Ørsted shares down on impairment charges

Investing.com — Ørsted (CSE:) stock fell on Thursday following its earnings report, which showed significant impairments and delays in several key projects.

At 4:46 am (0846 GMT), Ørsted was trading 7.8% lower at DKK 389.60.

Although the company reported stronger-than-expected EBITDA for the second quarter of 2024, the impact of these financial setbacks has been a major concern for investors.

In Q2 2024, Ørsted achieved an EBITDA of DKK 6.6 billion, exceeding both the UBS estimate of DKK 4.5 billion and the company’s own consensus forecast of DKK 5.4 billion. 

This was largely driven by a better-than-expected outcome in the offshore wind segment, which saw a notable EBITDA beat of DKK 0.5 billion against the consensus estimate of DKK 4.4 billion. 

However, the positive financial performance was overshadowed by the announcement of substantial impairments totaling DKK 3.9 billion ($580 million) in the quarter. 

These impairments stemmed from a range of issues, including the cessation of a green hydrogen project in Sweden, delays in the Revolution Wind project in the US, and adjustments to the fair value of the Ocean Wind sea areas. 

“Small Negative on the basis there are new impairments. But we acknowledge quality of EBITDA (more EBITDA in the high-multiple offshore operating assets) is better than expected, and capex cuts are a positive,” said analysts at UBS Global Research in a note.

“We do not expect Ørsted to pay a dividend until 2027 (in relation to 2026), with a c3.5% dividend yield at that time. We would not rule out successful farm-downs bringing payouts forward,” the analysts added. 

Specifically, Ørsted recorded a DKK 1.5 billion impairment due to the halt of its efuels project, a DKK 2.1 billion impairment related to delays in the onshore substation for the Revolution Wind project, and a DKK 0.6 billion impairment from a revised fair value measurement of the Ocean Wind sea areas.

IØrsted has adjusted its gross investment forecast for 2024 to a range of DKK 44-48 billion, down from the previous range of DKK 48-52 billion. This adjustment reflects changes in the timing of expenditures rather than a fundamental shift in the company’s growth strategy. 

The company has reiterated its full-year EBITDA guidance of DKK 23-26 billion, which aligns with the midpoint of its forecast at DKK 24.3 billion.