Denmark-based energy company Ørsted A/S has ceased development of its Ocean Wind 1 and 2 projects due to supply chain disruptions and increased interest rates. The decision has led to total impairments reaching DKK 28.4 billion. Mads Nipper, CEO of Ørsted, conveyed disappointment but confirmed the company's ongoing commitment to the US renewables market. The termination of the Ocean Wind 1 project is projected to negatively impact Q4 2023 EBITDA by approximately DKK 8-11 billion.
In contrast to these setbacks, Ørsted has given the green light for the Revolution Wind project, which it co-owns with Eversource. Despite an impairment of DKK 3.3 billion, the project will commence offshore construction in 2024 and is expected to be completed by 2025. The Revolution Wind project boasts a capacity of 704 MW.
Ørsted is also contemplating rebidding for the Sunrise Wind project, another venture co-owned with Eversource, in response to NYSERDA's request for information on an accelerated solicitation for offshore wind capacity. Furthermore, the company continues to reconfigure the Skipjack Wind project while keeping expenditure minimal.
Despite these challenges, Ørsted's previously guided EBITDA for 2023 remains unchanged at DKK 20-23 billion when excluding the provision related to Ocean Wind 1. The gross investment for 2023 is now expected to be DKK 40-44 billion, down by DKK 4 billion.
To counterbalance these impairments and provisions, Ørsted has initiated measures to bolster its capital structure and maintain its long-term commitment to its credit rating. These measures encompass cost-saving initiatives, improvements in working capital, and prioritizing development activities.
Ørsted is globally recognized for its climate action and was the first energy company to have a science-based net-zero emissions target validated by the Science Based Targets initiative (SBTi). The group's revenue in 2022 amounted to DKK 132.3 billion.
As part of the ongoing review of its US portfolio, Ørsted will evaluate the potential implications for its current long-term strategic build-out ambition and financial targets. The company anticipates providing an update to the market no later than in its Q4 2023 results announcement. Ørsted's shares are listed on Nasdaq Copenhagen.
InvestingPro Insights
Ørsted, a prominent player in the Electric Utilities industry, has had a turbulent journey recently. Based on InvestingPro data, the company has a market capitalization of $20,241.8M and a P/E ratio of 12.91 as of Q2 2023. Despite a significant fall in price over the last three months, it's worth noting that Ørsted has raised its dividend for seven consecutive years, which may be appealing for income-focused investors.
InvestingPro Tips also highlight that the company operates with a moderate level of debt and its liquid assets exceed short term obligations. This indicates a relatively stable financial position, which could be a factor of consideration for investors amidst the current disruptions faced by the company.
For a deeper dive into Ørsted's financial health and more insightful tips, consider the InvestingPro platform, which offers an extensive list of 16 additional tips to guide your investment decisions.
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