Wind Developer Orsted Swings to $48.2 Million Loss in Q4 Due to Project Delays
Company posted 37% growth in net profit for the full financial year 2022
February 2, 2023
Denmark-based wind developer Orsted swung into a loss of DKK 329 million (~$48.19 million) in the fourth quarter (Q4) of the financial year (FY) 2022, compared with a net profit of DKK 3.26 billion (~$482 million) year-over-year (YoY).
The company said the quarterly loss was due to delays at two of its projects — Hornsea 2 and Greater Changhua 1 and 2a. Adverse impacts from ineffective hedging compounded the quarterly loss, the company added.
For the October-December quarter, the company’s earnings before interest, taxes, depreciation, and amortization (EBITDA) stood at DKK 6.7 billion (~$981 million), a decline of 18.78 % YoY.
Orsted’s pipeline increased by 25% during FY 2022.
The company’s installed renewable capacity, as of FY 2022, stands at 15,121 MW compared to 12,977 MW in 2021, an increase of 16.5 % on a YoY basis.
For FY 2022, Orsted recorded a net profit of DKK 15 billion (~$2.2 billion), an increase of 37.74% YoY.
The company’s EBITDA for the full financial year amounted to DKK 32.06 billion (~$4.7 billion), an increase of 31.9% YoY.
The company said its earnings composition demonstrates the strength of its diversified portfolio of assets. A strong performance was seen from the onshore wind and solar PV business and gas activities.
The company commissioned the offshore wind projects Hornsea 2 in FY 2022. It also reached a Final Investment Decision (FID) on its first utility-scale U.S. offshore wind project in South Fork Wind.
Other major developments include a partnership with Copenhagen Infrastructure Partners (CIP) for a potential of up to 5.2 GW through an open-door scheme. Orsted also applied to build 15 GW of offshore capacity in Sweden, another floating wind partnership in Spain with Repsol, and entry into Scotland took shape.
The company was also able to recycle capital through the farm-down of its two projects, Hornsea 2 and Borkum Riffgrund 3.
Through the “farm down” or build-sell-operate model, developers sell stakes in renewable assets to institutional investors keen on long-term and stable yields.
Further, the company recorded a 91% of green share in energy generation, and greenhouse gas emissions dropped by 87% between 2006-2022.
In terms of onshore wind projects, Orsted reached FID on a total of 1.4 GW onshore projects, expanding into Germany and France with the acquisition of Ostwind.
The company said it is well-positioned to tap into political support with a portfolio spanning several renewable technologies across key growth markets.
The European Union’s “Fit-for-55” and progress on ensuring faster permitting of renewable projects, is one of the policies that boosted operations.
The U.S. ‘Inflation Reduction Act and several coastal states also increased targets for offshore wind build-out.
Additionally, the continued expansion of renewable ambitions across the APAC region along with opening up the Australian offshore market led to growth.
The Denmark-based wind developer posted a net profit of DKK9.36 billion (~$1.3 billion) in the third quarter (Q3) of 2022, a massive jump of 1,821% YoY.
Orsted had agreed to acquire 100% of Ostwind, onshore wind and solar developer, owner, and operator. The deal is based on an enterprise valuation of Ostwind of €689 million (~$759 million). The acquisition is part of Orsted’s strategy to expand its European footprint, which is key to its offshore business.