Danish wind power giant Orsted has defied market conditions by posting a 33% earnings increase for a first quarter in which energy markets have been battered by the effects of coronavirus.
High wind speeds during the first three months of the year helped propel the company’s operating profit to 6.8 billion Danish krone ($991m) during the period, up from DKK5.1bn ($743m) in the same quarter of 2019.
Net profit grew 28% year-on-year to DKK3.3bn ($481m), while the company said its full-year earnings guidance of between DKK16bn ($2.3bn) and DKK17bn ($2.5bn) remains unchanged, with “no indication” that the pandemic will significantly impact its business performance during 2020.
Orsted president and CEO Henrik Poulsen said: “Despite the Covid-19 crisis and its profound impact on societies around the world, we have had a very good start to the year with strong financial results and solid operational performance across the entire business.
“During the last couple of months, our asset base has been fully operational with availability rates for our wind farms and power stations within the normal range.”
The quarterly update comes in stark contrast to the fortunes of energy market peers in the fossil fuel sector, which have faced considerable financial and operational struggles amid the economic crisis brought on by the coronavirus outbreak.
Yesterday (28 April), UK oil giant BP revealed a 66% decline in underlying earnings for the first quarter, with other oil majors expected to deliver their results over the next few days.
Orsted’s first-quarter earnings boost comes despite supply chain and construction concerns for wind sector
Orsted said its first-quarter results had been driven by 25% increase to its earnings from onshore and offshore wind projects to DKK 5.2bn ($757m) – as electricity generation was ramped up across its Hornsea 1, Lockett and Sage Draw projects.
Industry analysts have cautioned over supply chain concerns for the global wind industry amid coronavirus, as well as disruption to new construction projects and labour shortages as lockdowns continue to be enforced.
BloombergNEF has warned of “chain reaction” delays to project timelines as tight construction schedules become disrupted – as well as the risks some projects face of missing government subsidy deadlines in countries such as China and the US.
But Orsted says it is confident that the majority of its wind construction projects remain “on track” despite the “increased risk of component and service delays from suppliers impacted by Covid-19”.
Some projects in the US are progressing “at a slower pace than originally expected”, it conceded, due to regulatory issues – with the 120 megawatt (MW) Skipjack project in Maryland and the 130MW South Fork project in New York both facing delays.
Poulsen added: “We collaborate closely together with our partners to mitigate these situations as best possible and without compromising health and safety standards.
“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.”
