Orsted says offshore business faced headwinds in Q4 due to delays, hedges

(Reuters) – Denmark’s Orsted (ORSTED.CO), the world’s No. 1 offshore wind farm developer, on Wednesday reported fourth-quarter operating profit in line with preliminary 2022 numbers but said its offshore business faced challenges.

“In a year with unusual market conditions, not least the very volatile energy prices and a substantial increase in inflation, we’re happy to achieve a record-high operating profit for 2022,” Chief Executive Mads Nipper said in a statement.

However, fourth-quarter earnings before interest, tax, depreciation and amortisation (EBITDA) excluding new partnerships fell 19% to 6.70 billion Danish crowns ($979.5 million), the statement said.

The company said it saw an unexpected decrease in its offshore business in the fourth quarter, primarily due to adverse impacts from hedges and delays at its Hornsea 2 project in the UK and Greater Changhua 1 & 2a project in Taiwan.

Orsted confirmed its 2023 forecasts for EBITDA excluding new partnerships of 20 billion-23 billion crowns, compared with 21.1 billion achieved last year and below the 24.2 billion crowns expected by analysts.

Its shares, which have shed more than half of their value since peaking in January 2021 and fell more than 8% on Jan. 20 when preliminary numbers were published, were trading 1.9% higher at 1046 GMT.

Nipper added on Wednesday that new U.S. subsidies aimed at the renewable energy sector will be a “turning point” for the nascent green hydrogen industry. Orsted has announced plans to build large-scale production facilities for the fuel in Denmark and the United States.

The U.S. Inflation Reduction Act, which was signed into law last year, included billions of dollars of green hydrogen tax credits.

“With the right incentive, like for example a $3 tax credit per kilogram of green hydrogen in the Inflation Reduction Act, we think that the next few years will be a turning point for green hydrogen,” Nipper said.

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