Dong Energy, the Danish wind farm developer with large UK operations, has announced it will exit its oil and business to focus solely on offshore wind power.
The former state-controlled utility, which listed on the Copenhagen Stock Exchange in June, posted a 627 per cent rise in profits to 3.3bn Danish krone (£395m) in the third quarter to the end of September. This was aided by a 1.3bn krone gain from divesting in the gas distribution grid, Energinet.dk.
Profit at the company behind plans to build the world's biggest offshore windfarm rose 200 per cent in the first nine months of 2016, to 9.7bn krone.
A 19 per cent increase in wind power and a renegotiated gas purchase contract lifted adjusted earnings before interest, tax, depreciation and amortisation (Ebitda) seven per cent to 4.8bn krone.
However, net debt increased from 3.8bn krone at the end of June to 5.9bn krone by the end of September.
Dong Energy's share price was down 0.12 per cent to 253.7 krone on the Copenhagen Stock Exchange this morning.
Why it's interesting
Chief executive and president Henrik Poulsen said today the group's oil and gas arm, which includes major investments in the North Sea, is expected to be cash flow positive in 2016. However, a return to the black is not enough for Dong, which is now looking to divest its O&G arm.
"We have decided to initiate a process with the aim of ultimately exiting from our oil and gas business," Poulsen said today.
"This should be seen in the context of Dong Energy’s strategic transformation towards becoming a global leader in renewables and a wish to ensure the best possible long-term development opportunities for our oil and gas business."
Poulsen added that the can be "no assurance" as to the outcome or completion date of the process.
Dong has reaffirmed its full-year Ebitda outlook of between 20bn and 23bn krone, as well as gross investment estimates of 18bn to 21bn krone.
What Dong Energy said
The group continues to develop positively and according to our strategic and financial plans.
We currently have seven large offshore wind farms under construction. The construction programme totalling 4.4GW is well on track. In parallel, we continue to shape our pipeline of offshore wind project opportunities for the period beyond 2020.
The construction of the REnescience plant in the UK is on schedule, and we expect to inaugurate the plant in 2017.