Dong Energy booked growth in earnings before interest, taxes, depreciation and amortisation (EBITDA) of around 70% in the second quarter of this year, up to Dkr4.4bn (€591m) from Dkr2.6bn in the same period in 2016.
In quarterly results published on Wednesday the Danish developer said the figure was due to higher earnings off the back of new offshore wind farm commissionings and “high wind energy content”.
Its ongoing divestment schemes, including the sale of a 50% share in the 573MW Race Bank project off the UK, also contributed, the company said.
Net profit on continuing operations meanwhile stood at Dkr2.5bn for the quarter, up from Dkr673m for the same period in 2016.
An increase in power generation from wind was partly responsible, up to 1.8TWh in quarter two 2017 from 1.2TWh in 2016, thanks to the ramp up in operations at the 258MW Burbo Bank 2 in the UK and 576MW Gode Wind 1&2 in Germany. Earnings from operating wind farms increased by Dkr1.9bn to Dkr4.2bn for the quarter.
Gross investments stood at Dkr4.3bn, up 83% on the Dkr2.3bn in the year-ago period, due to the spending of more cash associated with the building of the 659MW Walney 3, 1.2GW Hornsea 1 and Race Bank in the UK, and the 450MW Borkum Riffgrund 2 in Germany.
Net debt also increased by Dkr3.8bn at the end of quarter two to Dkr10.3bn.
Return on capital employed was 18% for the quarter, up from 15% at end-June 2016.
Cash flows turned negative to – Dkr1.8bn from Dkr3.1bn, primarily due to early settlement of intra-group hedging contracts related to the oil and gas business as well as more funds that were tied up in working capital on offshore wind farm construction.
Chief executive Henrik Poulsen said the first six months of 2017 have showed “strong strategic progress”.
He pointed out the company has raised its outlook for operating profit for the year up around Dkr2bn to up to Dkr19bn on the back of the 50% divestment in the Borkum Riffgrund 2 project in Germany.
“Our offshore wind farms under construction are progressing according to plan. We are also continuing our efforts to expand our portfolio of offshore wind projects for construction after 2020,” he said.
Poulsen also confirmed the company expects to file a bid in the UK’s Contract for Difference auction on 14 August for the 1.8GW Hornsea 2 project off Yorkshire.
Further “value-enhancing, green growth opportunities beyond the current investment plan” will be “explored against tight strategic and financial criteria”, he added.
More “farm downs” of offshore wind farm stakes after the current pipeline will only be considered “subject to substantial value creation and risk diversification”.
Poulsen said the developer expects to have more cash available to maintain 100% shares in future offshore wind farms after it builds the 1.2GW Hornsea 1 off the UK, and will no longer need to bring in outside capital.
However, future divestments will remain on the table should attractive offers be made, he added.
Meanwhile, divestment of Dong’s oil and gas assets is expected to be finalised in quarter three once regulatory approval is secured.
Image: Dong’s Race Bank project (Dong)
