Monday 3 February 2020

Orsted - Full Year Results

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, Holland the US and also Taiwan. Total offshore capacity is around 7.5GW and the recently completed Hornsea 1 is the largest in the world accounting for 1.2GW.

The US arm has recently started work on their first utility scale solar+storage project. A 460 MW facility in Texas which is due to become operational in mid 2021.

The shares were added to my portfolio in April at the 495 DKK and have advanced nicely over the past few months to currently 740 DKK - an increase of 50%. The shares represent around 9% of my 'green' portfolio.

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.


The company has recently announced full year results to end 2019 (link via company website).

Operating profits were ahead of expectations and increased by 17% to DKK 17.5bn (2017 13.3bn). The dividend will increase by 7.7% to DKK 10.5 - a yield of 1.4% based on the current share price.

Henrik Poulsen, CEO and President of ├śrsted, says:  “2019 was a great year for ├śrsted with continued strategic progress and global expansion. We achieved a very satisfactory operating profit (EBITDA), and the green share of our heat and power generation increased to a new high of 86%.
We reached significant milestones by winning two large-scale offshore projects in the US. We were awarded 1,100MW with our Ocean Wind project in New Jersey and 880MW with our Sunrise Wind project in New York. With these awards, we have secured a US offshore wind portfolio with a total capacity of 2.9GW to be completed towards 2024. In addition, we have up to 4.5GW of lease rights which can be developed for future offshore wind projects in the US. The Sunrise Wind project will be constructed together with our partner Eversource. For Ocean Wind, we are in exclusive negotiations with the Public Service Enterprise Group (PSEG) regarding a joint venture agreement to acquire 25% of the project.
In the UK, we commissioned Hornsea 1, the world’s largest offshore wind farm with a capacity of 1,218MW. We passed further milestones when we inaugurated phase two of Taiwan’s first-ever offshore wind farm Formosa 1, and when we commissioned the onshore wind farm Lockett in Texas in the US".
Investment for the coming year will be around DKK 30bn reflecting high levels of construction activity for both offshore and onshore wind as well as solar PV.

A decade ago, this company was heavily involved in oil & gas but has transformed itself to become the most sustainable company in the world according to Corporate Knights Global 100 Index. The management realised that fossil fuels were neither environmentally or financially sustainable - something the other large oil companies have yet to grasp.

The company has the ambitious target of becoming carbon neutral by 2025. Their vision is to see a world run entirely on renewable energy.

Orsted is one of six stand-alone company shares I have added to my 'green' portfolio over the past year and as it currently represents around 9% of the whole portfolio, I don't want to go too much overboard with any one holding. But obviously very happy with progress so far and hoping for more progress over the coming year or two.

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!

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