Hello, and welcome to the Alfen 2023 Q3 trading update call. My name is Laura, and I will be your coordinator for today's event. Please note, this call is being recorded, and for the duration of the call, your lines will be on listen-only. However, you will have the opportunity to ask questions at the end of the call. This can be done by pressing star one on your telephone keypad to register your question. If you require assistance at any point, please press star zero and you will be connected to an operator. I will now hand you over to your host, Marco Roeleveld, CEO, to begin today's conference. Thank you.
Thank you, Laura, and good morning and welcome to this webcast regarding the 2023 third quarter trading update of Alfen. We appreciate the fact that you've taken the effort to participate. This webcast and questions that may come forward are handled by the management board of Alfen, being Jeroen van Rossen, CFO, Michelle Lesh, CCO, and myself, Marco Roeleveld, CEO. In this third quarter, we increased our revenue with 11%, and we've been able to improve our EBITDA percentage compared to the first two quarters of this year. We may conclude that 2023 is for Alfen, the breakthrough year for energy storage systems. In this webcast, we will start with the highlights of the third quarter, followed by a short review per business line. Next, we will go in more detail regarding our financials and outlook.
We continue with slide 3, with the highlights of this third quarter of this year. In this quarter, we realized EUR 136.4 million in revenue. This represents a growth of 11% compared to the same period last year, and the revenue of our three business lines developed as expected. The overall gross margin was 29.4%, compared to 34.8% in the same quarter last year. This is purely driven by a shift in the business line revenue mix towards energy storage systems, and we are able to maintain the gross margin levels of the individual business lines. As a percentage of revenue, the Adjusted EBITDA declined from 19.9% in the first quarter of last year to 12%–12.7% in the same quarter this year.
But as said, we've been able to improve our EBITDA percentage compared to the first two quarters of this year. And we will confirm our 2023 full year revenue guidance of EUR 490 million-EUR 520 million. And lastly, I want to mention that our CFO, Jeroen van Rossen, has decided to leave Alfen after the AGM in April 2024. We highly appreciate his contribution to the growth of Alfen in the past 8 years, and we are happy that we directly can announce that his successor is in the, is in the person of Boudewijn Tans. Boudewijn is 55, 45 years old and has an extensive investment banking background, and worked the past years as CFO at another company active in the energy transition.
Jeroen will go in more detail on the financials and decision to leave later on in this presentation. In the commentary sheets, we'll go in a little bit more detail on each of our business lines. In the EV charging equipment business line, the Q3 revenues were EUR 34.9 million, and is about half of the revenue in the same period of last year. The decline was driven by low volume due to the destocking at our customers and a somewhat lower market demand. In retrospect, the year 2022 can be characterized by, for Alfen, by an exceptional post-COVID demand for EV chargers. Almost all of our customers have moved through their inventory. Throughout Q3, we've seen customers ordering again, however, at a lower volume than in 2022.
In the third quarter, about 57% of our revenue was generated from outside the Netherlands, and we produced roughly 36,000 charge points. For the next quarter, we continue to expect sequential increase of EV charging revenue, and for the coming year, we expect a revenue growth of 15%-20%. We now continue on sheet five, with smart grid solutions, where the revenue was 41% higher than the same period last year and amounted up to EUR 49.9 million. Both the grid operators and the private network segments grew strongly, but private networks even doubled in revenue compared to last year, when the revenue was hampered by the supply chain constraints in 2022. We continue to prepare for a step change in growth in coming years as grid operators in the Netherlands are scaling up their investment plans.
In the third quarter of 2023, we produced about 789 substations, a decrease of 1% compared to the same period last year. The decline was driven by a pivot in business strategy of Alfen Elkamo towards lower volume, higher value substations. In the Benelux, the produced number of substations increased with about 10%. We expect Q4 revenues to be in line with Q3 revenues, and in 2024, we expect to grow the revenue in this business line with about 20%. We go to sheet six, regarding energy storage systems, where we tripled our revenue in Q3 relative to the same period last year. The Q3 revenues were EUR 51.5 million, and this revenue increase was driven by both The Battery Elements, our stationary systems, and our mobile system, being TheB attery Mobile.
We continue our growth strategy for this business line in Europe in 2023. The momentum in the energy storage market remains powerful, mostly driven by continuous renewable growth and the need to balance electricity demand and supply. For the fourth quarter, we expect a revenue level in line with Q3, and the outlook for 2024 is also positive as we steadily build our lead pipeline and grow our backlog for 2024 with new order wins. In 2024, we expect to grow this business line with about, with at least 40% relative to this year. Please do note that the revenue for energy storage is highly susceptible to project execution and the timing of component allocation. Now, our CCO-- CFO, Jeroen van Rossen, will continue this webcast.
Thank you, Marco. Let's have a look at our financials, and we start with the Q3 revenue. That revenue amounted to EUR 136.4 million, which is a growth of 11% compared to the same quarter last year. And this growth was driven by smart grid solutions and our energy storage systems business lines. The gross margin in the third quarter was 29.4%, compared with 34.8% in the same quarter last year. However, relative to the second quarter of this year, the gross margin improved from 28.8% in the second quarter to 29.4% in this third quarter, which is driven by the product mix within energy storage systems and smart grid solutions.
Our adjusted EBITDA was EUR 17.1 million, which was 12.7% of revenues, compared with EUR 24.5 million, which was 19.9% of revenues in the same quarter last year. But also here, relative to the second quarter, the adjusted EBITDA significantly improved from 7.6% of revenue in the second quarter to 12.7% of revenue in this third quarter. This is driven by operational leverage in our smart grid solutions and energy storage systems business lines. Of course, at the financials 2023, we will provide a full and detailed statement of cash flows. But as an interim update, we would like to share that we generated a free cash flow of EUR 17.3 million in this third quarter.
Hence, the cash flow is developing in a positive way relative to the end position of the first half year, as we also anticipated. On the next slide, we will continue with the outlook. We expect that the energy storage systems and smart grid solutions markets will continue to grow throughout 2023, as Europe's transition to a carbon-free energy system that is not dependent on fossil fuels continues to gain momentum. We said before that for EV charging, we consider 2023 a bridge year after an extraordinary demand in 2022. If we look more long term, we continue to anticipate positive market developments for all of our business lines. And as Marco already mentioned, we reiterate our full year 2023 revenue outlook, which will be in a range of EUR 490 million-EUR 520 million.
Then finally, a few words on my decision to leave Alfen. Let me start by saying that it was definitely not an easy decision for me to leave Alfen and step down at the AGM in April 2024. But after a fantastic journey of more than 8 years, I felt that it is time for me to focus on other opportunities. But before I will do that, I will take a sabbatical to spend more time with my family. I'm very happy with my successor, Boudewijn Tans, who will already start at January 1, 2024. This safeguards, of course, a thorough and very extensive handover period. The last remark I want to make is that I fully believe that in the end, it's the people who make the difference.
So I'm very proud that I have been able to build such strong teams, and I'm convinced that they, together with Boudewijn, Michelle, and Marco, will continue to support and drive our profitable growth strategy. We are now at the end of the presentation, where I will hand over to the moderator for any questions. Moderator, could you please take over?
Thank you. Ladies and gentlemen, as a reminder, if you would like to ask a question, please press star one on your telephone keypad. Thank you. And we'll now take our first question from Ruben Devos at Kepler Cheuvreux. Your line is open. Please go ahead.
Yes, yes, good morning. Thanks for taking my questions. First of all, Jeroen, of course, I would like to wish you best of luck in your future endeavors. And then, of course, also, I hope you enjoy your time off for the sabbatical. Maybe first question on-
Thank you.
Yeah, maybe first question on the gross margins, basically, because I think that's, that's a very interesting dynamic, what we've seen in Q3, where you've obviously have, you think about EV charging with gross margins roughly around 40%, energy storage around 20%, basically meaning that, you know, for a decline of every EUR in EV charging, you have to make up for it with two additional EUR in energy storage. So, very curious if you could talk a bit about the gross margin evolution for energy storage in the rest of this year, but also going into 2024, because I believe you're also mentioning that basically, the product mix has also so much changed in Q3. So very interested to hear your comments on this.
Yeah, well, if you look at the gross margin as such, without wanting to put all the numbers in the market, because we said before that we will do that on a segment basis, let's say, with the semi-annual report as well as with the financials. But what we can say is that the margin in EV charging is relatively stable, and that we saw an increase of margins both in the smart grids and energy storage.
... And it's correct, with energy storage, we said that with the product mix, with a bit more of, let's say, not the extremely large, but still large projects and mobiles kicking in, that blended gross margin percentage would be somewhat different. So we are very happy with that increase in margin, and that's also a trend that we see continuing in 2024.
Okay. And I believe, one of the earlier comments in one of the other calls was that basically if you look at the 15%-30% gross margin guidance range, which you've given at CMD, it was said that basically we could be heading towards sort of the midpoint of that guidance range by the end of this year. Is that still how you look at things?
That is always the aim.
Okay. Okay, then for, I guess, the business from the private networks within the smart grids, with revenues doubling, could you walk us through how the private networks business improved so significantly in Q3? Also, I'm curious about how the, let's say, lingering effects of supply chain constraints in 2022 impacted performance in the first half of this year, but it's now no longer a drag.
Right. With, if we saw the, say, the year 2022, we saw, especially for the private networks, an impact on the execution of projects due to the constraints in the supply chain. As you can imagine, that when we have a, say, grid operator business, then we can almost pre-predict quite well what type of components we need in what type of time frame. And with private networks, we have to wait until, say, the final configuration of the project is clear, and then we can, say we really order the components. And sometimes, of course, we try to make reservations, but especially with the private network, we have the biggest, say, interaction with, say, supply chain constraints.
What we have seen in this year, that we've been able to catch up a little bit from, say, the delayed execution of 2022, and therefore benefit in this year in being able to execute on the relevant projects we have at hand, every these projects. It doesn't mean that we will double again next year. We expect more or less that it will be more or less in line with the given number of this year. But we saw in, that's it for 2023, and a little bit of an uptake due to the fact that now we've been able to cope with, say, the supply chain elements that were especially relevant in, in 2022.
Okay. And then just final question, still within smart grids. You had a quite significant pivot towards higher value substations. Could you just help us understand how these type of substations differ from what you were historically selling? What's sort of the makeup? How is it different? And yeah, how could that further impact the gross margins, of course. Thank you.
It is more or less a choice that we aim for, like, we did in the Netherlands for, say, energy transition-related new business. That means, say, substation for solar parks, substation for fast charging networks. And what we... Those type of substation, they are being characterized, that they are including transformers, including high voltage switchgear, that are mostly tuned towards the requirement of the customers. And, and they were able, more or less, also to generate a little bit better margin compared to, say, purely price-driven grid operator business in Finland.
So therefore, we decided that we would, more or less favor our customers with, where we can also leverage on our experience in, coming up to, say, proper value substations for the new market area, then, the more price-oriented part in the business.
Okay, thank you very much.
Thank you.
You're welcome.
We'll now move on to our next question from Nikita Lal at Deutsche Bank. Your line is open. Please go ahead.
Good morning, and thank you for taking my questions. First of all, Jeroen, thank you very much for your time and your efforts. I wish you all the best for your future. Yeah, one day, for sure, we will meet again.
Thank you.
I have two questions. I will go through them one by one. The first one is on Q4. If we look at the implied Adjusted EBITDA margin, it would suggest from the consensus figures we have for 2023, that it will be again single digit after seeing 12.7% in Q3. Is it the way we should think about Q4, or are we too conservative? I mean, you also guided us for the charging business that H2 should be H equal to H1. Some comments here would be for sure helpful.
I think I will first address the EBITDA. Of course, you know that we always focus on operational leverage, and unfortunately, that's not a linear line. So, what we also said is that particularly in smart grid solutions and energy storage, we felt that we were at the beginning of the operational leverage journey. I think what you definitely see is that in Q3, that journey starts to kick in. And therefore, we also said that we should continue and drive this further in the future. But as said, at certain moments, you need to invest up front, or the output is somewhat lower because a project shifts from one quarter to another quarter.
So it's not something which you can mathematically put into place. So that's why we always look at the trend line, and I think the trend is heading up again, and that was and will remain to be the aim.
And then in regard to first half equaling second half, we did share that previously. What we are now seeing is, you know, Q4 will not equal Q1, but we will expect a gradual increase in Q4 over Q3.
So just to be clear, Q4 will be below Q1?
Yes.
Okay. Understood. Thank you very much. My second question will be on pricing of chargers. What do you see there currently? Because if you calculate the ASP per charger, it is declining, and fell below EUR 1,000.
Yeah, I think if you, if you look over time and look back to, you know, first half 2022, ASP is up, but what we really need to focus on is the gross margin stability. So for us, that's really ASP is driven by mix. Pricing is not coming down and our gross margins are, are holding.
Okay, thank you very much.
Thank you. We'll now move on to our next question from David Kerstens at Jefferies. Your line is open. Please go ahead.
Hi, good morning, everybody. Thank you for taking my questions. I've got two on EV charging, please. First of all, you indicated that the share of revenues outside the Netherlands fell to 57%, down, I think, from 72% in last quarter. What is driving this much weaker momentum outside of the Netherlands, and what does that imply for your market share? Then the second question is more for 2024: How strong is the demand that you're seeing in the public segment currently to offset the impact of a slowing EV market on the home segment? You announced last week that framework agreement with E.ON. I saw some of your peers had a similar agreement. How much volume do you expect under that contract?
Will that public segment be sufficient to offset a slowdown on the home segment or a decline in the home segment? Thanks very much.
Yeah. Hi, David. So from an overall share perspective, we don't feel that we're losing share, but yes, obviously, we've seen some of our international countries slow down, specifically, I think some of our markets in Germany and the U.K. Some of those markets also had inventory that still needed to be worked through in Q3. And then from a public segment, you know, what we're seeing is that the public and business is a little bit disconnected from EV registrations. So we are expecting growth in public. Don't have the exact volumes for EDRI that we can share, but we do expect that to be a positive contributor over the next couple of years.
Yeah, sounds good. Do you expect the home segment to continue to grow in 2024, or is it a decline in the home segment offset—more than offset by growth in the public segment and with a mix effect as a result?
Yeah, the home segment has got a couple of subsegments, and I think you've got to look at, you know, how are the lease car providers supporting that segment? What's their turnover rate in terms of newer EVs versus the private EV owners? And I think what we're seeing right now is the private EV owners are maybe not purchasing quite as much. In Belgium, for example, they've introduced a new subsidy to try to incentivize second-hand EVs because those price points are still relatively high. But fundamentally, the long-term trend is there. So the home segment will have to... It'll play out over time as we introduce newer, lower-priced EV models and then also look at the lease car providers.
Okay, understood. Thank you very much. Jeroen, all the best in your future endeavors.
Thank you, David.
Thank you. And we'll now take our next question from Thijs Berkelder at ABN AMRO ODDO BHF. Your line is open. Please go ahead.
Yeah. Good morning, all. Congratulations on the strong Q3 performance. And, Jeroen, you still will do the full year results, so I'm not saying goodbye yet.
No, no, that's, that's absolutely true.
Question on your 2024 outlook on EV charging. You are communicating 15%-20% growth to expect versus 2023, but 2023 has suffered from destocking. Does that mean that if you exclude the destocking effects, that you underlying expect 2024 market for EV charges to be roughly flat versus 2023?
Maybe my interpretation is what we have or see now that we expect, say, a sequential uptake quarter by quarter in our EV charging revenue. If we look at, say, the first quarter of next year, the first quarter of 2023, it was the number was quite relatively high still because we then had a still outflow of chargers, which already were ordered way before in relationship to the, say, after COVID uptake. So the first quarter might be a little bit, say, to debate how the numbers compare.
For the whole year of 2024, we expect that the overall revenue will grow quarter by quarter, and therefore, at the end of next year, we expect still an uptake of the revenue compared to this year.
... Okay, clear. Then second question is on the strategy at Elkamo in Finland. What has now really changed in the strategy there?
In Finland, what we originally had focused on were the grid operators, and what we're starting to see is more opportunities for fast charging renewables, those more complex stations. So we've made a strategy shift. We still support the grid operators, but we're trying to grow more into the renewables fast charging space, which comes with higher margins.
But have the grid operators, let's say, left the track on bringing substations in the ground? Is that big project then severely in delay?
Now, there was in, say, Finland in the past years, there was a directive to, to change their overhead lines, to, say, ground-based lines. It's not that they fully stopped with it, but we, more or less, decided that we would, say, have a minimum margin to be able to, for us to, to secure orders. So it is more or less an active choice in, in not doing revenue as a- as revenue, as a, a goal by itself, but that we also value more or less about kind of margin can we, realize.
And therefore, say, last year we made a choice that would not, not step away from the grid operators, but more, have a focus on, realizing the, say, areas where we can more, leverage on our capabilities that we built also in the Netherlands, and we, with, say, solutions for, fast charging, connecting fast chargers, with, Tesla, Ionity, but also for, say, solar parks that are now being developed. And in that way, we can leverage more on the experience we built in the Netherlands on how to support those type of businesses than purely focus on, let's say, substations, where we have limited capability to leverage on, let's say, the technology base of our company.
Okay, clear. Then Jeroen, free cash flow, EUR 17 million in the third quarter. Can you explain what the working capital effect has been?
Yeah, well, you also see that the EBITDA is roughly the same number. So that means that the decrease of working capital has been there to offset, let's say, our investment cash outflow and our financing outflow. So, I think what we already expressed that we if we are beyond the destocking with the EV charging and we continue the production there like we do, then gradually also there are the inventory levels should come down, and that is starting to kick in. It will continue in 2024 because you cannot, of course, have a reduction of EUR 30 million-EUR 40 million in just two months, as I said before.
But this trend, we saw this trend coming and also we're, we're positive about this trend ongoing in 2024.
Okay. Thank you.
Thank you. We'll now take our next question from Paul de Froment at Bryan, Garnier & Co. , your line is open. Please go ahead.
Yes. Good morning. Two questions for me. First, on EV charging, can you give us more color on the 2024, EV charging guidance? Because, 15%-20% seems very cautious, knowing that the, the EV market is up more than 50%, year to date in 2023. My second question is on storage. How do you see gross margin evolve, in 2024? Do you see, any room, for improvement? Thank you.
Yeah. So I think one thing with EV charging that we're starting to see is, especially in the public and business segments, is it's a bit disconnected from EV registrations. So while we are seeing that trend maybe change over time, we're seeing a catch-up effect in the public and business segment, where those projects are still going forward and the infrastructure still needs to be built out. So I think as we look to 2024, we've communicated the 15%-20%. You know, I think that's the benefit of being in all three segments: home, business, public, and being in so many European markets, is we can take advantage of that ongoing infrastructure build-out. That what we're seeing, again, is disconnected in the short term, at least from the EV registrations.
Yeah, and I think, from a growth margin perspective, and we always said that there are of course a couple of elements that are influencing the growth margins. We always strive to increase our growth margins by producing more effective and have more efficiency and by running cost engineering programs, but also by our continuous ongoing purchasing programs, which of course you can imagine that if you grow, you get bigger, you also have more purchasing power. So those elements will all be taken into account, but I can assure you, we always strive for to increase our margins and to get them as high as possible.
Okay. And, Jeroen, thank you for the great job as a CFO, and all the best for the future.
Thank you.
Thank you. Once again, ladies and gentlemen, as a reminder, if you would like to ask a question, please press star one on your telephone keypad. Thank you. We'll now move on to our next question from Jeremy Kincaid at Van Lanschot Kempen. Your line is open. Please go ahead.
Thank you. Good morning, all, and congratulations on the result. Can we just talk about the gross margin just for a second? Obviously, that has been a positive surprise in this result, and one thing you've called out has been the smart grid solution movement. And when I listen to your comments, there's some things there which sound somewhat temporary in nature. Obviously, you said there was supply chain constraints in 2022 for the private network, but then also you've made a strategic shift with the Elkamo business. Could you just reconcile those two comments and give us an idea as to how permanent the apparent uplift in gross margin has been and how much we can expect going forward? Or if you think some of this is just a temporary sort of pent-up demand from the private network business, please.
I think for our smart grid solutions, the two elements that we indicated is especially for smart grid, the project segments that we see that uplift is compared to 2022. We also more indicated that we don't expect fundamental growth on that area for 2024, so that will be in line. And the biggest growth in 2024 on smart grid will be the further increase of number of substations due to the increased investment plans of the grid operators to make improvements and extensions of the grid. And the fundamental change that we participated in is in Finland. That is for there to stay.
We concluded that the substations were in so many situations we could not supply switchgear, we could not supply transformers, that the capability to create margin was limited. Then we said, "Okay, then we will reassess the situation and focus on areas where we can leverage on our capabilities that we built also here in the Netherlands and Belgium, on supplying solutions for substation to connect fast chargers towards grid, to support the business for solar fields also in Finland and in Sweden." And that's a direction that we want to continue because we are convinced that we can...
That is the way to leverage your knowledge base in, say, requirements from customers that are higher, is something where we can excel in, not only grow revenue, but also grow our gross margin.
Okay, sure. And can I ask the same question again for the energy storage? You mentioned there was a mix shift there. Can you provide some comment around how permanent you think this mix shift is, or if it's a one-off for this result?
No, it's definitely not a one-off. I think what we said in the second quarter is that a big and a very large project was influencing there the blended gross margin percentage as such. So what we see now is more balanced, I would say product mix, within Energy Storage, in the third quarter. And also going forward, we do expect that we will be in a certain balance. The only thing is what is difficult to predict is that from a quarter to a quarter, that balance might be somewhat different. But all in all, we feel we are on the right track with our Gross margin as we are driving that in our Energy Storage business line.
Okay, sure. One final one for me, just on the OpEx line. You've had two sequential quarters of declining OpEx. Do you think that's a fair trend to see that continue into the fourth quarter and maybe into FY 2024?
I think what we always try to do is we get the operational leverage in, which is also for the OpEx valid. Then, of course, from time to time, you see some differences because a trade fair is there, and then the quarter after, it isn't. So I tend to look more at the long-term trend line there. But the aim is definitely also going into 2024 to continue with that operational leverage perspective. And also, please note that we also monitor our flexible workforce quite intensively. Yeah, so we balance that with the output levels that we see. That's how we try and monitor our cost control.
Okay, sure. Thank you. And all the best to you and in your next endeavors.
Thank you very much.
Thank you. And we'll now move on to our next question from Maarten Verbeek from The IDEA!. Your line is open. Please go ahead.
Good morning. It's Maarten Verbeek of The IDEA!. Firstly, could you elaborate a bit on your backlog of energy storage system? Preferably, could you quantify, because you state that backlog continues to increase, and I'm presuming it's higher than at H1, and thus a book-to-bill of over one.
Yeah, so we previously shared the backlog number in order to support the ongoing growth in energy storage. We didn't share the number this quarter, but we have added additional order intake to the backlog, but you've also seen we've converted revenue in Q3, so backlog is fairly stable.
It's more or less stable at the 170 level?
It's a very lumpy business in terms of when revenue is recognized, so it's stable, plus, minus.
Going into 2024, you project again a very strong, considerable growth in energy storage systems. Inventory is weighing heavily in this business segment. Previously, you stated you want to address that with the different contracts and supply chain, et cetera. Will you be able to keep better control over inventory within ESS? Will you continue a very considerable strong growth?
Yes, without being able to share the details, because we agreed with our supplier that we would not do that, or suppliers, I need to say, that we would not do that. We do have a more spread in the supply chain challenge. I mentioned before that more than a year before, you needed to put purchase orders in with big down payments. So what we have negotiated now is that the down payments will be lower, and we can issue purchase orders later in time. So we have there more leverage that we can use to even try to get the balance between cash in and cash out in a better shape.
Okay. And one follow-up on your working capital, since you mentioned that EBITDA was more or less flat with free cash flow, and therefore, no reduction in working capital was consumed by CapEx and tax and interest. Could you also more or less specify where you made progress at your working capital within the three business? Because at EV Charging Equipment, there you had more or less the highest level of inventory. Have you seen their reduction in the other two parts; it has more or less remained stable, or have you made improvement across the board?
Yeah, I think I mentioned before that with energy storage, sometimes you have a very high inventory, and then the day after, when you ship the components to a site, then all of a sudden you see a big drop. So, I would say that we monitor the working capital as a whole, but it's definitely fair to say that we see a decrease in inventory levels for EV charging, and that is also what we fully expected. But nevertheless, we will see some swings left and right, but I think for us, it's very important that we keep on monitoring it. But from a working capital perspective, we knew that working capital would be better in Q3, so it's fully in line with what we expected.
That's also why we were so pronounced on saying that we don't need a capital raise, and we were, we're not planning on.
Okay, thanks so much.
Thank you. We'll now take a follow-up question from Thijs Berkelder at ABN AMRO - ODDO BHF . Your line is open. Please go ahead.
Thijs Berkelder again, ABN AMRO - ODDO BHF . Follow-up question on your chargers. You announced to launch, let's say, a fast charger. Can you update us there on the progress? What kind of volumes we might be expecting for 2024? And can you give a more or less similar update on your walk-in substations?
Yeah, so first on DC. So we're still progressing with our DC. We've successfully built a couple of units off the line and have gotten those to some of our early test customers. Still planning on taking pre-orders end of this year into early next year. Right now, we've got a limited market focus, so volumes will not be substantial for next year. Really looking to support our existing customer base, make sure we have the right product for them, before we scale more broadly across Europe.
The walk-in substations?
For the walk-in substations, we have been supplying now both in the Netherlands and Belgium, based on one mold. Last week, we started installing the second mold with, say, our partner in concrete. So, this will, as a consequence, mean that we will again step up towards 2024. So as far as we're concerned, this is developing nicely, and it's also that gives us a nice inroad into Belgium, because in the Netherlands, we have all our distributors are more as oriented towards non-walk-in substations, and Belgium, there is a preference to walk-in.
So therefore, we are well set also that what's now happening in the Netherlands, we expect that to will happen in Belgium also in the coming years, to have that greater have to expand our investments into, say, improvement of the grids. So that we are well set to profit also from that area, and that we can keep on growing our business in the coming years, not only in the Netherlands, but also in Belgium.
Okay, thank you. Maybe final one on technology. Can you explain what your planning is on bidirectional chargers?
With bidirectional charging, you can more see that we based on the, say, the step we did in developing our own DC charger, that we are well set more or less to participate in that market area as soon as it becomes relevant. But this moment, what we see is that there is a lot of talk about, say, bidirectional charging, but the actual business cases we see at this moment are still quite limited, because, say, 50% of the benefit of bidirectional could also be by, be, by optimizing the smart charging capabilities, is what we see now, is one of the fundamental areas where people are working on.
We expect that first, some other changes in the market to happen, both on the car side, because at this moment, only, say, a limited amount of cars are able to do bidirectional charging due to the settings and the way the cars are being built, and also that the business case is at this moment still limited. So we are well set to participate in the market if it really would take off. But at this moment, we think that the real, say, practical business capabilities is limited for bidirectional charging.
Okay, thank you.
Thank you. That was the last question we had. I will now hand it back to Marco for closing remarks. Thank you.
Thank you, Laura, and thanks for everybody in participating in this webcast, and also that we have seen also if we can interpret them positive remarks about our results. Other than these results were more or less in line what we tried to express already in the presentation of this results of the second half year. But nevertheless, we are happy that the appreciation of our results are as we more or less wanted them to be, and I would say then we'll speak each other again at the year figures in February next year. Thanks, everybody.
Thank you, Marco. Ladies and gentlemen, this concludes today's call. Thank you for your participation. Stay safe. You may now disconnect.