Denmark: DONG Energy Announces 1H Interim Financial Report

The Board of Directors of DONG Energy has today approved the interim financial report for the first half of 2012 with the following outlook and financial highlights compared with the first half of 2011:

First-half 2012 EBITDA was DKK 6.6 billion compared with DKK 9.1 billion in the first half of 2011 and was affected by negative effects from the increased spread between oil and gas prices, the discontinuation of non-recurring income in 2011 from the renegotiation of gas contracts, low electricity prices and lower output from power stations as well as costs
for the repair work to the Siri platform.

By contrast, earnings from wind activities showed an increase and, in Exploration & Production, both production and prices were higher.

Profit after tax was DKK 0.8 billion, down DKK 2.0 billion on the first half of 2011. The sustained very low green spark spreads in Europe necessitated the recognition of a DKK 2.0 billion impairment loss on the gas-fired power stations. Profit for the period included a DKK 2.0 billion gain after tax on disposal of enterprises.

Operating cash inflow decreased to DKK 2.6 billion from DKK 6.3 billion in the first half of 2011. This primarily reflected more funds tied up in working capital and the lower EBITDA.

First-half 2012 net investments were DKK 6.5 billion versus DKK 6.7 billion in the same period the previous year. Gross investments were DKK 9.3 billion and primarily related to the development of wind activities and gas and oil fields, while divestments primarily related to Oil Terminals.

Interest-bearing net debt rose by DKK 6.2 billion from the end of 2011 to DKK 29.9 billion.

Carsten Krogsgaard Thomsen, Acting CEO: “The results we delivered for the first half were not good. Our earnings (EBITDA) matched expectations, but our net profit was affected by, in particular, the fact that we had to write down the value of our gas-fired power stations. This was due to the low coal and CO2 prices, which make gas-fired power stations less profitable than coal-fired power stations. The unfavourable gas price also means that we no longer expect to achieve the same EBITDA in 2012 as in 2011.

“However, it does not alter our outlook concerning significantly improved earnings in 2013 compared with 2011 as a result of our investments in offshore wind and oil and gas activities. We also reaffirm our ambitious target to double our EBITDA in 2015 compared with 2009.” 

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Offshore WIND staff, August 10, 2012; Image: mansfieldmonk