In a June 2 research note, Pareto Securities analyst Tom Erik Kristiansen reported the takeaways from the corporate information Ørsted A/S (ORSTED:NCSE; DNNGY:OTCMKTS) just released on Capital Markets Day (CMD).
"Ørsted aims to become a 'global green energy major' and retain its position as the leading offshore wind developer, whilst becoming a top ten player in onshore renewables and a leader within green hydrogen," noted Kristiansen.
Key points included the company's revised guidance for installed renewable energy capacity, investments, EBITDA and cost of capital, Kristiansen wrote.
By 2030, the Denmark-headquartered company aims to install 50 gigawatts' (50 GW) worth of installed renewable energy capacity, an approximately 70% increase from its previous 30 GW estimate. Comprising the 50 GW are 30 GW in offshore wind, 17.5 GW in onshore renewables and 2.5 GW in hydrogen and biomass. Ørsted's current installed capacity now stands at 12 GW, the analyst noted.
Ørsted also increased the amount it plans to invest between 2020 and 2027 to DKK350 billion, up 50% since its 2018 estimate, the analyst stated. This DKK350 billion equates to roughly DKK45 billion per year. The energy firm will direct 80% of those investments to offshore wind along with hydrogen and biomass, and the remaining 20% to onshore.
As for finances, Ørsted forecasts EBITDA to grow 12% annually during the same seven-year period, reaching DKK35 billion to DKK40 billion in 2027. Previous guidance, for 2019–2025, was 20% annual EBITDA growth.
"Visibility remains strong, with about 90% from regulated/contracted activities," Kristiansen added. "The growth rate assumes that Ørsted farms down projects to retain a 50% stake."
As for capital, Ørsted updated guidance for weighted average cost of capital plus spread, projecting it to be 150 to 300 basis points across the portfolio at final investment decision time. Pareto's estimates fall in the middle to high end of that range.
The renewable energy company raised its return on capital employed to 11–12% for the period versus its previous 10% reported on the previous CMD.
Ørsted kept its dividend policy as is, described by management as being in the "high single digit" area, Kristiansen indicated.
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Disclosures from Pareto Securities AS, Ørsted, June 2, 2021
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