Release Date: November 05, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Orsted AS (DNNGY, Financial) achieved significant milestones, including CFD awards for 3.5 gigawatts in the UK and favorable contract settlements for Ocean Wind One.
- The company reported strong operational performance and progress on construction projects, with a total portfolio of 18.2 gigawatts.
- EBITDA excluding new partnerships and cancellation fees increased by 12% to DKK 17.2 billion, reflecting solid financial performance.
- Orsted AS (DNNGY) successfully divested a minority stake in four UK offshore assets, contributing DKK 15.7 billion to its farm down program.
- The company shut down its last coal-fueled CHP plant, marking a major step towards its goal of reducing emissions intensity by 98% by 2025.
Negative Points
- Unexpected challenges impacted the construction of a US offshore project, including issues with the installation of an offshore substation monopile.
- Orsted AS (DNNGY) recognized a net impairment loss of DKK 0.3 billion due to updated market assumptions and increased costs.
- The company faces higher than anticipated costs due to the extension of an installation vessel contract.
- Grid connection delays in Germany are expected to push the commissioning of a project to Q1 2026.
- The company has a remaining provision of DKK 3 billion for Ocean Wind One, indicating ongoing financial exposure.
Q & A Highlights
Q: What are the risks to the Sunrise and Revolution Wind projects if Trump wins the presidency, particularly regarding the bonus ITC and potential construction delays?
A: Mads Nipper, CEO, stated that both projects are fully permitted at the federal level, and they do not anticipate changes in the risk outlook. They do not see a material risk of losing the bonus ITC and expect the energy community credit to be firmed up.
Q: Can you explain the impact of the Brookfield transaction on your FFO net debt definition and whether it affects your balance sheet?
A: Trond Westlie, CFO, explained that the transaction involves selling a minority stake, which will be recorded as a minority interest in the P&L and balance sheet. The transaction structure is not primarily driven by FFO net debt considerations but rather by overall transaction value and flexibility.
Q: What are the circumstances under which you might exercise the call option to repurchase assets sold to Brookfield?
A: Trond Westlie, CFO, mentioned that the call option provides flexibility and is not currently in the money. The decision to exercise it would depend on market price developments and strategic considerations.
Q: How do you plan to use the DKK 5 billion reversal from cancellation fees, and what are your priorities for any additional cash flow improvements?
A: Trond Westlie, CFO, noted that while the DKK 5 billion is significant, it is part of a larger funding plan of around DKK 70 billion for 2024-2026. The reversal helps reduce pressure but does not significantly alter their overall funding strategy.
Q: What percentage of equipment or services for US projects like Sunrise and Revolution Wind is imported, and how might potential levies affect these projects?
A: Mads Nipper, CEO, could not provide specific percentages but noted that much of the equipment for Revolution Wind is already on site. They believe any potential levies would have a manageable impact due to expected implementation periods.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
