The challenging times are set to continue for Danish renewable giant Orsted after the firm announced it will be pausing shareholder payouts and slashing costs to try and regain control of the struggling company.
In its 2023 report published today, the Danish wind-power giant said it will slash its green power pipeline goal to 35-38 gigawatts by 2030, down from a previous target of 50 gigawatts alongside efforts to reduce its fixed costs by DKK 1bn (£114m) by 2026.
In addition the group will cut 600-800 positions globally, with about 250 people being made redundant within months.
Orsted will also be exiting several offshore markets (including Norway, Spain, and Portugal), de-prioritising development activities in Japan and planning for a leaner development within its floating offshore wind projects.
Despite earnings before interest, taxes, depreciation, and amortisation (EBITDA) hitting DKK 24bn (£2.75bn), above the company’s guidance, impairment losses from cancelled or delayed wind projects punctured earnings and pushed the group to a net loss of £2.2bn (DKK 20bn).
The company said it expected EBITDA excluding new partnership agreements and cancellation fees for 2024 to be DKK 23-26bn (£2.6-2.8bn) and gross investments are expected to total DKK 48-52bn (£5.4-£5.9bn).
Orsted is still reeling from the £5bn charge it booked after it suspended the Ocean Wind 1 and 2 projects off the coast of New Jersey in November last year.
But that hasn’t stopped it from committing major capital and pipeline development allocation to enormous projects since – including the Revolution Wind project in the US of which it owns 50 per cent and Hornsea 2, announced last year, which will be the world’s largest wind farm on completion.
Mads Nipper, Group President and CEO of Orsted, said 2023 marked “strong underlying business progress” but came with “substantial challenges.”
“Despite a year with strong underlying business progress, 2023 marked a year with substantial challenges for Orsted. Our financial results are adversely affected by the impairments we took on our US offshore projects in the third quarter of 2023 and the provision for cancellation fees related to ceasing the development of the offshore project Ocean Wind 1.
“Despite the short-term challenges, our traction and underlying momentum was strong in 2023 and we remain optimistic about the future of the renewable energy industry, and we’re confident we can be a key contributor in accelerating the renewable build-out in the years to come.”
Orsted’s shares are up 2 per cent today, but they’ve slumped 39 per cent over the last 12 months. The stock has lost almost two-thirds of its value from the peak in early 2021.
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