Ørsted exceeds expected earnings for 2022 despite offshore dip

4C Offshore | Tom Russell
By: Tom Russell 20/01/2023 Ørsted

Ørsted issued its preliminary and unaudited results for 2022 noting its earnings in its Offshore business decreased. The unexpected decrease in Offshore was primarily due to adverse impacts from hedges, and delays at its Hornsea 2 and Greater Changhua 1 & 2a construction projects.

Despite this, it achieved 2022 EBITDA within its latest guidance from 3 November 2022 and above its initial expectations for the year. EBITDA including new partnership agreements is expected to total DKK 32.1 billion in 2022, our highest EBITDA to date, of which the gain from the 50% farm-downs of Hornsea 2 and Borkum Riffgrund 3 amounted to DKK 11.0 billion in total.

EBITDA excluding new partnership agreements is expected to be DKK 21.1 billion, an increase of DKK 5.3 billion compared to 2021. This was partly attributed to achieving higher earnings from its onshore wind and solar PV business, combined heat and power plants, and gas activities than expected at the beginning of the year.

As a result of project-specific CAPEX increases, an unprecedented cost inflation, and rapidly rising interest rates in 2022, Ørsted also recognised an impairment of DKK 2.5 billion on its 50% owned US-based offshore wind development project Sunrise Wind in 2022.

Mads Nipper, Group President and CEO of Ørsted, said: “In a year with unusual market conditions, not least the very volatile energy prices and a substantial increase in inflation, we’re happy to achieve a record-high EBITDA for 2022 within our latest guidance and above our initial expectations for the year. The composition and development of our earnings mix was significantly different than expected and once again showed the benefits from having a diverse portfolio.

"We expect that earnings from our operational renewable energy assets will increase significantly in 2023 and contribute to reaching a Group EBITDA excluding new partnerships of DKK 20-23 billion, and we remain confident in our long-term financial estimates and growth ambitions.”

EBITDA excluding new partnership agreements is expected to be DKK 20-23 billion in 2023. Its EBITDA guidance assumes higher earnings in Offshore, the same level in Onshore, and lower earnings in Bioenergy & Other compared to 2022.