REG-Ørsted A/S Capital Markets Update: Ørsted presents updated business plan following comprehensive portfolio review – Thomas Thune Andersen steps down as Chair at upcoming AGM

Oersted A/SAnnouncement

07/02/2024 07:15

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   Ørsted A/S (Orsted)
   Capital Markets Update: Ørsted presents updated business plan following
   comprehensive portfolio review – Thomas Thune Andersen steps down as Chair
   at upcoming AGM

   07-Feb-2024 / 08:00 CET/CEST

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   7.2.2024 08:00:19 CET | Ørsted A/S | Inside information

   Today, Ørsted’s Board of Directors has approved a business plan with the
   ambition of 35-38 GW of installed capacity by 2030 and updated financial
   targets, following the completion of a comprehensive portfolio review. The
   updated ambition and financial targets that Ørsted announces today confirm
   that Ørsted, despite the challenges in 2023, remains a global leader
   within offshore wind with the ambition of delivering attractive growth and
   returns towards 2030.

   Despite strong underlying business progress, 2023 marked a year with
   substantial challenges for Ørsted as its US offshore projects caused
   significant impairments and additional costs for terminating contracts,
   leading to a negative impact on Ørsted’s credit metric (FFO/adjusted net
   debt) projections.

   In response to this, Ørsted is implementing measures to ensure a robust
   balance sheet, supporting long-term growth and capital structure
   resilience towards 2030. Based on the learnings from the US offshore
   projects, Ørsted has also concluded an extensive review of its project
   portfolio and has taken actions to reduce risks.

   Mads Nipper, Group President and CEO of Ørsted, says:
   “We have prioritised projects within our portfolio and are implementing
   significant changes in our business, including revising our operating
   model to reduce risks. We now present a robust business plan, and with an
   uncompromising focus on value creation, we plan to more than double our
   current installed capacity of renewable energy by 2030.”

   Review of risk and portfolio
   Ørsted’s fundamental strategic choices on technologies and regions are
   unchanged, and Ørsted still aims to be the world leader in Offshore and a
   regional player in Onshore and P2X in Europe and the US. However, Ørsted
   has revisited its portfolio to prioritise growth options with the highest
   potential for value creation and lower risks.

   Ørsted is implementing the learnings from its US offshore projects into
   its operating model to reduce risks in the development and execution of
   projects, with a particular focus on contingency planning, monitoring of
   suppliers, inflation protection, scrutiny of pre-FID commitments, greater
   flexibility on project timelines and commissioning dates, and project
   governance and reviews.

   As previously communicated, Ørsted has ceased the development of the
   offshore wind projects Ocean Wind 1 and Ocean Wind 2 in the form that they
   were awarded by the New Jersey Board of Public Utilities, has decided to
   reposition the offshore wind project Skipjack Wind in the US, and will
   primarily focus its US offshore portfolio towards the North-East Atlantic.
   To reduce development costs and create further strategic market focus,
   Ørsted is exiting several offshore markets (including Norway, Spain, and
   Portugal), deprioritising development activities in Japan, and planning
   for a leaner development within floating offshore wind and P2X.

   Project cancellations and phasing of capital expenditure across the
   portfolio will result in approx. DKK 35 billion of capital expenditure
   relief in 2024-2026 compared to the numbers presented at the Capital
   Markets Day in June 2023.

   As a result of the review, Ørsted now believes that it has a more robust
   portfolio of projects, and it has refocused its offshore strategy for the
   US. The portfolio changes will result in approx. DKK 3 billion of
   development expenditure reductions in 2024-2026 compared to the numbers
   presented at the Capital Markets Day in June 2023.

   Ensuring a robust balance sheet
   Besides reducing capital expenditure and project development costs, Ørsted
   pauses dividends for the financial years 2023-2025.

   Furthermore, Ørsted will accelerate its divestment programme. Farm-downs
   and divestments are expected to contribute with proceeds of approx. DKK
   115 billion towards 2030, of which approx. DKK 70-80 billion are expected
   in 2024-2026.

   In addition, Ørsted will look at measures to become a leaner and more
   efficient organisation and has set a target to reduce its fixed costs by
   DKK 1 billion by 2026 compared to 2023, on a like-for-like basis. This
   will include a reduction of 600-800 positions globally. Not all reductions
   will result in redundancies, but there will be redundancies throughout
   2024, and today, Ørsted is announcing that approx. 250 people globally
   will be made redundant and leave Ørsted within the coming months.

   Mads Nipper, Group President and CEO of Ørsted, says:
   “In order to improve our competitiveness, ensure value creation, and
   ensure our ability to attract capital to the renewable build-out, we will
   make Ørsted a leaner and more efficient company. This will include
   reducing the number of positions across the company. We are committed to
   carrying this through in a fair and respectful manner.”

   Updated strategic ambition, financial targets, and financial policies
   As a result of the business plan approved by Ørsted’s Board of Directors,
   Ørsted has updated its ambition for installed renewable capacity from
   approx. 50 GW to 35-38 GW by 2030, which will be more than double its
   current installed capacity of 15.7 GW. By 2026, Ørsted expects to have an
   installed capacity of approx. 23 GW.

   Ørsted has also updated its financial targets for 2024-2030 and its
   financial policies to reflect the new strategic ambition for installed
   capacity by 2030 (targets announced in June 2023 in parentheses):

     • Ørsted maintains its target of an unlevered, fully loaded lifecycle
       IRR at 150-300 bps spread to WACC when we bid in tenders or take FIDs
       (whichever comes first).
     • Ørsted expects EBITDA (excluding new partnerships) to increase to
       approx. DKK 39-43 billion in 2030, corresponding to an annual growth
       (CAGR) of 8 % in the period 2023-2030 (previously DKK 50-55 billion in
       2030, corresponding to a targeted annual growth of 13-14 %).
     • Ørsted expects to achieve a return on capital employed (ROCE) of
       approx. 14 % on average during 2024-2030 (previously approx. 14 % on
       average during 2023-2030).
     • Ørsted is committed to a solid investment grade credit rating with an
       FFO/NIBD ratio above 30 % (previously an FFO/NIBD above 25 %).
     • Ørsted has decided to pause dividends for the financial years 2023,
       2024, and 2025. Hereafter, the target is to reinstate dividends from
       the financial year 2026.

   Ørsted plans a DKK 270 billion investment programme in the period
   2024-2030, of which Ørsted expects to invest approx. DKK 130 billion by
   2026.

   The business plan is fully financed without any need for raising new
   equity. It is financed through a combination of operating cash flow,
   partnerships and divestments, tax equity, as wells as debt and hybrid
   issuance.

   Ørsted continues to be fully committed to a sustainable build-out that
   creates further positive impact on nature and society, going beyond
   decarbonising energy systems. Ørsted has taken considerable steps with its
   suppliers to decarbonise its whole supply chain and is progressing towards
   its science-based targets of reducing carbon emissions by 98 % (scopes 1
   and 2) in 2025 and achieving net-zero for the entire value chain in 2040.

   Thomas Thune Andersen steps down as Chair
   Following the approval of the above-mentioned business plan, Thomas Thune
   Andersen, Chair of the Board of Directors of Ørsted A/S, has today
   informed the Board of Directors about his decision to step down as Chair
   at the upcoming annual general meeting on 5 March 2024.

   Thomas Thune Andersen, Chair of Ørsted A/S, says:
   “2023 was a challenging year for Ørsted. We have learned from the
   challenges and today, we are announcing a robust business plan with
   revised strategic growth ambitions for 2030. The plan has been developed
   in close collaboration between the executive management team and the Board
   of Directors, and we are confident that this is a robust plan that will
   secure our continued long-term growth.”

   Thomas Thune Andersen continues:
   “I have had the pleasure and the privilege to serve as the Chair of the
   Board of Directors of Ørsted for the past ten years, which have seen the
   transformation of DONG Energy to a world-leading renewable utility renamed
   Ørsted. We now have a new plan in place that will more than double
   Ørsted’s capacity by the end of the decade and fulfil our continued
   ambition to be a major renewable energy company. With the plan in place
   and at this juncture, it is an appropriate time for me to step down and
   let a new chair take the plan forward.”

   Following Thomas Thune Andersen’s decision to step down as Chair, the
   Board of Directors will as soon as possible come with a recommendation
   regarding a new Chair to be elected at the annual general meeting on 5
   March 2024.

   Investor and analyst update
   Mads Nipper, Group President and CEO of Ørsted, and Rasmus Errboe, interim
   CFO of Ørsted, will present the full-year results and a Capital Markets
   Update on Wednesday, 7 February at 13:00 CET.

   To follow the presentation via live streaming, please click here:
    1 Ørsted full-year results 2023 and Capital Markets Update
   (getvisualtv.net)

   Presentation slides will be available prior to the Capital Markets Update
   at  2 Investors | Ørsted (orsted.com)

   Press briefing
   Ørsted will host a phone press briefing for journalists on Wednesday, 7
   February 2024 at 09:00 CET to elaborate on and answer questions about the
   Capital Markets Update and the annual results for 2023.

   Dial-in numbers for the press briefing:

   Denmark: +45 89 87 50 45
   UK: +44 20 3936 2999
   Access code: 421285

   For participation in the press briefing, please register here:
    3 NetRoadshow

   For further information, please contact:

   Global Media Relations
   Carsten Birkeland Kjær
   +45 99 55 77 65
    4 cabkj@orsted.com

   Investor Relations
   Rasmus Keglberg Hærvig
   +45 99 55 90 95
    5 ir@orsted.com

   About Ørsted
   The Ørsted vision is a world that runs entirely on green energy. Ørsted
   develops, constructs, and operates offshore and onshore wind farms, solar
   farms, energy storage facilities, renewable hydrogen and green fuels
   facilities, and bioenergy plants. Ørsted is recognised on the CDP Climate
   Change A List as a global leader on climate action and was the first
   energy company in the world to have its science-based net-zero emissions
   target validated by the Science Based Targets initiative (SBTi).
   Headquartered in Denmark, Ørsted employs approx. 8,900 people. Ørsted's
   shares are listed on Nasdaq Copenhagen (Orsted). In 2023, the group's
   revenue was DKK 79.3 billion (EUR 10.6 billion). Visit  6 orsted.com or
   follow us on  7 Facebook,  8 LinkedIn, Instagram, and  9 X.

   Disclaimer
   This company announcement contains certain forward-looking statements
   which include projections of Ørsted’s ambition, short- and long-term
   financial performance and targets as well as its financial policies.

   Statements herein, other than statements of historical fact, regarding
   Ørsted’s future results of operations, financial condition, cash flows,
   business strategy, ambitions, plans, and future objectives are
   forward-looking statements. Words such as ’targets‘, ’believe‘, ’expect‘,
   ’aim‘, ’intend‘, ’plan‘, ’seek‘, ’will‘, ’may‘, ’should‘, ’anticipate‘,
   ’continue‘, ’predict‘, or variations of these words as well as other
   statements regarding matters that are not historical facts or regarding
   future events or prospects constitute forward-looking statements. These
   forward-looking statements are based on current views with respect to
   future events and financial performance. These statements are by nature
   uncertain and associated with risk. Many factors may cause the actual
   development to differ materially from Ørsted’s current expectations. These
   factors include, but are not limited to, changes in temperature, wind
   conditions, wake and blockage effects, precipitation levels, the
   development in power, coal, carbon, gas, oil, currency, and interest rate
   markets, the ability to uphold hedge accounting, inflation rates, changes
   in legislation, regulations, or standards, the renegotiation of contracts,
   changes in the competitive environment in Ørsted’s markets, reliability of
   supply, market volatility, and disruptions from geopolitical tensions. As
   a result, investors are cautioned not to rely on these forward-looking
   statements.

   Please read more about the risks in Ørsted’s most recent annual report
   available at  10 www.orsted.com. Unless required by law, Ørsted is under
   no duty and undertakes no obligation to update or revise any
   forward-looking statement after the release of this company announcement,
   whether as a result of new information, future events, or otherwise.

       Attachments

     •  11 Company announcement_Capital Markets Update.pdf
     •  12 Ørsted FY 2023 results & Capital Markets Update.pdf

   News Source: Ritzau

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   Dissemination of a Regulatory Announcement, transmitted by EQS Group.
   The issuer is solely responsible for the content of this announcement.

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   ISIN:          DK0060094928
   Category Code: MSCM
   TIDM:          Orsted
   Sequence No.:  302084
   EQS News ID:   1831909


    
   End of Announcement EQS News Service

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