Ørsted’s profits down in first quarter despite higher revenues

Ørsted’s profits were squeezed in the first quarter of 2021, despite an increase in revenue.

The Danish developer recorded a DKK 1.6 billion (€214 million) net profit in the period, down 52% from one year earlier.

Meanwhile, its operating profit fell 29% to DKK 4.9 billion in the first quarter of the year.

These drops in profit were mainly due to valuable construction and divestment contracts being realised in Q1 2020 and lower wind speeds, the company stated.

This came despite revenue increasing 23% to DKK 18.9 billion in the first three months of 2021.

This increase in revenue was mainly due to the sale of transmission assets, higher gas and power prices across all markets, but was partially offset by lower wind speeds.

Offshore cable protection

Ørsted also made a DKK 800 million warranty provision – hitting operating profit in the quarter – related to issues with the cable protection systems at up to ten of its offshore wind farms in the UK and continental Europe. 

It discovered that the cable protection systems at some of its wind farms are moving across the scour protection – rocks placed on the seabed around the foundations to avoid seabed erosion – and risked being eroded, and possibly caused to fail.

The developer reported the issue could create a total financial hit of DKK 3 billion across 2021 to 2023, but will not change its long-term guidance.

It maintained its full-year Ebitda guidance of DKK 15-16 billion. It also anticipates increasing gross investments to DKK 32-34 billion (up from DKK 23.3 billion) due to a high level of construction activity in offshore and onshore wind, as well as solar PV.

Ørsted explained that its net profits in the first three months of 2021 were nearly halved due to several valuable transactions and phenomena in Q1 2020 not being repeated one year later.

In the first quarter of 2020, it had benefited from construction agreements related to the transmission assets at the 1218MW Hornsea Project One Hornsea Project One (1218MW) Offshoreoff Yorkshire, UK, Europe Click to see full details project, very high wind speeds and divestment of its distribution, residential customer and city light businesses.

However, its revenue increased by almost a quarter mainly due to the divestment of the Hornsea One transmission assets.