Ørsted’s Board of Directors have approved adjustments to the company’s business plan towards a focused capital allocation to strengthen the capital structure. The company will prioritise the most value-accretive growth opportunities through a self-funded investment programme.
During 2024, Ørsted delivered full-year results in line with expectations, reaching an EBITDA excluding new partnerships and cancellation fees of DKK 24.8 billion. In addition, commissioning of 2.4 GW of renewable capacity took place, 3.5 GW of offshore wind capacity was awarded in the UK, and the final investment decision on the offshore wind farm Baltica 2 in Poland was made last week. All of which contribute to the strategic progress of the company.
Despite delivering full-year results in line with expectations and the strategic progress, Ørsted has experienced challenges, especially related to the US offshore wind portfolio, which have led to further pressure on our credit metric. This development, in combination with the wider renewable industry challenges, has led Ørsted to reduce its investment programme towards 2030 by around 25 % compared to its previous strategic ambition on a like-for-like basis. The reduced investment programme is in line with our commitment to ensure a capital structure that can support a solid investment grade credit rating.
Rasmus Errboe, Group President and CEO of Ørsted, says: 'We’ll reduce our investment programme towards 2030 through a stricter, more value-focused approach to capital allocation. We do this to ensure a stronger balance sheet, supporting a solid investment grade rating, and to ensure that we only invest our capital in the most financially attractive opportunities.
'Our number one priority throughout the next three years will be to deliver on our committed 8.4 GW offshore wind construction programme, which will almost double our installed offshore wind capacity. The market remains challenging, but delivering on this programme will solidify our position as the undisputed global leader in offshore wind.
'I’d like to emphasise that Ørsted continues to believe in the long-term fundamentals of and value perspectives for offshore wind and renewables more broadly, based on the expected doubling of the global electricity demand by 2050.'
Improving the credit metric projections will be achieved through a self-funded business plan, requiring a reduction of our investment programme, execution of our construction projects according to plan, and delivery of our divestment programme. The business plan is financed through a combination of operating cash flow, partnerships and divestments, tax equity, and debt and hybrid issuances, without any need for raising new equity.
We will adopt a focused approach to capital allocation by prioritising geographies and technologies with the most attractive value-creation potential. Additionally, we will continue our company-wide efficiency programme to further drive cost efficiency beyond the DKK 1 billion savings plan implemented during 2024. As we do not expect to construct at the same pace as our current build-out programme, we will also be rightsizing our cost base and organisation continuously.
These adjustments will not affect the execution of the 9 GW of renewable projects that Ørsted is currently constructing. The construction portfolio brings line of sight to an expansion of renewable capacity from 18 GW to more than 27 GW.
Adjusted investment programme, financial targets, and financial policies
With the adjustments to its business plan, Ørsted has the following financial targets and policies:
- Ørsted plans a DKK 210-230 billion investment programme in the period 2024-2030.
- 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 and cancellation fees) to increase to approx. DKK 29-33 billion in 2026.
- Ørsted expects a return on capital employed (ROCE) of approx. 13 % on average in the period 2024-2030.
- Ørsted continues to be committed to a solid investment grade credit rating.
- Ørsted maintains its target to reinstate dividends from the financial year 2026.
The previous ambition for installed renewable capacity of 35-38 GW by 2030 and the targeted EBITDA (excluding new partnerships) of approx. DKK 39-43 billion in 2030 have been discontinued.
Source: Ørsted
