Orsted slips to loss in second quarter but retains guidance for full-year

A poor second quarter caused Orsted to report a 55% fall in earnings for the first half of 2023, but underlying improvement in the key offshore wind sector allowed the renewables developer to stick to its full-year guidance.

Orsted reported a net loss of DKr538m ($79m) in the second quarter, compared with a net profit of DKr269m in the same period last year.

The company's January-June profit of DKr2.7bn, was down from the DKr6bn gain reported for the same six-month period in 2022.

First-half earnings before interest, tax, depreciation and amortisation (Ebitda) were DKr10.2bn, slipping back 33% from the same period last year, but this result was described as "within expectations" in the earnings report released today (Thursday).

First-half earnings from offshore sites provided a bright spot, hitting DKr9bn, which was DKr3.3bn higher than in the same period last year, Orsted said.

The company said ramp-up on Hornsea 2 and on Greater Changhua 1 and 2a in Taiwan helped boost earnings in this category, offsetting the impact of some non-renewals of hedges.

In contrast, earnings under the "bioenergy & other" business segment decreased by Dkr3.2bn following the volatile and elevated price levels of 2022, Orsted added.

The company said it will maintain its gross Ebitda guidance of DKr20-23bn — excluding earnings from new partnerships during the year —helped by expectations of higher earnings in the offshore than was included in the 2022 annual report.

Path to growth

Mads Nipper, CEO of Orsted, commented: “We're pleased with the results for the first half year of 2023, where our Offshore business is back with strong earnings.”

Among the strategic milestones highlighted during the quarter, Orsted said it had received development consent for the 2.6GW Hornsea 4 offshore wind farms in the UK and entered into a partnership with Irish utility ESB to jointly develop an Irish offshore wind portfolio.

Orsted also signed an agreement to acquire Eversource’s 50 % interest in Lease Area 500 in the US.

“With this added seabed, our portfolio of northeastern US lease rights amounts to more than 4 GW, making Orsted’s lease capacity the largest in the region,” the company stated in its earnings report.

Orsted also took the opportunity to express satisfaction that New Jersey state has enacted a law that allows its Ocean Wind 1 offshore wind project to to access and retain federal tax credits without any additional costs to New Jersey state ratepayers.

"This is an important and necessary step to ensure the project’s viability following the substantial cost increases experienced across the US offshore projects,” the company stated.

Orsted lowered its gross investment guidance for 2023 by DKr6bn to DKr44-48bn due to ‘timing’.

However, the company said it expects to spend approximately DKr6bn on two ‘net’ investments involving non-controlling shareholders - acquiring PSEG’s ownership share of Ocean Wind 1 and Eversources’s ownership share of Lease Area 500 in the US.

In other ongoing projects, Orsted said construction work is continuing at the Greater Changhua 1 and 2a offshore wind project in Taiwan and, depending on weather, the company aims to commission remaining turbines before the year-end,.

South Fork Wind, in the US, is expected to be commissioned in the final quarter.