Danish energy company Orsted (CSE:ORSTED) reported its financial performance for the first nine months of 2023, which was marked by significant impairment losses, steady operating profit, and the termination of key projects. The company's operating profit (EBITDA) reached DKK 19.4 billion, with EBITDA excluding new partnerships standing at DKK 15.4 billion, marking a DKK 1.0 billion increase from the previous year.
Offshore sites like Hornsea 2 and Greater Changhua 1 and 2a played a substantial role in the company's earnings, contributing DKK 13.0 billion. However, the firm faced a series of challenges including supply chain delays, increased interest rates, and lack of OREC adjustment on Sunrise Wind. These issues led to impairment losses of DKK 28.4 billion being recognized in the first nine months of 2023, primarily associated with the US offshore project Ocean Wind.
The net profit for Orsted was reported at DKK -19.9 billion with a return on capital employed (ROCE) at -14%. If impairment losses are excluded, the net profit and ROCE stood at DKK 8.5 billion and 13% respectively. Despite these setbacks, the company has kept its EBITDA guidance for 2023 unchanged at an estimated DKK 20-23 billion.
The firm also announced that it had decided to cease development of Ocean Wind 1 and 2 projects, which is expected to result in a provision of approximately DKK 8-11 billion related to potential cancellation fees. The gross investment for 2023 is projected to be DKK 40-44 billion due to project delays and termination of investments in Ocean Wind.
On the other hand, despite these challenges, Orsted confirmed that the Revolution Wind project is progressing into the construction phase. More information about these issues will be discussed in an earnings call for investors and analysts scheduled for November 1, 2023.
Orsted, which generated a revenue of DKK 132.3 billion in 2022 and employs approximately 8,700 people, is recognized by the CDP Climate Change A List and the Science Based Targets initiative (SBTi) for their net-zero emissions target. The company's shares are listed on Nasdaq Copenhagen.
InvestingPro Insights
Orsted's financial performance for the first nine months of 2023, as reported, has been underlined by several key metrics and trends. The InvestingPro data reveals that Orsted's market capitalization stands at an adjusted 20241.8M USD. The company's P/E ratio is 12.91, indicating that it is trading at a low earnings multiple, a point also highlighted as one of the InvestingPro Tips.
The company's revenue for the last twelve months as of Q2 2023 is 17304.25M USD, with a growth rate of 12.19%. However, the quarterly revenue growth for Q2 2023 has declined by 37.34%, aligning with the InvestingPro Tip that the company's revenue growth has been slowing down.
Two key InvestingPro Tips to note are that Orsted has raised its dividend for 7 consecutive years and is a prominent player in the Electric Utilities industry. The dividend yield as of 2023 is 3.97%, with a growth rate of 8.0% over the last twelve months as of Q2 2023.
The InvestingPro platform offers numerous additional tips and data points for Orsted, providing a comprehensive view of the company's financial performance and market standing.
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