Ørsted Stays on Upward Path

Ørsted reported DKK 1.8 billion (EUR 241.5 million) profit from offshore wind farms in the second quarter of 2018, an 8% jump compared to the same period last year.

Walney Extension. Source: Ørsted

The increase in profit is largely attributed to ramp-up at Walney Extension and Race Bank and partly offset by lower wind.

Operating profits (EBITDA) for the period were DKK 3.1 billion, a 31% decrease compared to Q2 2017 primarily due to a deferred gain of DKK 1.4 billion in Q2 2017 regarding the 2016 Race Bank farm-down, as well as lower earnings in the company’s Markets business.

Earnings from partnerships in Wind Power was lower than in Q2 2017, due to the above-mentioned deferred gain regarding Race Bank. Income from partnerships in Q2 2018 mainly related to the construction of Walney Extension and Borkum Riffgrund 2.
Return on capital employed (ROCE) increased to 23% at the end of June 2018 compared to 18% in the same period in 2017.

During Q2 2018, Ørsted secured 2.4GW of offshore wind projects in competitive processes in Germany and Taiwan.

First Half of 2018 and Outlook

The company’s EBITDA for the first six months of 2018 was DKK 8.6 billion, up 11% compared to the first half of 2017. This was partly due to a 32% increase in operating profits from wind farms in operation, the company said.

Power generation from offshore wind increased by 23% to 4.8TWh in H1 2018 due to the ramp-up of generation from Race Bank and Walney Extension and to some extent Burbo Bank Extension. This was partly offset by lower wind speeds in the UK and Denmark.

Looking ahead, Ørsted expects full-year EBITDA excluding new partnerships to be towards the upper end of the guidance range of DKK 12.5-13.5 billion.

Ørsted also now considers it likely that the planned divestment of 50% of Hornsea One will materialise during the second half of 2018.

The outlook for gross investments is unchanged relative to the annual report for 2017, the company said. Gross investments related to construction of offshore wind farms are expected to be lower than originally anticipated. This is mainly due to shifts in spending across years but it is also partly driven by the Race Bank and Walney Extension construction projects being finalised at a lower capex spend than expected. However, reduced 2018 spend on offshore wind construction projects is offset by the expected payment related to the acquisition of Lincoln Clean Energy, a US-based onshore wind developer, owner and operator.

“We’re very satisfied with the first half of 2018. The solid results from our offshore wind business continued into the second quarter with increased earnings from our operating assets and continued strong progress on our construction projects. We commissioned the world’s largest offshore wind farm in operation, Walney Extension, in May, well ahead of schedule, and at Borkum Riffgrund 2, we installed the first wind turbines,” Ørsted’s CEO Henrik Poulsen said.