Only three years after its founding, earnings take a big leap at Yggdrasil Commodities. Currently, the company is working on an ambitious growth strategy together with the newly appointed board of directors.
The ingredients to ensure a continuous positive development are investor capital, more markets, an increase in traded volumes and more employees. Today, the company is trading electricity on three continents.
Yggdrasil Commodities has more than quadrupled its earnings compared to the previous fiscal year, netting a 3.5 million EUR profit for the fiscal year 2020-2021.
During the first three years, Yggdrasil focused on setting up and developing the IT platform. The backbone of the company is the conviction that algorithms are the most successful way to predict the electricity prices. The right team is now in place and new hires are joining the company.
Earnings from the US
Today, the biggest share of the earnings comes from the American market where the company started its adventure:
“It is our fourth year of trading in the US, and we have documented that our trading strategies work. Hence, we have turned up the volume the past year, and this is reflected in the financial statements,” explains Søren Agersbæk Jensen, co-founder and CEO of Yggdrasil Commodities
Two years ago, the company started trading in Europe and now earnings are starting to increase.
“Our strategies in Europe are slowly beginning to prove that they work. Thus, during the next year we are turning up the volume in Europe, and we expect to see the same development over the next 12 months as we have seen in the US the past year”, he continues.
Yggdrasil Commodities expect to increase earnings significantly over the next year even though the bar is high, and a repetition would be a very ambitious goal, according to the CEO.
Focus on risk management
The three-year plan, recently presented for the board of directors by COO, Søren Bondo Andersen, and Søren Agersbæk is constantly adding new markets to the portfolio, one at a time.
“Our business is relatively simple since we neither create products nor interact with customers. Our main priority is spreading our risk and avoiding that a single market is becoming too dominant. The more geographically different markets we are trading, the more we are able to increase our earnings,” says Søren Bondo Andersen and continues:
“We get valuable input from our new board of directors to focus our resources in the strategically best way. It means a great deal to us that we must continuously convince external stakeholders that our risk spread is sensible, and our growth is on the right track. At the same time, we get incentive to increase our internal transparency and strengthen the part of our business that does not relate to the IT platform. Hence, the board of directors keeps us on our toes and that is very positive for us.”
The company has been working intensely on a new market for the past two years, and it is expected to start generating earnings over the next 12-24 months. It is located in Asia, according to Søren Agersbæk Jensen, and he elaborates:
“We do not necessarily develop markets in the most obvious order, and we want to wait a little while before revealing our new market. We take a risk when entering new markets, we do not know. Therefore, we trade conservatively for the first couple of years, but we expect big earnings in Asia over the next year,” and he states:
“Business development is a crucial part of our strategy, and we continuously work on adding new markets to our portfolio.”
Yggdrasil Commodities has recently been valued at 21.5 million EUR, and according to the CEO the goal is 135 million EUR (or 1 billion DKK) within the next three to five years.