Orsted · OMXCOP:ORSTED
Orsted — Ørsted — FY2023 Earnings Presentation
62 slides from Orsted's earnings presentation, Feb 7, 2024
Slide 1: FY 2023 results & Capital Markets Update
FY 2023 results & Capital Markets Update 7 February 2024
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. Statements herein, other than statements of historical fact, regarding our future results of operations,
Slide 3: FY 2023 and Capital Markets Update
FY 2023 and Capital Markets Update Business Financial Q&A update update session Mads Nipper Rasmus Errboe Chief Executive Officer Interim Chief Financial Officer 3
Slide 4: Business update
Business update Mads Nipper Chief Executive Officer 4
Slide 5: Updated business plan based on a comprehensive portfolio review
Today we present an updated business plan based on a comprehensive portfolio review Solid results for 2023 Risk reduced across Robust business Delivering attractive despite challenges portfolio plan in place and accretive growth Solid underlying financial Concluded thorough Measures in place to ensu
Slide 6: Solid operational results in 2023 and several milestones achieved
We delivered solid operational results in 2023 with adjusted EBITDA slightly above guidance and several important milestones achieved Financial highlights for 2023 Strategic milestones achieved DKK 24.0 bn EBITDA excl. new partnerships and 2.9 GW Hornsea 3 FID excl. cancellation fees1 0.9 GW Greater
Slide 7: Adverse developments and actions taken in recent months
Several adverse developments have impacted our business plan and led us to take a number of actions in recent months Developments since CMD in June 2023 Actions since our Q3 2023 results Concluded review of events that led to the Ocean Short-term negative impact from ceased project development 1 Win
Slide 8: Learnings from Ocean Wind
1 Learnings from Ocean Wind We are implementing the learnings from our Ocean Wind review to reduce risks in project development and execution Ocean Wind 1 challenges We are implementing learnings to revise our project operating model, with particular focus on: General adverse industry developments S
Slide 9: Risk review: offshore portfolio more robust
2 Risk review While the supply chain remains tight, we consider our offshore portfolio to be more robust Under construction (6.7 GW) Awarded (3.7 GW) Changhua South German Changhua Revolution Sunrise Hornsea 3 Baltica 2 Baltica 3 1 and 2a Fork programme2 2b and 4 Wind Wind4 Capacity1 900 MW 130 MW 1
Slide 10: FID on Hornsea 3 with comfort around execution and value
2 Risk review We have taken FID on Hornsea 3 with comfort around the execution and value creation Expected returns Risk-reducing elements NON-EXHAUSTIVE Value creation at time of FID around Framework conditions Contracting Ørsted execution the bottom end of our targeted lifecycle project return rang
Slide 11: Re-focused capital allocation towards value-accretive opportunities
3 Portfolio review We have re-focused capital allocation towards the most value-accretive opportunities in prioritised markets Core portfolio principles Portfolio decisions US offshore wind portfolio re-focused towards the North-East Atlantic (e.g., withdrew OREC1 for Skipjack) Value over volume Exi
Slide 12: Re-focused US offshore pipeline
3 Portfolio review We have re-focused our US offshore pipeline providing optionality in the most attractive US states North-East hub Mid-Atlantic hub Outcome of our US review Attractive portfolio now focused predominantly on the North-East Capacity, Withdrew from Skipjack OREC awards Hub Ørsted site
Slide 13: DKK ~270 bn gross investments towards 2030
4 2030 business plan We plan to deploy DKK ~270 bn gross investments towards 2030 Capital allocation towards 2030 Gross investments (Ørsted share, excl. partners’ CAPEX spend) 2024-2030, DKKbn ~270 ~15 ~5 % ~75 ~25 % ~180 ~70 % Offshore Onshore P2X & Bioenergy Total gross investments 13
Slide 14: Renewable capacity ambition ~35-38 GW by 2030
4 2030 business plan We update our renewable capacity ambition to ~35-38 GW by 2030 Installed renewable capacity ambition by 2030 Gross capacity, GW ~11-14 ~35-38 ~1 ~1 GW Power-to-X ~5-7 ~2 GW Bioenergy 24.1 ~5-7 2.1 0.1 ~11-13 GW Onshore 6.4 ~20-22 GW Offshore 15.5 Installed & under construction A
Slide 15: Strong visibility on offshore projects towards 2030
4 2030 business plan We have strong visibility on our offshore projects towards 2030 Offshore wind build-out Strong position for offshore Gross capacity, GW growth towards 2030 Installed Additional capacity Under construction 2030 ambition 15.5 GW offshore wind already Awarded (FID not taken) ~20-22
Slide 16: Broad optionality in onshore due to extensive pipeline
4 2030 business plan We have broad optionality in onshore due to our extensive pipeline Onshore wind and solar build-out Strong position for onshore Gross capacity, GW growth towards 2030 Installed Additional capacity Pipeline ~18 Under construction 2030 ambition Broad optionality to select the most
Slide 17: Strong returns and growth towards 2030
4 2030 business plan We plan to deliver strong returns and growth towards 2030 Spread to WACC ROCE Renewable capacity EBITDA Targeted range at time of Average ROCE, % Installed renewable capacity, Group EBITDA excluding new bid/FID1, basis points gross GW partnerships and cancellation fees, DKKbn, %
Slide 18: Financial update
Financial update Rasmus Errboe Interim Chief Financial Officer 18
Slide 19: EBITDA slightly exceeded guidance for FY 2023
2023 results Solid EBITDA excluding new partnerships and cancellation fees slightly exceeded our guidance for FY 2023 Strong underlying performance in 2023 EBITDA excl. new partnerships and cancellation fees DKKbn, FY 2023 Offshore Sites delivered strong earnings growth driven by: 2022 21.1 • No neg
Slide 20: 2024 EBITDA outlook
2024 outlook We expect to deliver DKK 23 - 26 bn in EBITDA in 2024 Financial outlook 2024 Guidance on 2024 EBITDA excl. new partnerships and excl. cancellation fees EBITDA excluding new partnerships and excluding cancellation fees is DKKbn, FY 2023 expected to be DKK 23 - 26 bn in 2024 Offshore Site
Slide 21: Revised capital allocation principles support robust capital structure
Near-term financials (2024-2026) Our revised capital allocation principles support a robust capital structure Capital allocation principles Target above 30 % FFO/Net Debt1, commensurate with a solid investment grade rating Dividend holiday for the financial years 2023-2025 with target to reinstate d
Slide 22: Review improves credit metrics
Near-term financials (2024-2026) We have conducted a comprehensive review of our near-term business plan enabling a significant improvement of our credit metrics Comprehensive review of near-term business plan for Credit metrics outlook 2024-2026 2024-20261 FFO2 Adj. NIBD3 ILLUSTRATIVE DKK ~35 bn re
Slide 23: Grow installed portfolio by ~50% towards 2026
Near-term financials (2024-2026) We expect to grow our installed portfolio by ~50 % towards 2026 Installed renewable capacity ambition by 2026 Gross capacity, GW Offshore Onshore Bioenergy P2X ~2 ~23 5.5 ~0.1 0.1 ~2 1.6 3.8 ~7 15.7 2.1 4.8 ~14 8.9 Installed 2023 Under construction1 Awarded & pipelin
Slide 24: Invest DKK ~130 bn through 2026 with high visibility
Near-term financials (2024-2026) We plan to invest DKK ~130 bn through 2026 with high visibility Gross investments Offshore Onshore P2X & Bioenergy Ørsted share, excl. partners’ CAPEX spend, 2024-2026, DKKbn ~130 ~8 ~5 % ~20 ~20 % ~5 ~5 ~35 ~75% ~57 Under construction1 Awarded Pipeline Under constru
Slide 25: Continued EBITDA growth towards 2026
Near-term financials (2024-2026) We plan to deliver continued EBITDA growth with high certainty towards 2026 Commentary Group EBITDA (excl. new partnerships and cancellation fees) DKKbn 30-34 23-26 24.0 2023 2024E 2026E 25
Slide 26: Flexible approach to partnerships and divestments
Near-term financials (2024-2026) We have a holistic and flexible approach to partnerships and divestments Three strategic objectives Two approaches to partnerships and divestments Any decision related to execution of partnerships and Description Examples, divestments1 will factor in the following th
Slide 27: DKK ~70-80 bn proceeds from partnerships and divestments
Near-term financials (2024-2026) We plan to deliver DKK ~70-80 bn proceeds from partnerships and divestments towards 2026 based on already well-advanced program Near-term outlook and long- Track record term plan DKK ~70-80 bn DKK ~55 bn proceeds1 expected between proceeds1 between 2021-2023 2024-202
Slide 28: Invest DKK ~270 bn towards 2030
Long-term financials (2024-2030) We plan to invest DKK ~270 bn towards 2030 with emphasis on visibility and flexibility Gross investments Ørsted share, excl. partners’ CAPEX spend, 2024-2030, DKKbn P2X & Bioenergy Onshore Offshore ~140 ~270 ~270 ~5% ~25% ~130 ~70% 2024-2026 2027-2030 Gross investmen
Slide 29: Funding programme towards 2030 fully financed
Long-term financials (2024-2030) Our funding programme towards 2030 is fully financed in our plan based on a stable cash flow profile as well as partnerships and divestments Long-term funding programme 2024-2030 Debt & hybrid ~5 % Hybrid coupon/dividends2 Tax equity ~10 % ~15 % Partnerships & divest
Slide 30: Offshore leader with high-graded renewable portfolio and reduced risks
Offshore leader with high-graded renewable portfolio and reduced risks Global leader in a massively growing industry undergoing short-term challenges, but with long-term growth fundamentals intact Robust near-term portfolio with reduced risks by leveraging recent learnings across markets and with hi
Slide 31: Appendix
Appendix 31
Slide 32: Disclosure summary
Disclosure summary Strategic ambition and financial targets Year Financial policies Ambition for installed renewable capacity ~35-38 GW Target a solid investment grade rating with Moody’s/S&P/Fitch - Offshore ~20-22 GW - Onshore ~11-13 GW By 2030 FFO to adjusted net debt above 30 % - P2X ~1 GW - Bio
Slide 33: Group – Financial highlights
Financials Group – Financial highlights Financial highlights Q4 2023 Q4 2022 D FY 2023 FY 2022 D EBITDA DKKm (686) 6,696 n.a. 18,717 32,057 (42 %) - New partnerships 317 77 312 % 4,324 10,993 (61 %) - Cancellation fees (9,621) - n.a. (9,621) - n.a. - EBITDA excl. new partnerships and 8,618 6,619 30
Slide 34: Offshore – Financial Highlights
Financials Offshore – Financial Highlights Financial highlights Q4 2023 Q4 2022 D FY 2023 FY 2022 D EBITDA DKKm (2,611) 2,094 n.a. 13,817 19,569 (29 %) • Sites, O&Ms and PPAs 7,164 3,746 91 % 20,207 9,940 103 % • Construction agreements and divestment gains 676 (715) n.a. 5,218 12,277 (57 %) Wind sp
Slide 35: Onshore – Financial Highlights
Financials Onshore – Financial Highlights Financial highlights Q4 2023 Q4 2022 D FY 2023 FY 2022 D EBITDA DKKm 525 852 (38 %) 2,970 3,644 (18 %) • Sites 394 420 (6 %) 1,256 2,097 (40 %) • Production tax credits and tax attributes 590 712 (17 %) 2,567 2,556 0% Wind speeds, m/s • Other, incl. project
Slide 36: Bioenergy & Other – Financial Highlights
Financials Bioenergy & Other – Financial Highlights Financial highlights Q4 2023 Q4 2022 D FY 2023 FY 2022 D EBITDA DKKm 1,434 3,609 (60 %) 1,523 8,619 (82 %) • CHP plants 836 1,718 (51 %) 1,218 5,851 (79 %) • Gas Markets & Infrastructure 589 2,073 (72 %) 558 3,117 (82 %) • Other, incl. project deve
Slide 37: Capital employed
Financials Capital employed Capital employed, DKKm FY 2023 FY 2022 Capital employed by segment %, FY 2023 Intangible assets, and property and equipment 183,195 181,694 Offshore Onshore Assets classified as held for sale, net - - Bioenergy & Other Equity investments and non-current receivables 1,172
Slide 38: FFO/Adjusted net debt calculation
Financials FFO/Adjusted net debt calculation Funds from operations (FFO), DKKm1 2023 2022 EBITDA 18,717 32,057 Change in provisions and other adjustments 8,742 (2,213) Change in derivatives 4,274 (8,687) Variation margin (add back) (7,086) 10,332 Reversal of gain (loss) on divestment of assets (5,74
Slide 39: Taxonomy-aligned KPIs
Financials Taxonomy-aligned KPIs Incl. voluntary disclosures Unit 2023 FY 2022 D Revenue (turnover) DKKm 79,255 114,417 (31 %p) Taxonomy-aligned revenue % 86 69 17 %p - Taxonomy-aligned revenue adjusted for green bond financing % 83 63 20 %p Taxonomy-non-eligible revenue % 14 31 (17 %p) - Gas sale %
Slide 40: Currency and energy exposure
Financials Currency and energy exposure Currency exposure 2024-2028 Merchant exposure 2024-2026 DKKbn DKKbn Before hedging Before hedging After hedging After hedging via as-produced PPAs and traded markets 34.5 32.1 14.2 15.5 6.6 5.9 11.6 0.1 4.3 3.2 -0.3 -0.1 -0.1 -4.8 Power Gas Oil Spread GBP USD1
Slide 41: Revenue composition including merchant exposure
Financials Revenue composition including merchant exposure Revenue composition of offshore and onshore assets, Composition of revenue from generation of power in 2024-2030 Offshore and Onshore, 2024-2025 Fixed-price subsidy Fixed-volume hedges Guaranteed minimum price with potential upside Merchant
Slide 42: Key financial exposures are proactively managed
Financials Key financial exposures are proactively managed Inflation-indexed revenue Fixed nominal revenue Merchant revenue 20% 35% 45% • Prioritise inflation-indexed revenue • Debt used to de-risk fixed nominal • Corporate PPAs used to de-risk to protect against cost inflation and revenue from asse
Slide 43: Protecting fixed nominal assets against interest rates
Financials Protecting fixed nominal assets against interest rates via fixed rate debt and derivatives Fixed-rate debt used to protect fixed nominal cash Fixed nominal awarded assets where construction has flows against interest rate increases not started are matched with interest rate swaps ~95% mat
Slide 44: Liquidity reserve remains significantly above target
Financials Liquidity reserve remains significantly above target Collateral and margin postings Liquidity reserve DKKbn DKKbn 17.3 97.8 90.7 3.9 9.7 7.9 4.0 2.6 3.7 1.2 Dec 2022 Dec 2023 Dec 2022 Dec 2023 Initial margin Cash, available Variation margin Securities, available Credit support annex and o
Slide 45: Debt and hybrids overview
Financials Debt and hybrids overview Total gross debt and hybrids Effective funding costs – Gross debt Maturity profile of notionals of gross debt 31 December 2023, DKKbn 31 December 2023, DKKbn >90 % of gross debt (bond and bank loans) fixed interest 34.2 rate. Remainder floating or inflation-linke
Slide 46: Hybrid capital in short
Financials 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 equity in a cost-efficient manner: when calculating centra
Slide 47: Ørsted's outstanding senior bonds
Financials 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
Slide 48: Renewable capacity as of 31 December 2023
Build-out & market development Renewable capacity as of 31 December 2023 Indicator, MW, gross 2023 2022 Δ Installed renewable capacity The installed renewable capacity is calculated as Installed renewable capacity 15,731 15,121 610 renewable gross capacity installed by Ørsted Offshore, wind power 8,
Slide 49: Ørsted construction programme and pipeline
Build-out & market development Ørsted construction programme and pipeline Gross renewable capacity MW 1,255 27,774 Offshore 1,498 2,147 Onshore 924 1,622 72 24,097 Other (incl. biomass & PtX) 704 2,147 2,852 6,407 920 1,166 130 6,407 900 15,731 2,075 4,785 19,220 15,543 8,871 Installed Greater Germa
Slide 50: Offshore wind build-out plan
Build-out & market development Offshore wind build-out plan Installed capacity MW 1,255 19,220 Under construction 1,498 924 Awarded 2,852 15,543 920 704 1,166 130 900 8,871 Installed Greater German South Fork Greater Revolution Hornsea 3 Decided Sunrise Wind2 Baltica 2 Baltica 33 Decided capacity Ch
Slide 51: Onshore build-out plan
Build-out & market development Onshore build-out plan Installed capacity MW Under construction 471 71 33 124 6,407 600 73 4,785 250 Installed Helena Energy Eleven Mile Old 3003 Mockingbird German French Irish Portfolio6 Decided (FID’ed) capacity Center1 portfolio4 portfolio5 and installed Q4 2023 ca
Slide 52: Promising renewable energy market outlook
Build-out & market development Promising renewable energy market outlook Offshore wind Onshore renewables Power-to-X (P2X) Installed capacity (excl. China), GW Installed capacity (excl. China), GW Electrolyser capacity, GW2 ~133 ~3,840 ~260 28 APAC ~1,000 RoW1 15 Americas 130 RoW1, 3 x2.5 x6 ~800 AP
Slide 53: Offshore market development – Europe (1/2)
Build-out & market development Offshore market development – Europe (1/2) • Ambition of 50 GW by 2030 for offshore wind, including 5 GW of floating, was reiterated in March 2023 • Commitment to decarbonise electricity system by 2035 and binding target to reach net-zero emissions across the whole eco
Slide 54: Offshore market development – Europe (2/2)
Build-out & market development Offshore market development – Europe (2/2) • The government on firm trajectory to deliver 21 GW by 2030 Netherlands • Next tender is IJmuiden Ver (2 x 2 GW) in H1 2024. Government has opt’ed for a tender design that includes a capped payment and qualitative criteria fo
Slide 55: Offshore market development – US
Build-out & market development Offshore market development – US • Target of 9 GW offshore wind by 2035. 8.3 GW previously awarded • State issued awards in NY 3 RFP in Q4 2023, with a total of 4 GW awarded across three projects New York • State has initiated an accelerated re-bid process (NY 4) inten
Slide 56: Offshore market development – APAC
Build-out & market development 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 Taiwan • Third round auction announced with 15 GW offshore wind target to be constructed from 2026-2035 • Auction round
Slide 57: Up to 40 GW offshore wind capacity expected to be auctioned in 2024
Build-out & market development Up to 40 GW offshore wind capacity expected to be auctioned in 2024 Upcoming auctions and tenders Q1 2024 Q1 20241 Q1 20241 Q1 20241 H1 2024 H1 2024 H1 2024 New York 4 Rhode Island Connecticut 3 Massachusetts 4 New Jersey 4 Sørlige Nordsjø II site 1 Taiwan auction Up t
Slide 58: Renewable hydrogen & e-fuels
Power-to-X Renewable hydrogen & e-fuels Signals for significant market growth Ørsted Power-to-X (P2X) highlights during Q4 2023 Critical regulatory developments in the EU and the US FlagshipONE (FS1) partnership announcement EU’s REDIII entered into force in November; this will significantly Announc
Slide 59: ESG Performance
ESG ESG Performance Total heat and power generation, 2023 Greenhouse gas emissions intensity Gender balance Energy source, % CO2e/kWh %, women/men Scope 1-3 (excl. natural gas sales) Total workforce Scope 1-2 2030 40/60 Offshore wind 42 Science- based 2023 34/66 Onshore wind 27 targets2 2022 33/67 S
Slide 60: Industry-leading sustainability initiatives and ESG rating performance
ESG Ørsted has been named the world’s most sustainable energy developer in Corporate Knights’ 2024 Global 100 index Industry-leading sustainability initiatives ESG rating performance Science-aligned climate action We are the first energy company with a science-based net-zero target for the full valu
Slide 61: Our publications
ESG To prepare for the Corporate Sustainability Reporting Directive (CSRD), we have conducted a E Science-aligned Green energy that S A green transformation G Governance that enables double materiality climate action revives nature that works for people the right decisions assessment (DMA) for the A
Slide 62: 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 Lead Investor Relations Officer Senior Investor Relations Officer sablo@orsted.com vehan@orsted.com