Last year, developer Ørsted achieved its highest operating profit to date, as measured by earnings before interest, taxes, depreciation, and amortization (EBITDA). This was largely due to significant gains from offshore wind asset sales.
According to preliminary figures, Ørsted’s EBITDA (including new partnership agreements) is expected to have increased by 7.8% to DKK 32.1 billion ($4.68 billion) compared to the same period the previous year. Of this, DKK 21.1 billion came from the sale of 50% of the Hornsea 2 and Borkum Riffgrund 3 projects in the UK and German parts 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,” Ørsted 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.”
Even without the extraordinary gains, Ørsted’s EBITDA for last year would have still been €21.1 billion, representing an increase of DKK 5.3 billion from 2021. The company emphasized that it generated significantly higher earnings from its onshore wind and solar operations, as well as from combined heat and power plants and gas activities, compared to initial expectations at the start of the year.
Ørsted made up for a decline in offshore wind revenue due to negative effects from hedges and delays at the Hornsea 2 and Greater Changhua 1&2A projects by offsetting it with income from other sources. Additionally, they had to acknowledge a loss of DKr2.5bn connected to their 50% ownership 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.”
