Danish renewable-energy company Orsted has unveiled a comprehensive new plan to tackle the obstacles it faced in the U.S. offshore wind market and ensure long-term growth and financial stability.
Cost cuts, asset sales, and a shift in business priorities are key elements of this strategy, which comes in the wake of significant challenges experienced by Orsted in 2023. Spiraling costs and supplier delays led the company to make a prudent decision, resulting in a 26.8 billion Danish kroner ($3.86 billion) impairment charge and a DKK9.6 billion provision.
Orsted's commitment to reshaping its portfolio is evident as it recently terminated a power supply agreement for a U.S. offshore project due to unfavorable terms. Additionally, the company announced its intention to increase its stake in another U.S. offshore project to become the sole owner, provided it secures higher tariffs.
In order to streamline operations and focus on strategic markets, Orsted will be exiting Norway, Spain, and Portugal. Development activities in Japan will be deprioritized, while efforts in floating offshore wind and power-to-X projects will be consolidated for maximum efficiency.
To further strengthen its financial position, Orsted has made the decision to pause dividends for the financial years 2023, 2024, and 2025, with plans to reinstate dividends starting from the financial year 2026.
With this comprehensive plan, Orsted aims to secure a robust balance sheet that supports long-term growth and ensures resilience in its capital structure. By implementing these measures, the company is well-positioned to overcome the challenges it has faced and continue driving the growth of renewable energy solutions.
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