Offshore Wind Eases DONG’s Financial Pains

DONG Energy recorded an operating profit (EBITDA) of DKK 18.5 billion (EUR 2.48 bn) in Fiscal Year 2015, a 13% increase compared to DKK 16.4 bn EBITDA in FY 2014, driven mainly by higher generation from offshore wind and higher levels of offshore wind farm construction activities for co-investors, the company said in its annual report today.

EBITDA in the company’s Wind Power sector increased by 2% to DKK 6.2 billion. However, when accounting for divestment gains in 2014, the underlying profit growth was significantly higher, DONG said.

However, the gains from the Wind Power could not offset impairment losses of DKK 15.8 bn after tax, mainly caused by the company’s faltering Oil & Gas sector which was hit hard by continuing fall in prices. DONG ended the FY 2015 with DKK 12.1 bn net loss, compared to DKK 5.3 bn net loss recorded in FY 2014.

DONG’s gross investments totalled DKK 18.7 bn in 2015, pertaining mainly to offshore wind activities, including Gode Wind 1+2, Borkum Riffgrund 1, Westermost Rough, Burbo Bank Extension, Hornsea 1 and project rights for Hornsea 2.

Henrik Poulsen, DONG Energy’s CEO, said: ”Wind Power has further reinforced its global leadership position in offshore wind. In 2015 we inaugurated two new wind farms in the UK and Germany and the Board of Directors approved the investments in two projects, Race Bank and Walney Extension. On 3 February, 2016 the Board of Directors approved the investment in the record breaking offshore wind farm Hornsea 1 (1,218 MW) in the UK, which is the largest investment in DONG Energy’s history to date. Wind Power’s revenue grew by 70% in 2015. We expect 2016 to be another year of significant growth in Wind Power.”

Looking ahead, DONG expects its business performance EBITDA to total DKK 20-23 bn in 2016, with the outlook being particularly sensitive to divestment gains in Wind Power, among others.

Gross investments for 2016 are expected to total DKK 20-23 billion, reflecting high levels of investment in the company’s offshore wind farms, and lower levels of investment in oil & gas projects, as well as bioenergy and thermal power projects.

 “With 55% of our heat and power generation coming from renewable sources, the company reached its lowest level of CO2 emissions ever. The ongoing restructuring of the O&G business in response to the sharp drop in commodity prices will lead to a further shift in the investment mix of DONG Energy towards renewables. Towards 2020 we expect offshore wind and bioenergy to account for more than 80% of investments. The investment strategy will further reinforce DONG Energy’s position as a global leader in renewables and expand our strongholds in offshore wind, bioenergy, and green distribution and customer solutions,” Poulsen said.