Developer Orsted last year reached its highest operating profit to-date measured in earnings before interest taxes, depreciation and amortisation (Ebitda), helped by large gains from offshore wind asset sales.
The Danish utility’s Ebidta (including new partnership agreements) is expected to have risen by 7.8% to DKr32.1bn ($4.68bn), compared to the same period a year earlier, according to preliminary figures.
Almost a third of that – DKr21.1bn – came from the 50% sale of the Hornsea 2 and Borkum Riffgrund 3 projects in the UK and German part of the North Sea respectively.
“In a year with unusual market conditions, not least the very volatile energy prices and a substantial increase in inflation, we’re happy to achieve a record-high Ebitda for 2022 within our latest guidance and above our initial expectations for the year,” Orsted chief executive Mads Nipper said.
“The composition and development of our earnings mix was significantly different than expected and once again showed the benefits from having a diverse portfolio.
“We expect that earnings from our operational renewable energy assets will increase significantly in 2023 and contribute to reaching a group Ebitda excluding new partnerships of DKr20-23bn, and we remain confident in our long-term financial estimates and growth ambitions.”
Excluding the extraordinary gains, the company’s Ebitda last would still have been €21.1bn, and increase of DKr5.3bn from 2021.
Orsted stressed that it achieved significantly higher earnings from its onshore wind and solar business, as well as from combined heat and power plants, and gas activities, than expected at the beginning of last year.
'New risk management framework'
This compensated for a decrease in offshore wind income cause by adverse impacts from hedges and delays at Hornsea 2 and the Greater Changhua 1&2A project off Taiwan. Orsted also had to recognise an impairment of DKr2.5bn related to its 50% stake in the Sunrise Wind project in the US.
“During the year, we have seen adverse impacts from overhedging, ineffective hedges, and delays at Hornsea 2 and Greater Changhua 1 & 2a, which is not satisfactory,” chief financial officer Daniel Lerup said.
“As a response to the unintended impacts from hedges, we have established and are in the process of implementing a new risk management framework to reduce the volatility from financial instruments and bring back the inherent predictability of earnings that our contracted and regulated activities possess.”