Global offshore wind giant Orsted expects to beat its earnings guidance for 2020 after a strong end to last year.

The Danish giant in a statement after markets closed on Tuesday said based on preliminary figures it expects to post an operating profit (Ebitda) of DKr18bn ($2.9bn) for last year, beating its last guidance of DKr16-17bn.

Orsted, which said the earnings uplift was “primarily of temporary nature”, told investors it had seen “strong operational performance throughout the group in the last months of the year.

“We achieved higher than expected earnings from our operating assets and trading related to hedging of our power exposures, and we saw positive temporary effects in our gas portfolio business due to higher gas prices at year-end.

“In addition, fixed costs came in lower than expected throughout the group, and we had lower than expected project development costs in the US, mainly due to timing.”

Costs rises in 2021

Orsted also updated investors on expectations for 2021, where it sees operating profit coming in at DKr15-16bn, excluding new partnership agreements.

The Danish group highlighted factors that could push down profitability at its global offshore business in 2021, including “an increase in expensed project development costs [and] O&M costs related to Greater Changhua 1 & 2a [in Taiwan] and [the UK’s] Hornsea 2 before they commence generation in 2022.”

Orsted added: “2020 had higher than normal wind speeds, which constitutes the largest negative impact year on year.”

However, the group expects higher profits at its onshore renewables business as new wind and solar comes online.

Orsted said of the prospects for partnerships in 2021: “We expect to close the 50% farm-down of Greater Changhua 1 following the agreement announced in December 2020,” when the company said Canada’s Caisse de dépôt et placement du Québec (CDPQ) and Taiwanese private equity fund Cathay PE would take a half-share in a deal worth $2.7bn.

“Furthermore, we plan to farm-down a 50% share of Borssele 1 & 2 [off the Netherlands] around summer. Finally, we will explore the possibility of a farm-down of our solar PV portfolio following the commissioning of Muscle Shoals [in Alabama, US] in Q3.”

The Danish group – which has just installed Mads Nipper as its new CEO, replacing Henrik Poulsen – will publish its final results for 2020 on 3 February.

Wind

Orsted to beat 2020 profits guidance after strong year-end