Ørsted Delays US Offshore Wind Project as Impairment Losses Hit

Thursday, August 15, 2024

Renewable energy group Orsted booked 3.2 billion Danish crowns ($472 million) in impairment losses in the second quarter, due partly to a delay in construction of a major U.S. offshore wind project, sending its shares down almost 8% on Thursday.

The world's biggest offshore wind developer pushed back the start of commercial operations at its 704 megawatt (MW) Revolution Wind project off Rhode Island and Connecticut to 2026 from 2025, it said in its quarterly results statement.

The impairment losses booked also related to its Ocean Wind project in the United States whose development it halted last year, an increase in U.S. long-dated interest rates, and its decision to cease development of a green e-methanol project which was due to open in Sweden next year.

Shares in Orsted, once a green investor favourite, were trading 7.6% down at 0710 GMT on Thursday. They remain at less than one-third of their value since peaking in early 2021.

The company last year found itself at the centre of a perfect storm of rising inflation, higher interest rates and supply chain delays, forcing it to cancel offshore projects in the United States and related impairments surged above $4 billion.

In February, it trimmed its investment and capacity targets and paused dividend payouts following a strategic review of its business.

Still, the company beat analyst expectations with a 59% rise in second-quarter profit before interest, tax, depreciation and amortisation (EBITDA) and excluding new partnerships of 5.27 billion Danish crowns.

That topped an average forecast of 4.41 billion crowns in a poll of analysts provided by Orsted.

"Despite encouraging progress on our U.S. offshore wind project Revolution Wind, the construction of the onshore substation for the project has been delayed," CEO Mads Nipper said in a statement.

Impairment losses related to the project alone amounted to 2.1 billion crowns, Orsted said.

"This is, of course, unsatisfactory, and we continue our dedicated efforts to de-risk our portfolio," he said.

Orsted kept its full-year profit forecast unchanged but said it would lower investments this year.

"Orsted's operations are performing well, and particularly the earnings from our offshore wind farms, and thus our core business, have increased," said Nipper.


($1 = 6.7745 Danish crowns)


(Reuters - Reporting by Jacob Gronholt-Pedersen; editing by Terje Solsvik and Emelia Sithole-Matarise)

Categories: Renewable Energy Industry News Activity Europe North America Offshore Wind

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