Orsted Reports 23% Drop in Operating Profit for First Nine Months of 2023

Ørsted CEO Mads Nipper. (Credit: Ørsted)

Copenhagen-based Orsted has announced a 23% decrease in its operating profit (EBITDA) for the first nine months of 2023, reflecting challenges within the sector. During this period, Orsted achieved an EBITDA of €2.6 billion (DKr 19.4 billion), compared to €3.4 billion (DKr 25.4 billion) in the same timeframe in 2022.

Excluding earnings from new partnership agreements, Orsted's EBITDA amounted to €2.1 billion (DKr 15.4 billion), representing a €0.13 billion (DKr 1 billion) increase from the previous year. Notably, earnings from sites reached €1.7 billion (DKr 13 billion), marking a €0.9 billion (DKr 6.8 billion) improvement over the same period in 2022.

Orsted attributed this positive performance to the ramp-up at projects such as Hornsea 2 and Greater Changhua 1 and 2a, along with the absence of negative impacts from hedges, which were present in 2022.

However, the company reported significant impairment losses of €3.8 billion (DKr 28.4 billion) in the first nine months of 2023. These losses were linked to supply chain delays, rising interest rates, and the absence of an OREC adjustment on Wind. Notably, the majority of these losses, €2.7 billion, were related to the US offshore project Ocean Wind 1.

Orsted's previously provided EBITDA guidance for 2023, excluding new partnership agreements, remains unchanged at up to €3.1 billion (DKr 23 billion). This figure excludes a provision of up to €147 million (DKr 11 billion), which is associated with potential cancellation fees resulting from the decision to cease the development of Ocean Wind 1.

Due to shifts in project timing and the termination of investments in Ocean Wind 1, Orsted now anticipates its gross investment for 2023 to be up to €5.9 billion (DKr 44 billion), signifying a reduction of €0.5 billion (DKr 4 billion).

, the Group President and Chief Executive of Orsted, expressed satisfaction with the company's operating assets' performance during the first nine months of 2023, which contributed to positive earnings. He acknowledged the challenges posed by supply chain issues, project delays, and rising interest rates, which affected offshore projects in the US, leading to significant impairments in Q3 2023.

Nipper further revealed that as part of a review of Orsted's US offshore wind portfolio, the company has decided to discontinue the development of Ocean Wind 1 and Ocean . Simultaneously, Orsted has greenlit the 704 MW Revolution Wind project, moving it into the construction phase, with a focus on future value creation. These strategic decisions align with Orsted's efforts to adapt to the evolving market conditions and strengthen its capital structure and competitiveness.

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