Swiss energy company VAROPreem looks to double earnings by 2030 as Europe faces fuel supply crunch

By May Angel and Stephanie Kelly

LONDON, Oct 23 (Reuters) - Swiss energy company VAROPreem set out on Friday a five-year growth strategy targeting earnings more than twice its 2025 level, as Europe faces tighter fuel supply and a shrinking refining base.

Within that target, VAROPreem, one of Europe's largest independent refiners and renewable fuel producers, expects to maintain sustainable energy earnings at more than 50% of total earnings, rather than increasing sustainable energy's share of earnings. This is largely because it sees strong growth from defense, a sector heavily dependent on fossil fuels.

The US-led war with Iran and the Russia-Ukraine war have caused global fuel supply disruptions, with the vital Strait of Hormuz constricted and Ukraine attacking Russian refineries.

The energy crunch has in turn driven renewed interest in sustainable energy sources such as biofuels.

VAROPreem supplies about 10% of Europe's mobility fuel demand in transport and marine across 41 countries and serves 50,000 business customers, the company said.

Varo Energy, backed by private equity firm Carlyle Group and the world's biggest trading house Vitol, agreed to buy Swedish refiner Preem last year to form VAROPreem, betting on growing demand for biofuels.

AIMING TO DOUBLE EBITDA

The company is targeting earnings before interest, taxes, depreciation and amortization of more than double 2025 levels of about $1 billion by 2030, it said.

"We are shifting gears from essentially transforming the business to accelerating growth," CEO Dev Sanyal told Reuters by phone.

VAROPreem aims to increase its share in the aviation, marine and defense segments in the markets it currently operates in to over 15% by 2030 from 10% currently. It is also targeting a 20% increase in biofuel production capacity by 2030 from 1.3 million metric tons in 2025.

Sanyal said while the macro environment is "very constructive" around biofuels, Europe is short of fossil fuels due to a spate of refinery shutdowns.

VAROPreem expects fossil fuel demand from sectors such as defense to double over the next 10 years, and is looking to grow its fossil and sustainable fuel businesses in equal measure.

"When you buy F-35s, they don't run on biogas," Sanyal said of the US-made fighter jets. "They run on conventional energy."