The Danish corporation constructing the biggest offshore windfarm in the North Sea plans to eliminate numerous positions and halt dividend payouts in order to bounce back from a tumultuous year.
On Wednesday, Ørsted announced its intention to cut up to 800 positions, withdraw from markets in Spain, Portugal, and Norway, and halt dividend payouts to shareholders for the 2023-25 fiscal years. This decision comes as the company prepares to undertake the £8bn Hornsea 3 project off the Yorkshire coast.
The company announced a revised target for achieving renewable energy capacity by 2030, lowering it from 50 gigawatts to 35-38GW.
After serving in the position for nearly ten years, Thomas Thune Andersen, the chair of the company, will be stepping down following the departure of two top executives in November.
The majority owner of the company is the Danish government, and they have announced a “reset plan” that aims to streamline and improve efficiency.
Ørsted has faced challenges due to inflation, disruptions in the supply chain, and increasing interest rates, all of which have impacted the windfarm sector. Additionally, the company has encountered difficulties in the United States while trying to obtain tax credits.
Ørsted decided to cancel its Ocean Wind I and II windfarm projects in the US last year, citing a significant increase in expenses. This decision resulted in a loss of 28.4 billion Danish kroner (£3.3 billion) for the company.
Last year, the company expressed concerns about the expense of the Hornsea 3 project. However, in December, it restated its dedication to the 2.9GW project, which is projected to provide electricity to 3.3 million households.
According to RBC analyst Alexander Wheeler, there was an anticipation in the financial markets for Ørsted to seek funds from investors. This could have helped to address the problems faster and mitigate any potential future risks.
He stated: “Nevertheless, we are currently in a phase where Ørsted must implement several aspects of its strategy to enhance its financial measures in the coming years.”
Ørsted currently operates 12 wind farms in the UK, generating sufficient energy to supply electricity to 6 million homes. The company is also actively developing a floating offshore wind venture in Scotland.
On Wednesday, Siemens Energy, a company that specializes in turbines, reported a first-quarter profit of €1.58bn. This was due to selling a portion of its Indian unit and comes after the company had to make a €15bn deal with the German government last year.
The turbine division reported lower orders than expected, possibly due to technical malfunctions in newer models. However, the company aims to reach a break-even point in this sector by 2026.
Last year, the Swedish energy company Vattenfall halted construction on the Norfolk Boreas windfarm, which was worth billions, due to challenges facing the windfarm industry and its lack of profitability.
Equinor, a Norwegian company in the oil and gas industry, reported a quarterly profit of $8.68 billion. This is a decrease from the previous year’s profit of $17 billion, but still higher than what was predicted by analysts in the City. The decline in profits can be attributed to lower energy prices.
The parent company of British Gas, Centrica, has entered into a contract to purchase one million metric tonnes of LNG from Repsol in Spain. The shipments will be transported to the Isle of Grain terminal in Kent over the course of 2025 to 2027. These gas terminals in Britain serve as a source of fuel for both domestic consumption and re-exportation.
Due to decreased Russian gas supplies following the invasion of Ukraine, Germany has quickly worked to strengthen its capacity to import liquefied natural gas (LNG) via ships. In contrast, the US recently took action to limit gas exports by putting a hold on all pending export permits due to climate-related concerns.
The newly appointed CEO of BP announced on Tuesday that the company will adopt a more practical approach in achieving its environmental goals. Last week, Shell was urged to accelerate its investments in renewable energy, as it reported high profits and dividends and an increase in oil and gas output.
According to the National Grid, gas-fired power plants were the primary source of electricity in Great Britain in January, making up 35.7% of the total supply. Wind power followed closely behind at 33.5%.