Sustainable Energy

Danish energy company Orsted reiterates guidance for 2020 and plays down coronavirus challenges

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Key Points
  • The coronavirus has affected several major firms involved in the renewable energy sector.
  • Orsted, however, says it has "no indication" the coronavirus will significantly impact its earnings this year.

In this article

One of Orsted's offshore wind farms, located off the coast of north-west England.
Alan Morris | iStock Editorial | Getty Images

Orsted reported Wednesday that its operating profit for the first quarter rose 33% compared to the same period in 2019, adding that it has "no indication" the coronavirus will significantly impact its earnings this year.

The Danish energy firm said in its financial report that earnings before interest, taxes, depreciation, and amortization (EBITDA) hit 6.8 billion Danish kroner (DKK, around $990 million) in the first quarter, up from DKK 5.13 billion in the same period last year.  

Earnings from operational onshore and offshore wind farms increased by 25% to DKK 5.2 billion. Orsted said this was driven by the ramping-up of generation at three wind farms — Hornsea 1, Lockett, and Sage Draw — as well as high wind speeds in Europe during the first quarter.

Referencing the current coronavirus pandemic, the Fredericia-headquartered company said that, "at this point in time, we have no indication that the COVID-19 situation will significantly impact our earnings for the year."

As such, it reiterated its most recent EBITDA guidance of DKK 16-17 billion for 2020.

Despite this, the company's CEO, Henrik Poulsen, still acknowledged that Covid-19 was having an impact in some areas.

"Our construction projects all remain on track. However, across our projects, we see an increased risk of component and service delays from suppliers impacted by COVID-19," he said.

"Based on our current outlook, we believe the COVID-19 related impact on our construction projects will be limited both in terms of timing and economics."

The coronavirus pandemic was also cited as a contributing factor to delays in several offshore wind projects in the U.S.

The release of Orsted's interim report comes a day after the firm announced that its Borssele 1 & 2 offshore wind farm had sent its first power to the Dutch grid. Situated 22 kilometers off the coast of Zeeland, in the south west of the Netherlands, construction work on the facility began in January this year.

When fully up and running, Borssele 1 & 2 will use 94 eight-megawatt turbines from Siemens Gamesa and is expected to be the biggest offshore wind farm in the Netherlands.

Coronavirus impact elsewhere

The coronavirus has affected several major firms involved in the renewable energy sector.

These include Siemens Gamesa, which withdrew financial guidance for the 2020 financial year last week. In a statement dated April 21, it said the "uncertainty associated with COVID-19" was "compounding challenges in India and Northern Europe."

Another firm involved with wind turbines, Vestas, has also withdrawn guidance for 2020.

In an announcement earlier this month, the Aarhus-headquartered firm noted that the global spread of Covid-19, and national measures taken to contain it, had caused disruptions to installations, manufacturing and its supply chain. Vestas also recently announced a decision to lay off around 400 employees.