ESG King Ørsted Crashes on Multi-Billion Write-Downs

Shares in the Danish renewables company plunge 20% on Copenhagen's stock exchange after the firm flagged impairments worth 16 billion Danish Kroner in its US portfolio

Johanna Englundh 30 August, 2023 | 10:15AM
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OrstedShares in Danish energy giant Ørsted have plunged after it said it may take write-downs totaling up to 16 billion Danish kroner (£1.8 billion) in its US portfolio due to supply chain, tax, and interest issues. 

In a statement late Tuesday the company said there was an increased risk some of its suppliers would not fulfill their commitments and the agreed schedule for the Ocean Wind 1, Sunrise Wind and Revolution Wind projects in the USA. Costs will therefore increase and delay revenues.

"These effects will lead to write-downs of up to 5 billion Danish kroner, and this assumes that there will not be even more negative development in the supply chain of these projects," it said.

By 10am on Wednesday, the firm's stock had fallen about 20% on the Copenhagen stock exchange as traders reacted to the update. 

Additionally, the company announced discussions with senior federal stakeholders regarding its applications for investment tax credits for Ocean Wind 1 and Sunrise Wind have not progressed as previously expected. That could also result in write-downs of up to DKK 6 billion if the company does not qualify for additional credits in addition to 30%, it said.

Rising interest rates in the USA have also affected Ørsted's US offshore projects and certain onshore work. If interest rates remain at current levels at the end of the third quarter, this will lead to write-downs of approximately 5 billion Danish kroner. Impairments for affected US projects will be booked in the report for the third quarter of 2023.

"The US offshore wind market remains attractive in the long term. We will continue to work with our stakeholders to explore all options to improve our short-term projects," said David Hardy, CEO of Ørsted Americas.

According to Ørsted, the write-downs will not change its EBITDA forecast of between DKK 12.6 billion and DKK 14.4 billion, or expected gross investment level of DKK 27.6 billion to £30.2 billion.

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Orsted A/S393.00 DKK0.20Rating

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Johanna Englundh  Johanna Englundh is an editor for Morningstar in Sweden 

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