhyfe and Denmark’s Eurowind Energy for the development, installation and commissioning of a 24 MW power plant in Skive. By comparison, Green Hydrogen Systems’ order book is currently only 7 MW. The Skive plant will produce hydrogen from the renewable energy generated by the turbines on site. This green hydrogen can be used directly in vehicles equipped with fuel cells, or will be further processed into green methanol for heavy duty transport. Green Hydrogen Systems will be responsible for operating the plant for the first 24 months, after which Eurowind Energy and Lhyfe will take over operations. The first phase of the project (12 MW) will be ready by the end of 2022. Finans
Triangle Energy Alliance: new partnership for the production of green fuels
The Triangle Energy Alliance brings together 13 companies and 7 municipalities in the "triangle" region. The aim of the partnership is to take advantage of the collaboration and synergies between the different sectors and companies in the region, in order to reduce the costs of green hydrogen production. According to Christian Motzfeldt, president of the Triangle Energy Alliance and Better Energy, the partnership will generate several billion kroner in investments and will be able to supply green fuels as early as 2022. For Green Hydrogen Systems, the Triangle Energy Alliance offers an opportunity to demonstrate the impact that Power-to-X can have on an industrial scale, especially through sector coupling. Although the partnership is still in its infancy, a concrete hydrogen production project has already been launched by Everfuel: the company has announced an investment of DKK 1.9bn (€260m) in the construction of the Hysynergy green hydrogen plant in Fredericia. By 2022, the plant will have a capacity of 20 MW (producing 8 tonnes of hydrogen per day), which will then be expanded to 300 MW by 2024 (120 tonnes of hydrogen per day). About 20% of the green hydrogen produced will be used directly as fuel, while the remaining 80% will be sold as green feedstock for the production of other fuels - methanol or ammonia - (notably to the nearby Shell refinery). Everfuel also plans to sell surplus heat from the plant to the district heating company TVIS, which is also a partner in the Triangle Energy Alliance.
New government initiative: ’’Green cities and a developing capital’’
In order to strengthen the green transition in the country’s major cities and improve living conditions in the capital, the government has presented a project consisting of 19 new initiatives. The main aim is to ensure greener traffic, cleaner air, and more space for nature in the big cities, while stimulating business development in the metropolitan area and meeting the growing demand for housing. Among other things, the government proposes that cities will be able to establish ’zero emission zones’ (where petrol and diesel vehicles will be banned), and to tighten the requirements for ’environmental zones’ (e.g. by banning diesel vehicles). In addition, cities will also have the opportunity to ban old wood-burning stoves in communal heating zones. Miljøministeriet, Berlingske, Børsen
Expansion of Lagkagehuset to Denmark, London and New York
Danish Bake Holding has over 100 shops in Denmark (behind the Lagkagehuset brand), as well as 14 in London and three in New York (behind the Ole & Steen brand). Despite a deficit of DKK 227m (€31m) in 2020, Danish Bake Holding will open over 40 new shops over the next three years. This development is supported by financially stable owners (private equity funds Nordic Capital and L Catterton), who have injected an additional DKK 200m (€27m) to support the group’s expansion. The coronavirus crisis has also led to a new strategy for the management of Danish Bake Holding’s shops, with a focus on digitalisation and reducing food waste. To this end, the group will work with the Danish start-up Too Good To Go. Other Danish food brands have also successfully exported internationally, such as Sticks’n’Sushi, which operates in the UK and Germany, and Joe & the Juice, which has shops in the US, France (Paris and Nice), the UK and South Korea.
Increase in donations from shareholder foundations
According to the Foundation Analysis 2020, prepared by Kraft & Partners, the 30 largest shareholder foundations in Denmark have a total wealth of at least DKK 444bn (based on equity), or €60bn, and distributed approximately DKK 11.5bn (€1.6bn) in donations in 2020. The Novo Nordisk Foundation alone has donated DKK 5.5bn (€740m) in 2020, including for coronavirus-related projects. In 2010, the wealth of these foundations amounted to only DKK 264.4 billion (€36 billion), and their donations to DKK 6.5 billion (€870 million). The amounts donated have increased sharply over the years, and have been accompanied by growing influence at the political level. Finans
Rains: increased turnover and international expansion
Despite the challenges of the coronavirus crisis, Danish fashion company Rains broke records in 2020. Founded in Aarhus in 2012, Rains makes waterproof clothing (particularly jackets, bags and trousers). Its financial results indicate a significant increase in turnover (undisclosed) in 2020, as well as a 54% increase in pre-tax profit to DKK41m (€5.5m). According to Jan Stig Andersen, CEO of Rains, this positive development is due to long-term returns on investment, as well as growing demand in all its channels and markets (especially in the UK, Germany and France). With an export share of 90%, Rains operates internationally via 2,000 retailers in 30 countries. Rains also has its own concept stores: six new shops were opened in 2020, with more to come in 2021. Finans
Eurofins may soon analyse Denmark’s wastewater
The French group Eurofins has accumulated experience in testing wastewater for coronavirus. In Denmark, Eurofins Miljø is ready to use this method since August 2020. The company now believes that it can halve the number of tests performed by testing Danish wastewater. This proposal is supported by both experts and politicians, who see it as an opportunity to relax the corona passport requirements. In addition, wastewater testing would reduce the costs of the Danish coronavirus strategy, saving DKK 988m (€133m) per month: the current cost of testing Danes is DKK 2bn (€270m) per month (500,000 tests per day), and monitoring wastewater at 300 Danish sewage treatment plants would only cost DKK 164m (€22m) per year. If Eurofins wins the tender, which the State Serum Institute is currently preparing, it would be possible to start testing as early as mid-July 2021. Berlingske
Tryg becomes the largest insurance company in Scandinavia
Tryg has completed, together with Canada’s Intact, the acquisition of the British insurer RSA Insurance Group. This is one of the largest takeover transactions in Denmark to date, making Tryg the largest insurance company in Scandinavia, with 5.3 million customers and 6,000 employees. Tryg takes over RSA’s operations in Sweden and Norway (Trygg-Hansa and Codan, respectively), and Intact takes over its operations in Canada, the UK and the rest of the world. In the Danish market, Intact and Tryg will share ownership of Codan, and Intact will be responsible for running the company. The cost of the acquisition was DKK 60 billion (€8 billion) in total, of which Tryg paid DKK 37 billion (€5 billion). To complete the acquisition, Tryg had to obtain a total of 16 approvals from authorities in 11 countries.
Danfoss in the market for electric buses and trucks
Finnish subsidiary Danfoss Editron develops electric and hybrid drive systems for commercial and heavy machinery and vehicles (both land and sea). It has recently entered into a partnership with two other major international companies, Meritor and Electra, to provide a complete powertrain for large electric vehicles. The project is called Electric Powertrain Integration for Heavy Commercial Vehicles (EPIC), and Danfoss will contribute compact inverters and electric motors. The development will mainly take place at the Danfoss Editron site in Scotland, where the Low-Carbon Innovation Center will be established. According to Adrian Schaffer, head of Danfoss Editron’s On-Highway division, this is a technological breakthrough, which could enable the new consortium to become a major player in the electric bus and truck market in the future. Finans
Record profit for Terma, despite the coronavirus crisis
The Danish defence, security and aerospace company achieved a record turnover of more than DKK 2.07 billion (€280 million) in 2020/21, up 8% on the previous year. Its profit also reached a high level (DKK 137 million, or €18 million), corresponding to an increase of 25%. Terma was, however, negatively affected by the coronavirus crisis, which, among other things, forced it to lay off some of its staff for long periods and to postpone naval projects. Terma’s good results are explained by the $1 billion agreement with the US Air Force at the beginning of the year (by the aeronautics division), as well as by the growing demand for its conventional radar programme (surveillance division). Terma’s space division also performed well in 2020/21, thanks to a series of collaborations with the European Space Agency, ESA. According to Jes Munk Hansen, CEO of Terma, this positive development is the result of a greater openness to the world and massive investments in technology.
Clever launches smart charging system for electric cars
From mid-June, the charging operator Clever - which, together with E.ON, is the largest player on the Danish market - will deploy its first generation of intelligent home charging systems for electric cars to 1,000 customers. The aim is that, in the long term, the electric car, the charging box and the electricity grid will communicate continuously and be able to adjust the charging according to the price of electricity, the load on the grid and the amount of green energy in the grid. According to Casper Kirketerp-Møller, CEO of Clever, there is a huge potential both for the Danish company’s energy transition and for exporting new solutions internationally. Last year, Clever announced that the company would install at least 10,000 new public charging stations by 2025.Berlingske
New venture capital investment for start-up Eloomi
Eloomi is an HR technology company founded in 2015 by Claus Bach Johansen. It develops software to facilitate meetings, conversations, and other HR-related content online. The Danish start-up has just closed a Series B funding round, valuing the company at around DKK 1.2bn (€160m), and has received DKK 335m (€45m) from US venture capital fund Great Hill Partners, and DKK 45m (€6m) from existing investors. Eloomi had previously raised several million kroner in a Series A round in the summer of 2019, before securing a DKK 50m (€7m) capital injection from Vækstfonden in October 2020. Eloomi employs more than 100 people in its offices in Copenhagen, London and Orlando, and has customers in 26 countries (with the US and UK accounting for half of its revenue). Its ambition is to join the ranks of Danish unicorns, including Trustpilot and Zendesk. Børsen
Ecco launches new investment company for green solutions
At the end of 2020, the owner of the footwear group Ecco Holding established Ecco Investment Corporation, with the objective of participating in projects that contribute to the development and implementation of new technologies in footwear and leather production. In its first investment, the new company has acquired 25% of Circlia Nordic (formerly IBJ Innovation), a Danish company that has developed a solution to transform sewage sludge and other biomass waste into new raw materials in a circular economy. This initiative of the Ecco Group is part of a global strategy of green transition: in its last annual report, the company announced various concrete green objectives, such as the reduction of the use of fossil fuels and the recycling of 90% of the waste produced. Finans
Novo Nordisk faces large losses in the Chinese market
In 2020, Novo Nordisk’s sales in the Chinese market reached DKK 14 billion (€2 billion), of which DKK 11 billion (€1.5 billion) was insulin. China accounts for 11% of the group’s sales and is therefore its second largest market. But a new procurement model, volume-based procurement (VBP), could potentially lead to large losses for Novo Nordisk. The VBP model guarantees a certain volume in exchange for lower prices. It has been implemented by the Chinese authorities in Wuhan, and could be generalised throughout the country. According to Bernstein analyst Wimal Kapadia, this change in model could reduce Novo Nordisk’s insulin sales in the Chinese market by more than 43%. Mike Doustdar, Novo Nordisk’s vice president of international operations, acknowledged that there was a risk for Novo Nordisk. But although several multinationals have seen the price of their products fall by up to 80% in China as a result of the VBP model, he said such a development seemed unlikely for the Danish pharmaceutical giant. Indeed, Novo Nordisk has a strong position in China, with a broad portfolio of products on the market and in the pipeline.
Sale of Mærsk Container Industry
According to Bloomberg News, several companies have already expressed interest in buying Mærsk’s container business, which was officially confirmed for sale in early May. Chinese groups China International Marine Containers and Midea are expected to participate in the bidding, as well as Carrier Global, Thermo King, Daikin Industries and Triton. Mærsk is expected to receive the bids by the end of July. Mærsk Container Industry, which produces refrigerated containers used primarily for the transport of foodstuffs, medicines, etc., is expected to be worth around $1 billion. Finans