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DONG Energy Reports Strong Growth In Second Quarter, Raises 2017 Outlook

Danish wind energy company DONG Energy published its second quarter earnings this week, revealing a 74% growth in profits and increasing its expected profits outlook for 2017. 

Danish wind energy company DONG Energy published its second quarter earnings this week, revealing a 74% growth in profits and increasing its expected profits outlook for 2017.

It was a very good quarter for DONG Energy, which reported underlying operating profit (or, EBITDA, Earnings before interest, tax, depreciation and amortization) of DKK 4.4 billion ($695 million) for the second quarter, up DKK 1.8 billion, or 74% on the same quarter a year ago. DONG Energy attributes the impressive growth to the ramp-up of new offshore wind farms as well as the 50% farm-down of the 573 MW (megawatt) Race Bank Offshore Wind Farm, which was announced back in December of last year.

DONG Energy’s current strategy is to farm down (sell off) stakes in the wind farms it develops, using the new capital to invest into future offshore wind farms which will in turn be farmed down, and so on and so forth. DONG Energy hopes this strategy will last it through the next year until it is able to “begin to generate excess financial headroom,” according to Chief Executive Henrik Poulsen. Further, the recently announced farm-down of the 450 MW Borkum Riffgrund 2 Offshore Wind Farm is now expected to reap rewards in 2017 instead of 2018.

”H1 showed strong strategic progress supplemented by good financial and operating results,” Poulsen explained. “Our expectations for partnership income in H2 2017 have increased, as we complete the divestment of 50% of Borkum Riffgrund 2 in 2017 instead of 2018. This means that we have raised our outlook for the Group’s operating profit (EBITDA) for 2017 to DKK 17-19 billion from previously DKK 15-17 billion, corresponding to an underlying growth of 18-32%.”

Looking forward, DONG Energy expects the second half of 2017 to be similarly strong. “We expect to submit a bid in the UK auction for the Hornsea 2 project on 14 August, and we expect to know the outcome of the auction in September,” Poulsen continued. “The deadline for submitting bids in the auction in Massachusetts, USA, is in the second half of December this year, and we expect to know the outcome of this auction in mid-2018 at the latest.”

The company subsequently raised its EBITDA (profit) guidance for the full year 2017 from between DKK 15 to 17 billion, up to between DKK 17 and 19 billion, an underlying growth of between 18% and 32%.

On initial news of its second quarter earnings, DONG Energy’s shares fell by 1.9%, but have since re-stabilised and as of writing are currently above where the company was trading before its earnings report was published.

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