Orsted exits several offshore wind markets, suspends shares

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Burbo Bank, Liverpool Bay, England, seen from the offshore turbines of the Burbo wind farm off the UK coast.

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Danish renewable energy giant Orsted on Wednesday announced plans to cut jobs, halt dividend payments to shareholders and exit several offshore wind markets after a tumultuous year of rising costs.

Orsted, the world’s largest offshore wind developer, said it plans to take steps “to become a leaner and more efficient organization” after a year marked by “substantial challenges”.

These measures include the reduction of as many as 800 jobs worldwide, a freeze on dividends for the financial years 2023 to 2025 and an escape from markets in Norway, Spain and Portugal.

Shares of Orsted were trading 1% lower at 11 a.m. London time (6 a.m. ET).

The Copenhagen-listed stock price has fallen more than 40% over the past 12 months, with the company struggling against the wider wind industry. Supply chain disruptions and higher interest rates sent wind energy stocks down last year.

“Despite a year of strong business progress, 2023 marked a year of great challenges for Ørsted,” Mads Nipper, chief executive of Orsted, said in a statement.

Nipper said the company’s financial results were “adversely impacted” by shortfalls on US offshore projects built in the third quarter of 2023.

Orsted halted two major US offshore wind farm projects late last year, citing high inflation, rising interest rates and supply chain bottlenecks.

William Pettitt, offshore infrastructure construction manager with Orsted, steps inside a monopile at the EEW wind turbine manufacturing facility in Paulsboro, New Jersey on July 14, 2023.

The Washington Post | The Washington Post | Getty Images

Orsted said they were now targeting 35 to 38 gigawatts of power generation capacity by the end of the decade, a downward revision from the previous target of 50 GW.

The elimination of projects and elimination of capital costs across the portfolio will result in about 35 billion Danish kroner, or $5.05 billion, of capital cost relief in 2024 to 2026, the company said.

“We have revisited our portfolio to prioritize growth options with the highest potential for value creation while minimizing risks in the development and execution of our projects,” said Nipper.

“We remain optimistic about the future of the renewable energy industry, and we are confident that we can play a major role in accelerating renewable construction in the coming years.”

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