Research Update: Wind Giant Orsted Long-Term Ratings Placed On CreditWatch Negative On Substantial Charges

Orsted A/S has announced total exceptional losses of about Danish krone (DKK) 40 billion (€5.4 billion), stemming from substantial impairments of DKK28.4 billion for its U.S. assets, mostly offshore, and DKK8 billion-DKK11 billion of cancellation costs related to the Ocean Wind 1 and 2 offshore projects, both of which are being halted. In its Nov. 1 announcement, Orsted significantly increased the amount of upcoming impairments from its statement in August 2023, then estimated at up to DKK16 billion. Financially, we now forecast adjusted 2023 EBITDA of DKK9 billion-DKK15 billion, compared with DKK21 billion-DKK24 billion previously. Those costs are meaningfully higher than we previously assumed and may taint our view of the company's business profile. We have revised downward our view

...- Orsted A/S has announced total exceptional losses of about Danish krone (DKK) 40 billion (5.4 billion), stemming from substantial impairments of DKK28.4 billion for its U.S. assets, mostly offshore, and DKK8 billion-DKK11 billion of cancellation costs related to the Ocean Wind 1 and 2 offshore projects, both of which are being halted. In its Nov. 1 announcement, Orsted significantly increased the amount of upcoming impairments from its statement in August 2023, then estimated at up to DKK16 billion. Financially, we now forecast adjusted 2023 EBITDA of DKK9 billion-DKK15 billion, compared with DKK21 billion-DKK24 billion previously. - Those costs are meaningfully higher than we previously assumed and may taint our view of the company's business profile. We have revised downward our view of management and governance. - This said, Orsted has significant financial flexibility, particularly regarding capital expenditure (capex), and has announced a strategic review. This suggests that the...

Research Update