Orsted · OMXCOP:ORSTED
Orsted — Ørsted — Q2 2023 Earnings Presentation
44 slides from Orsted's earnings presentation, Aug 10, 2023
Slide 1: Investor presentation Q2 2023
Investor presentation Q2 2023 10 August 2023
Slide 2: Disclaimer
DISCLAIMER This presentation contains certain forward-looking statements which include projections of our short- and long-term financial performance and targets as well as our financial policies, including but not limited to, the statements and expectations contained in the “Financial Outlook” secti
Slide 3: CMD 2023 – Becoming the world's leading green energy major
CMD 2023 – Becoming the world’s leading green energy major Our strategy Be selective in the Maintain global Establish a Leverage our Deliver significant massively growing leadership in significant regional unrivalled global growth in operating market, and offshore wind growth platform in pipeline of
Slide 4: Q2 2023 – Highlights
Q2 2023 – Highlights Financials • H1 2023 EBITDA of DKK 10.2 billion. Offshore sites amounting to DKK 9 billion, up 57 % compared to the same period last year • Divested remaining 25 % minority interest in UK offshore wind farm, London Array, at an attractive NPV retention Awarded projects • Ocean W
Slide 5: Continued expansion of industry-leading offshore wind pipeline
Continued expansion of industry-leading offshore wind pipeline 3 GW added to substantiated pipeline Offshore wind substantiated pipeline GW, gross capacity • Expanded pipeline in US through acquisition of 2 GW seabed from Eversource • Vikinge Banke (1.1 GW) selected to be part of the Danish open 14.
Slide 6: Up to 50 GW offshore wind capacity expected to be auctioned in 2023-2024
Up to 50 GW offshore wind capacity expected to be auctioned in 2023-2024 Bids submitted Upcoming auctions and tenders Award Q4 2023 Q3 2023 H2 2023 Q1 2024 Q1 2024 2024 New York 3 New Jersey 3 Sørlige Nordsjø II site 1 Connecticut 3 Massachusetts 4 ORESS 2.1 2,000 – 4,600 MW 1,200 – 4,000 MW 1,500 M
Slide 7: Ørsted construction programme and pipeline
Ørsted construction programme and pipeline Gross renewable capacity MW 2,825 225 31,026 Offshore 2,147 1,255 Onshore 1,498 Other (incl. biomass & PtX) 3,214 6,472 1,628 1,394 72 20,381 920 285 130 2,147 1,166 900 15,514 2,075 6,247 4,568 22,407 11,987 8,871 Installed Greater German South Greater Ons
Slide 8: Offshore earnings increased by 54%
Offshore earnings increased by 56 % EBITDA of DKK 3.3 billion in Q2 2023 EBITDA excluding new partnerships DKKm • Offshore sites earnings increased 54 % driven by: Q2 2022 3,615 - Ramp-up generation at Greater Changhua 1 & 2a, higher prices on inflation-indexed CfD and ROC wind farms as well as lowe
Slide 9: Net profit, ROCE, and Equity
Net profit, ROCE, and Equity Net profit ROCE Equity Equity excl. hedging reserves DKKbn %, last 12 months DKKbn Hedging reserves 0.3 14.8 61.3 103.5 13.2 110.5 115.8 -12.3 -49.2 -0.5 Q2 2022 Q2 2023 30 Jun 2022 30 Jun 2023 30 Jun 2022 30 Jun 2023 Net profit of DKK -0.5 bn ROCE of 13.2 % Equity of DK
Slide 10: Net interest-bearing debt and credit metric
Net interest-bearing debt and credit metric Net interest-bearing debt FFO / Adj. net debt DKKbn % 0.9 43.9 39 0.7 2.0 7.5 35.3 18 -2.4 31 Mar 2023 CFO Capex Ocean Wind Repurchase of Other 30 Jun 2023 30 Jun 2022 30 Jun 2023 1 acquisition hybrid capital Net interest-bearing debt of DKK 43.9 bn, up DK
Slide 11: Non-financial ratios
Non-financial ratios Taxonomy-eligible KPIs Green share of energy generation Safety %, YTD %, YTD Total recordable injury rate, YTD 92 92 2.8 Revenue OPEX 2.6 85 71 30 Jun 2022 30 Jun 2023 30 Jun 2022 30 Jun 2023 EBITDA CAPEX Green share of energy at 92 % TRIR of 2.6 • Higher generation from our win
Slide 12: 2023 guidance, strategic ambition and financial targets
2023 guidance, strategic ambition and financial targets 2023 guidance EBITDA (excluding new partnerships) DKK 20 – 23 bn Gross investments DKK 44 – 48 bn Strategic ambition and financial targets Ambition for installed renewable capacity by 2030 ~50 GW Fully loaded unlevered lifecycle spread to WACC1
Slide 13: Q&A
Q&A DK: +45 78 76 84 90 UK: +44 203 769 6819 US: +1 646 787 0157 PIN: 994005 For questions, please press 5*
Slide 14: Appendix
Appendix Orsted
Slide 15: Rapidly growing addressable market for Ørsted
Rapidly growing addressable market for Ørsted Offshore wind Onshore renewables Power-to-X (P2X) Installed capacity (excl. China), GW Installed capacity (excl. China), GW Electrolyser capacity, GW4 ~205 ~3,840 ~260 ~33 APAC ~1,000 RoW3 ~30 Americas1 130 RoW3, 5 x3 ~800 APAC x6 ~1,120 ~870 US 52 Ameri
Slide 16: Renewable capacity as of 30 June 2023
Renewable capacity as of 30 June 2023 Indicator, MW, gross H1 2023 H1 2022 Δ FY 2022 Installed renewable capacity Installed renewable capacity The installed renewable capacity is calculated as the 15,514 13,605 1,909 15,121 cumulative renewable gross capacity installed by Offshore, wind power 8,871
Slide 17: Offshore wind build-out plan
Offshore wind build-out plan Installed capacity MW 2,822 22,404 Under construction 1,255 Awarded 1,498 3,214 1,628 920 11,987 1,166 130 900 8,871 Installed Greater German South Greater Decided US North- US Mid-Atlantic Baltica 2 Baltica 35 Hornsea 3 Decided capacity Changhua Portfolio1 Fork Wind Cha
Slide 18: Onshore build-out plan
Onshore build-out plan Installed capacity MW Under construction 471 50 25 29 16 6,247 600 250 201 4,532 73 Installed Old 3001 Helena Energy Sunflower Eleven Mile Mockingbird German French Irish UK Decided (FID’ed) capacity Center2 portfolio4 portfolio5 portfolio6 portfolio7 and installed Q2 2023 cap
Slide 19: Offshore market development – Europe (1/2)
Offshore market development – Europe (1/2) • In April 2021, the UK Government increased its ambition for offshore wind to 50 GW by 2030, including 5 GW of floating offshore wind, to reduce reliance on imports and improve energy security. This ambition was reiterated in the Government’s Powering Up B
Slide 20: Offshore market development – Europe (2/2)
Offshore market development – Europe (2/2) • New government has ambitions to increase offshore wind targets to 30 GW by 2030, 40 GW by 2035 and 70 GW by 2045, necessary to achieve the countries’ target of GHG- neutrality by 2045 with 80 % renewables in the energy mix by 2030 Germany • Out of the tot
Slide 21: Offshore market development – US
Offshore market development – US • Target of 5.6 GW offshore wind by 2027 of which 3.2 GW has already been awarded. Up to 2.0 GW have been “withdrawn” (Commonwealth Wind & SouthCoast Wind) Massachusetts • Next OSW procurement for up to 3.6 GW released, with bid submission by 31 January 2024 • Target
Slide 22: Offshore market development – APAC
Offshore market development – APAC • Taiwan has met its target of awarding 5.5 GW to be commissioned by 2025. Target of 20.6 GW offshore wind by 2035 • Third round auction announced with 15 GW offshore wind target to be constructed from 2026-2035 Taiwan • Auction round 3.2 bid submission deadline ex
Slide 23: Offshore seabed competition
Offshore seabed competition H2 2023 Q1 2024 2024 Gulf of Mexico Central Atlantic Oregon ~6 GW TBD ~3 GW 2023 2024 2024 Utsira Nord (floating) Celtic Sea (floating) Gulf of Maine 1.5 GW 4 GW TBD 23 All timelines and capacities based on authorities communication and subject to change. Timeline reflect
Slide 24: Power-to-X: Renewable hydrogen & e-fuels updates for Q2 2023
Power-to-X: Renewable hydrogen & e-fuels updates for Q2 2023 Signals for significant market growth Ørsted Power-to-X (P2X) highlights during Q2 2023 Critical regulatory developments in the EU FlagshipONE (FS1) maturation Critical regulatory success has been achieved in the EU by Ground broken at the
Slide 25: ESG Performance
ESG Performance Total heat and power generation Q2 2023 Scope 1 and 2 GHG intensity Scope 3 greenhouse gas emissions, Energy source, % g CO2e/kWh million tonnes CO2e Other scope 3 emissions Natural gas sales Offshore wind 37 Total scope 3 -87% -98% -90 % gas Onshore wind 28 -50 % all scope 3 product
Slide 26: Sustainability leadership in Ørsted
Sustainability leadership in Ørsted Globally recognised sustainability leadership ESG rating performance Our reporting Net-zero in 2040 across scope 1-3 Rating agency Score Benchmark First energy company in the world with an approved science-based Annual report net-zero target for the full value cha
Slide 27: Our strategic sustainability priorities & targets
Our strategic sustainability priorities & targets Science-aligned climate Green energy that revives A green transformation that Governance that enables the action nature works for people right decisions Aspiration Aspiration Aspiration Aspiration We scale our green energy business We work to ensure
Slide 28: Group – Financial highlights
Group – Financial highlights Financial highlights Q2 2023 Q2 2022 D FY 2022 FY 2021 D EBITDA DKKm 3,320 3,615 (8 %) 32,057 24,296 32 % - New partnerships - - n.a. 10,993 8,507 29 % - EBITDA excl. new partnerships 3,320 3,615 (8 %) 21,064 15,789 33 % • Offshore 2,979 1,904 56 % 19,569 18,021 9% • Ons
Slide 29: Offshore – Financial Highlights
Offshore – Financial Highlights Financial highlights Q2 2023 Q2 2022 D FY 2022 FY 2021 D EBITDA DKKm 2,979 1,904 56 % 19,569 18,021 9% • Sites, O&Ms and PPAs 3,135 2,031 54 % 9,940 13,059 (24 %) • Construction agreements and 340 601 (43 %) 12,277 7,535 63 % divestment gains 11.3 10.9 10.7 • Other, i
Slide 30: Onshore – Financial Highlights
Onshore – Financial Highlights Financial highlights Q2 2023 Q2 2022 D FY 2022 FY 2021 D EBITDA DKKm 792 1,075 (26 %) 3,644 1,349 170 % • Sites 292 571 (49 %) 2,097 535 292 % • Production tax credits and tax 637 679 (6 %) 2,556 1,382 85 % attributes • Other, incl. project development (137) (175) (22
Slide 31: Bioenergy & Other – Financial Highlights
Bioenergy & Other – Financial Highlights Financial highlights Q2 2023 Q2 2022 D FY 2022 FY 2021 D EBITDA DKKm (583) 647 n.a. 8,619 4,747 82 % • CHP plants (244) 619 n.a. 5,851 3,202 83 % • Gas Markets & Infrastructure (279) 66 n.a. 3,117 1,829 70 % • Other, incl. project development (60) (38) 58 % (
Slide 32: Liquidity reserve significantly above target
Liquidity reserve significantly above target Collateral and margin postings, Liquidity reserve DKKbn DKKbn 30.6 97.8 0.4 88.0 85.2 18.4 14.1 1.3 10.1 9.7 3.3 11.8 5.4 3.1 1.4 Sep 2022 Dec 2022 Jun 2023 Sep 2022 Dec 2022 Jun 2023 Initial margin Cash, available Variation margin Securities, available T
Slide 33: Debt and hybrids overview
Debt and hybrids overview Total gross debt and hybrids Effective funding costs – Gross debt Maturity profile of notionals of gross debt 30 June 2023, DKKbn DKKbn >95 % of gross debt (bond and bank loans) fixed interest rate. Remainder floating or inflation-linked 34.3 3.4% 3.4% 3.3% 9% 3.1% 78.4 79.
Slide 34: Currency and merchant exposure
Currency and merchant exposure Currency exposure Q3 2023 – Q2 2028 Merchant exposure Q3 2023 – Q2 2028* DKKbn DKKbn Before hedging Before hedging After hedging After hedging via as-produced PPAs and traded markets 70.6 50.3 33.0 18.2 0.8 6.6 5.5 0.2 -2.2 -3.8 -0.3 -0.1 -0.1 -20.6 Power Gas Oil Sprea
Slide 35: Hedge levels for merchant exposure
Hedge levels for merchant exposure1 As of June 30th, 2023 Merchant exposure covered with ‘as produced’ PPA contracts Offshore Merchant exposure covered with fixed volume obligations2 76% 68% 1% 49% 75% 9% 67% 18% 18% 41% 17% 16% 1% 2% 2023 2024 2025 2026 2027 Onshore 75% 67% 59% 61% 61% 27% 36% 41%
Slide 36: Portfolio revenue uncertainty
New approach better suited for the characteristics of our portfolio Lower hedge level and shorter time horizon. Hedge level of Hedge level will depend on portfolio composition merchant exposure between 0-70 % in Y1 & Y2 • Leveraging portfolio diversification as natural hedge between price • Risk of
Slide 37: Capital employed
Capital employed Capital employed, DKKm Q2 2023 FY 2022 Q2 2022 FY 2021 Capital employed by segment %, Q2 2023 Intangible assets, and property and equipment 190,353 181,694 175,704 162,939 Offshore Onshore Assets classified as held for sale, net - - 741 860 Bioenergy & Other Equity investments and n
Slide 38: Taxonomy-aligned KPIs
Taxonomy-aligned KPIs Unit H1 2023 H1 2022 D FY 2022 Revenue DKKm 45,846 60,057 (24 %) 132,227 Taxonomy-aligned revenue % 85 70 15 %p 73 - Electricity generation from solar PV and storage electricity % 1 0 1 %p 0 - Electricity generation from wind power % 74 61 13 %p 65 - Cogeneration of heat and po
Slide 39: FFO/Adjusted net debt calculation
FFO/Adjusted net debt calculation Funds from operations (FFO), DKKm1 30 Jun 2023 31 Dec 2022 30 Jun 2022 EBITDA 29,242 32,057 24,282 Change in provisions and other adjustments (1,174) (2,213) (2,128) Change in derivatives 1,786 (8,687) (6,791) Variation margin (add back) (5,855) 10,332 11,514 Revers
Slide 40: Hybrid capital in short
Hybrid capital in short Hybrid capital can broadly be defined as funding Due to hybrid’s equity-like features, rating Accounting treatment instruments that combine features of debt and agencies assign equity content to the hybrids when equity in a cost-efficient manner: calculating central rating ra
Slide 41: Ørsted's outstanding senior bonds
Ørsted’s outstanding senior bonds Outstanding Fixed/Floating Green Allocated to green Avoided emissions (thousand Bond Type Issue date Maturity Face Value Coupon Coupon payments amount rate bond projects (DKKm) tons CO2/year) Senior Unsecured Nov. 2017 26 Nov. 2029 EUR 750m EUR 750m Fixed 1.5% Every
Slide 42: Inflation and interest rate risks
Inflation and interest rate risks Fixed nominal Inflation-indexed Merchant 2023-2032 nominal cashflows from Active use of debt & hedges Offshore & Onshore assets to mitigate inflation risk 15% 50% 25% 30% 30% 45% 35% 45% 25% Revenue incl. hedges Other EBITDA EBITDA Debt Hedges of future debt EBITDA
Slide 43: Glossary
Glossary Balancing costs Ineffective hedges The cost of settling intraday differences between expected (day- Expected overhedging of future periods, which we, according to IFRS, ahead) and actual (real-time) production have to recognise already in the quarter where we report Intermittency costs Pric
Slide 44: Investor Relations contacts
Rasmus Hærvig Henriette Stenderup Head of Investor Relations Investor Relations Coordinator rakol@orsted.com hnste@orsted.com Sabine Lohse Valdemar Høgh Andersen Christopher Glaf Stenhammer Lead Investor Relations Officer Investor Relations Officer Finance Graduate sablo@orsted.com vehan@orsted.com