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Orsted leads the green revolution

Previously centred around oil and gas, the group has transformed into the world’s leading offshore wind developer
Orsted leads the green revolution

Formerly known as Danish Oil and Natural Gas Energy, Ørsted (Copenhagen:ORSTED) has undertaken a dramatic transformation over the past decade, shedding its fossil fuel assets while pivoting towards offshore wind. Not solely motivated by environmental concerns, this reinvention came as weak oil and gas prices contributed to a DKr12.1bn (£1.4bn) net loss in 2015. Having sold its upstream oil and gas business to Ineos in 2017, Ørsted aims to be coal-free by 2023 and is divesting its lossmaking liquefied natural gas business to Glencore (GLEN).

IC TIP: Buy at 670.2kr
Tip style
Growth
Risk rating
Medium
Timescale
Long Term
Bull points

Global shift towards renewable energy

World leader

First-mover advantage

Potential takeover target

Bear points

Significant capex requirements

Internal rate of return downgrade

The change of direction has proved savvy – the share price has more than doubled since listing on the Copenhagen exchange in 2016. Enjoying a 25 per cent global market share, Ørsted is now the world’s leading offshore wind developer. Its offshore wind farms in operation generated DKr8.6bn in cash profits (Ebitda) in the first nine months of 2019, with the ramp-up of new wind farms driving the 23 per cent year-on-year increase. With overall cash profits up almost a fifth to DKr12.9bn, the group is guiding to DKr16bn-17bn (excluding new partnerships) for the full year.

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