This energy company based in Denmark is a global
leader in offshore wind with around 30% of global capacity and operations in
Denmark, UK, Germany and Holland. It also operates several wind farms outside
of Europe in the US and also Taiwan. The company's vision is to see a world run
entirely on renewable energy.
The shares were added to my portfolio in April at 495 DKK and have advanced nicely over the past few months to 630 DKK. They also now feature in some of my other holdings - Mid Wynd
Trust and Baillie Gifford Positive Change.
Renewable energy is very much in the ascendancy
due to concerns about our climate emergency. It is estimated the global wind
energy sector will attract investment of $1 trillion over the next 10 years as
the world makes the transition from fossil fuels to low-carbon clean energy.
Results
The company has today announced half year results
to June 2019. Operating profits increased to DKK 8.8bn (2018 8.5bn) and
expectations for the full year are well on track.
CEO and President Henrik Poulsen says:
"2019 has been a very good year for Ørsted so far. Operating profit for the first half of the year amounted to DKK 8.8 billion, which was in line with our expectations and keeps us well on track to deliver on our full-year guidance of DKK 15.5-16.5 billion.
"2019 has been a very good year for Ørsted so far. Operating profit for the first half of the year amounted to DKK 8.8 billion, which was in line with our expectations and keeps us well on track to deliver on our full-year guidance of DKK 15.5-16.5 billion.
We
were selected as preferred bidder in the auctions in both New Jersey with our
Ocean Wind project (1.1GW) and New York with the Sunrise Wind project (880MW)
which we own in a JV with Eversource. Subject to final investment decisions,
the wind farms are expected to be completed by 2024. We are very pleased with
these awards and are well on track to reach our ambition of 15GW offshore wind
capacity by 2025 as we continue to pioneer the global offshore wind industry.
In
June, we officially inaugurated the Borkum Riffgrund 2 offshore wind farm in
Germany and in July, we commissioned the Lockett onshore wind farm in the US
well ahead of schedule.
In
June, we acquired the 103MW construction-ready onshore wind project Willow
Creek in South Dakota in the US. The project is expected to be commissioned by
Q4 2020 and will expand our operations in the Southwest Power Pool market,
covering the central US".
The share price has increased by 27% since purchase to
DKK 630 and this is the second largest holding in my 'green' portfolio.
The shares yield around 1.7% based on the current
price.
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| Share Price past 6 months |
Green Transition
In the North Sea, 131 turbines have been installed
and Hornsea 1 is due to be completed later this year and will become the
world's largest offshore wind farm with a capacity of 1,218MW. Work has started
on Hornsea 2 which is due for completion in 2022.
The company is on track to be carbon-free by 2025
and have plans for the sale of the remaining gas and fossil-based power
operations which make up around 18% of the business. They have announced plans
to phase out their company fleet of petrol/diesel cars and replace them will fully electric by 2025.
The company has a strong commitment to the Paris Agreement and the UN
Sustainable Development Goals.
The company has set ambitious targets to reduce greenhouse
gas emissions in their supply chain by 50% by 2032.
So, although there are the inevitable currency
considerations and the higher risks associated with single share ownership, I
am happy with progress so far but it's early days.
The company is awaiting the outcome of various
tenders on new projects in the US, Taiwan and Europe and news should unfold
later this year. So, fingers crossed.
As ever, this article is merely a record of my personal investment decisions and should not be regarded as an endorsement or recommendation - always DYOR!
Well done. Clearly this has proved a very successful investment so far.
ReplyDeleteAm i right to assume you hold Orsted in Danish Krone?
If so, what kind of practical (currency-based) considerations did you find yourself having to weigh up when deciding whether or not to purchase this non-UK holding back in the Spring?
Thanks bernie, I am off to a good start...I will accept 10% per month!
DeleteYes, the shares are listed on the Copenhagen exchange and priced in Krone and my broker AJ Bell Youinvest keeps tabs on the daily exchange rates and shows the value of my holding in sterling. It can be a bit confusing to start with but I can always check the Orsted site for confirmation and do my own currency conversion online.
The dividend will also be paid in local currency and then converted on receipt by my broker.
Exchange considerations aside, the more I read up about this company, the more I feel comfortable with holding it as a stand alone share but obviously it is higher risk then the likes of iShares Global Clean Energy ETF which holds 30 similar companies.
Great investment. Having read your article I've taken a look but most of my funds are in a SIPP and ISA. These do not list shares on the Copenhagen exchange unfortunately. I'll have to look at using a taxable account which I try and avoid if possible.
ReplyDeleteI hold my Orsted shares in my ISA with AJ Bell Youinvest. They offer most of the UK listed funds and investment trusts as well as shares but I think most brokers are 'patchy' when it comes to investments listed on foreign exchanges so good luck with your efforts Grizgal.
DeleteI am using AJ Bell Youinvest but can't seem to track down the listing via the search function. Did you have to contact them directly?
DeleteMatty,
DeleteIf you log into your account and then from the normal 'buy & sell' menu enter ORSTED, it should show up (along with several fixed income options) but the equity one is listed as ORSTED A/S DKK10.
Hope that helps but otherwise contact Youinvest.
Got it, thanks! Shows up on the app, but not the website for some reason...
Delete