Capital Markets Update: Ørsted presents updated business plan following comprehensive portfolio review – Thomas Thune Andersen steps down as Chair at upcoming AGM
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Ørsted A/S (Orsted)
7.2.2024 08:00:19 CET | Ørsted A/S | Inside information Today, Ørsted’s Board of Directors has approved a business plan with the ambition of 35-38 GW of installed capacity by 2030 and updated financial targets, following the completion of a comprehensive portfolio review. The updated ambition and financial targets that Ørsted announces today confirm that Ørsted, despite the challenges in 2023, remains a global leader within offshore wind with the ambition of delivering attractive growth and returns towards 2030. Despite strong underlying business progress, 2023 marked a year with substantial challenges for Ørsted as its US offshore projects caused significant impairments and additional costs for terminating contracts, leading to a negative impact on Ørsted’s credit metric (FFO/adjusted net debt) projections. In response to this, Ørsted is implementing measures to ensure a robust balance sheet, supporting long-term growth and capital structure resilience towards 2030. Based on the learnings from the US offshore projects, Ørsted has also concluded an extensive review of its project portfolio and has taken actions to reduce risks. Mads Nipper, Group President and CEO of Ørsted, says: Review of risk and portfolio Ørsted is implementing the learnings from its US offshore projects into its operating model to reduce risks in the development and execution of projects, with a particular focus on contingency planning, monitoring of suppliers, inflation protection, scrutiny of pre-FID commitments, greater flexibility on project timelines and commissioning dates, and project governance and reviews. As previously communicated, Ørsted has ceased the development of the offshore wind projects Ocean Wind 1 and Ocean Wind 2 in the form that they were awarded by the New Jersey Board of Public Utilities, has decided to reposition the offshore wind project Skipjack Wind in the US, and will primarily focus its US offshore portfolio towards the North-East Atlantic. To reduce development costs and create further strategic market focus, Ørsted is exiting several offshore markets (including Norway, Spain, and Portugal), deprioritising development activities in Japan, and planning for a leaner development within floating offshore wind and P2X. Project cancellations and phasing of capital expenditure across the portfolio will result in approx. DKK 35 billion of capital expenditure relief in 2024-2026 compared to the numbers presented at the Capital Markets Day in June 2023. As a result of the review, Ørsted now believes that it has a more robust portfolio of projects, and it has refocused its offshore strategy for the US. The portfolio changes will result in approx. DKK 3 billion of development expenditure reductions in 2024-2026 compared to the numbers presented at the Capital Markets Day in June 2023. Ensuring a robust balance sheet Furthermore, Ørsted will accelerate its divestment programme. Farm-downs and divestments are expected to contribute with proceeds of approx. DKK 115 billion towards 2030, of which approx. DKK 70-80 billion are expected in 2024-2026. In addition, Ørsted will look at measures to become a leaner and more efficient organisation and has set a target to reduce its fixed costs by DKK 1 billion by 2026 compared to 2023, on a like-for-like basis. This will include a reduction of 600-800 positions globally. Not all reductions will result in redundancies, but there will be redundancies throughout 2024, and today, Ørsted is announcing that approx. 250 people globally will be made redundant and leave Ørsted within the coming months. Mads Nipper, Group President and CEO of Ørsted, says: Updated strategic ambition, financial targets, and financial policies Ørsted has also updated its financial targets for 2024-2030 and its financial policies to reflect the new strategic ambition for installed capacity by 2030 (targets announced in June 2023 in parentheses):
Ørsted plans a DKK 270 billion investment programme in the period 2024-2030, of which Ørsted expects to invest approx. DKK 130 billion by 2026. The business plan is fully financed without any need for raising new equity. It is financed through a combination of operating cash flow, partnerships and divestments, tax equity, as wells as debt and hybrid issuance. Ørsted continues to be fully committed to a sustainable build-out that creates further positive impact on nature and society, going beyond decarbonising energy systems. Ørsted has taken considerable steps with its suppliers to decarbonise its whole supply chain and is progressing towards its science-based targets of reducing carbon emissions by 98 % (scopes 1 and 2) in 2025 and achieving net-zero for the entire value chain in 2040. Thomas Thune Andersen steps down as Chair Thomas Thune Andersen, Chair of Ørsted A/S, says: Thomas Thune Andersen continues: Following Thomas Thune Andersen’s decision to step down as Chair, the Board of Directors will as soon as possible come with a recommendation regarding a new Chair to be elected at the annual general meeting on 5 March 2024. Investor and analyst update To follow the presentation via live streaming, please click here: Ørsted full-year results 2023 and Capital Markets Update (getvisualtv.net) Presentation slides will be available prior to the Capital Markets Update at Investors | Ørsted (orsted.com) Press briefing Dial-in numbers for the press briefing: Denmark: +45 89 87 50 45 For participation in the press briefing, please register here: NetRoadshow For further information, please contact: Global Media Relations Investor Relations About Ørsted Disclaimer Statements herein, other than statements of historical fact, regarding Ørsted’s future results of operations, financial condition, cash flows, business strategy, ambitions, plans, and future objectives are forward-looking statements. Words such as ’targets‘, ’believe‘, ’expect‘, ’aim‘, ’intend‘, ’plan‘, ’seek‘, ’will‘, ’may‘, ’should‘, ’anticipate‘, ’continue‘, ’predict‘, or variations of these words as well as other statements regarding matters that are not historical facts or regarding future events or prospects constitute forward-looking statements. These forward-looking statements are based on current views with respect to future events and financial performance. These statements are by nature uncertain and associated with risk. Many factors may cause the actual development to differ materially from Ørsted’s current expectations. These factors include, but are not limited to, changes in temperature, wind conditions, wake and blockage effects, precipitation levels, the development in power, coal, carbon, gas, oil, currency, and interest rate markets, the ability to uphold hedge accounting, inflation rates, changes in legislation, regulations, or standards, the renegotiation of contracts, changes in the competitive environment in Ørsted’s markets, reliability of supply, market volatility, and disruptions from geopolitical tensions. As a result, investors are cautioned not to rely on these forward-looking statements. Please read more about the risks in Ørsted’s most recent annual report available at www.orsted.com. Unless required by law, Ørsted is under no duty and undertakes no obligation to update or revise any forward-looking statement after the release of this company announcement, whether as a result of new information, future events, or otherwise. AttachmentsNews Source: Ritzau Dissemination of a Regulatory Announcement, transmitted by EQS Group. The issuer is solely responsible for the content of this announcement. |
| ISIN: | DK0060094928 |
| Category Code: | MSCM |
| TIDM: | Orsted |
| Sequence No.: | 302084 |
| EQS News ID: | 1831909 |
| End of Announcement | EQS News Service |
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