Dong Energy's wind power division's profits increased by 114% in the first quarter (Q1) of 2013, compared to the same period a year earlier. The division’s revenues also more than doubled, rising by more than 104%. Group-wide revenue grew by a modest 7.8% and EBITDA jumped by just under 30%.
The company’s record-breaking offshore wind business was cited by chief executive, Henrik Poulsen, as having contributed to the improved performance, alongside higher oil production and a cost-cutting programme.
Revenue & EBITDA
Q1 wind power revenues were DKK3,246m (€435.4m) and EBITDA was DKK1,239m (€166.2m). This represented 15% of group revenue and almost 27% of group EBITDA. The 1,970-strong wind power division employs 29% of the company’s workforce.
During Q1, it benefited financially from the construction of two offshore wind farms: Anholt and Borkum Riffgrund 1. Dong owns 50% of each and is responsible for their construction. It earns fees from its co-investors.
Higher wind-generated electricity output also helped to boost Dong’s Q1 profits. Production from the 630MW London Array 1 represented the lion’s share of this increase, but the 400MW Anholt development also contributed. Earlier this month, it was announced that all of London Array 1’s 175 turbines had come online.
No breakdown is provided of Dong’s Q1 offshore wind electricity generation, but wind and hydro generation combined totalled 1.5TWh; a 25% increase on Q1 2012.
Dong’s net investments during Q1 were far higher than a year earlier, at DKK5.2bn, compared to DKK2.0bn. Offshore wind projects accounted for 69.2% of this.
The largest outlay was on Anholt (DKK1.0bn), but this project also generated revenue and profit. The remaining offshore wind spend was accounted for by West of Duddon Sands (DKK0.8bn), Westermost Rough (DKK0.3bn), Gode Wind 1, 2 and 3 (DKK0.3bn) and Gunfleet Sands 3 (DKK0.2bn). A further DKK0.2bn was spent on A2Sea’s new jack-up vessel, Sea Installer. Dong owns 40% of A2Sea.
Dong’s net investment over 2013 and 2014 is expected to total DKK25-30bn, with offshore wind projects likely to be the beneficiaries of most of this spending.
The company’s high debt level remains a concern. It is implementing a plan designed to bring its debt to EBITDA ratio down, from 3.8 in Q1 to 2.5 by the end of 2014.