COPENHAGEN – Danish energy company Ørsted A/S has announced a significant impairment charge totaling 12.1 billion Danish kroner ($1.7 billion) in the fourth quarter of 2024. This is due to financial setbacks due to rising US interest rates, subsea lease devaluations and increased costs to implement the Sunrise project. Wind project.
The impairment was primarily due to a 75 basis point increase in weighted average cost of capital due to the impact of long-term interest rate movements in the United States. This increase had a significant impact on the value of Ørsted’s US offshore wind projects, resulting in an impairment charge of DKK 4.3 billion. In addition, the company recognized an impairment charge of DKK 3.5 billion on subsea lease contracts off the coasts of New Jersey, Maryland and Delaware due to prevailing market uncertainty.
Challenges in the construction of the Sunrise Wind project, including supply chain issues and the need for increased costs to maintain schedule, further contributed to the impairment of DKK 4.3 billion. Commissioning of the project has been postponed to late 2027.
Despite these setbacks, Ørsted’s provisional unaudited 2024 EBITDA is reported at DKK 24.8 billion, in line with the company’s latest guidance. Offshore and onshore operating revenues were in line with expectations and were the main driver of this figure.
Ørsted Group President and CEO Mads Nipper expressed disappointment with the construction challenges, but remained optimistic about the company’s operating results and long-term commitment to the US market. He said that there is. Nipper cited the strategic value of the subsea lease and the Sunrise Wind project, which is expected to generate enough offshore wind energy to power approximately 600,000 U.S. homes and create hundreds of jobs. emphasized its importance.
Despite the impairment, Nipper maintains that the Sunrise Wind project remains profitable, with a mid-single-digit lifecycle IRR (internal rate of return) and an attractive forward-looking IRR based on current assumptions. I’m doing it.
Orsted plans to host a conference call with investors and analysts on January 21, 2025 to discuss impairment and 2024 EBITDA. The company plans to publish its 2024 annual report on February 6, 2025. This article is based on a press release statement from Ørsted.
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