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DONG Energy Reports Earnings Growth, Net Profit Loss

Danish wind energy juggernaut DONG Energy has released its financial results for the fourth quarter and full year of 2014, and it’s a case of good news and bad news: The company reported EBITDA of DKK 16.4 billion in 2014, but a net profit loss of DKK 5.3 billion.

The Board of Directors pinned the increased earnings on the company’s “market-leading position within offshore wind” — a position made all the stronger late December when they announced the final divestment of all onshore wind projects, in favor of focusing entirely on offshore wind development.

However, the company’s net profit loss was “mainly as a result of the lower oil and gas prices.”

“EBITDA was up 9% at DKK 16.4 billion despite a significant negative impact from declining oil and gas prices,” said CEO and President Henrik Poulsen, who added that “The increased operating profit came from our market-leading position within offshore wind and a record high production of oil and gas.”

The company’s gross investments totaled DKK 15.4 billion, and were focused primarily on offshore wind projects — including West of Duddon Sands, Westermost Rough, Borkum Riffgrund 1, and Gode Wind (among others). Several other investments into oil and gas fields filled out the tally.

“2014 marked a breakthrough for the Wind Power division with regards to securing the pipeline which will realize the target of a total installed offshore wind capacity of 6.5 GW in 2020,” said Poulsen. “The deciding factor was the award of subsidies for the three UK offshore wind farm projects Burbo Bank Extension, Walney Extension and Hornsea. Against this background, the Board of Directors decided in December to go ahead with Burbo Bank Extension.”

Henrik Poulsen noted that DONG Energy’s “financial strength was significantly improved due to the equity increase, divestments, and strong cash flows from operations,” and those divestments have allowed the company to continue investing into further offshore wind projects.

Earlier this week, DONG Energy announced that it had acquired the Hornsea Project One offshore wind farm development from previous-joint owner, the SMart Wind consortium.

The significant global decline in oil and gas prices was the reason behind the company’s profit loss, causing the company post-tax impairments of DKK 6.6 billion and resulting in a net loss of DKK 5.3 billion.

Interestingly, the company is making strides away from coal-fired electricity generation, noting in its press release that the Thermal Power division had “accelerated the conversion to green energy and heat generation” at its Studstrup and Skærbæk power stations, moving them from generating electricity from coal and gas over to sustainable biomass.

“The ongoing development of the two divisions positively impacted the carbon emissions per kWh of electricity generated, which were reduced by 16% from 2013 to 374g in 2014 – a historical low for the Group,” added Poulsen.

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