Rocky Start To 2017 For DONG Energy, But High Expectations For Rest Of Year

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Danish wind energy giant DONG Energy published its first quarter financial results on Thursday, and it was mixed news for investors, whose reaction caused share prices to drop 2.7%.

A year ago, prior to its stellar IPO offering, DONG Energy was able to report an operating profit (EBITDA) of DKK 8.1 billion [1], compared with the DKK 6.0 billion it took in during the first quarter of 2015. In 2017, however, DONG Energy only reported operating a profit of DKK 3.3 billion. While the decrease in profit “was in line with expectations” it nevertheless sent some investors scurrying for cover.

“Q1 EBITDA in line with expectations gives us a good start to 2017,” explained Henrik Poulsen, CEO and President.

“We maintain our financial guidance for 2017, with EBITDA expected to amount to DKK 15-17 billion, which is equal to a growth of 4-18% in the underlying operating profit, and gross investments expected to total DKK 18-20 billion for the year.

“Operations in Wind Power were in line with expectations in Q1. Following a January with weak winds, both February and March were close to a normal wind year. In addition, wind farm availability was satisfactory. Overall, earnings from commissioned wind farms were up by 21% compared to Q1 2016.”

Looking forward, DONG Energy expects EBITDA to amount to between DKK 15 and 17 billion, and gross investments looking towards DKK 18 to 20 billion for the year. While this might seem excessive, considering such a lackluster start to the year, DONG Energy is banking on partnership income from its Wind Power division to pour forth later this year, due in part to the expected divestment of 50% of the Walney Extension wind farm, and the construction of, among other projects, the massive Race Bank wind farm.

[1] DONG Energy’s reports differ on this figure. According to its Interim financial report for Q1 2016, published 27/04/2016, EBITDA for the first quarter was DKK 8.1 billion. According to this year’s figures, however, DONG Energy reports its Q1’16 EBITDA was DKK 7.1 billion.

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Joshua S Hill

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