Dong Energy to unload oil and gas operations

Danish offshore wind farm operator Dong Energy on Tuesday reported a rise in quarterly profit as it confirmed plans to sell its oil and gas operations.

Dong Energy to unload oil and gas operations
Photo: Jeppe Bjørn Vejlø/Scanpix
Net profit jumped 10 percent from the same period a year ago to 3.084 billion kroner (€414 million, $458 million), helped by the sale of its gas distribution grid and a lump sum for the renegotiation of gas purchase contracts.
Revenue fell 16 percent to 14.48 billion kroner after adjusting for fluctuations in the market value of contracts, including hedging transactions relating to other periods.
The company also said it was proceeding with plans to sell its oil and gas operations, after saying last month that it had hired the American banking company JP Morgan to conduct a preliminary market assessment for the sale.
“We have decided to initiate a process with the aim of ultimately exiting from our oil and gas business,” chief executive Henrik Poulsen said in a statement.
“There can be no assurance as to the outcome or the timing of the completion of the process,” he added.
Sydbank analyst Morten Imsgard told Danish news agency Ritzau that revenue from wind power was “significantly lower” than anticipated due to “the wind turbines not spinning quite as much as expected.”
But the company had maintained its financial guidance for the full year, he noted.
Shares in Dong Energy were 0.87 percent higher in midday trading on the Copenhagen bourse, where the main index was down by 0.38 percent.

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Denmark’s Dong Energy profits soften as wind drops

Denmark's leading wind energy group Dong Energy said Thursday earnings fell in the first quarter, partly because winds were not up to snuff at the start of the year.

Denmark's Dong Energy profits soften as wind drops
Photo: Erik Refner/Scanpix

Net profit fell by 47 percent to 3.19 billion kroner (429 million euros), and turnover by one percent to 17.42 billion.

A month of January “with weak winds” caused a lull in production, although February and March were “close to a normal wind year”, it said.

READ ALSO: Dong gets nod for 'world's biggest offshore wind farm'

Dong said earnings also suffered by comparison to a particularly strong year-earlier quarter when the renegotiation of gas purchase contracts and the sale of its gas distribution boosted income.

Dong shares swiftly ran into headwinds on the Copenhagen stock exchange in reaction Thursday, falling 1.9 percent in morning business.

The results for offshore wind, which the group considers its core business, deteriorated with a 19 percent decline in turnover and a 26 percent drop in gross operating income (EBITDA).

But Dong boosted its wind power production by 24 percent to 2.1 terawatt hours thanks to a rise in its capacity in mainly Germany and Britain.

READ ALSO: Denmark's Dong Energy to ditch coal by 2023

We are seeing significant momentum in the offshore wind industry, with innovation and notably reduced costs creating new market opportunities and an ever-stronger value chain. Competitive intensity is escalating,” CEO Henrik Poulsen said in a statement.

The group welcomed the strong contribution of an activity it wants to spinoff, oil and gas, thanks to a “high and stable production” and a 70 percent cut in investments.

Poulsen reiterated the company still aims to sell this business this year, without giving any indication of a possible buyer. 

READ ALSO: New probe of Denmark's Dong sale to Goldman Sachs