DONG Energy Disappoints With First Results Since IPO
Aug 4 (Reuters) - Danish group DONG Energy's maiden results as a listed company failed to live up to market expectations due to low wind levels and weak oil and power prices, sending its shares down by as much as 4.2 percent.
The leading European offshore wind farm developer, power utility and oil and gas producer reported a 19 percent rise in first-half earnings before interest, tax, depreciation and amortisation (EBITDA) to 12.4 billion Danish crowns ($1.86 billion), undershooting the 13 billion expected by analysts in a Reuters poll.
The wind power unit, seen as its future growth driver, boosted core earnings by almost 70 percent to 5.2 billion crowns, but the result fell short of the 5.7 billion crowns expected by analysts.
Light winds and technical challenges in Germany and Britain dented the wind power division's performance, analyst Morten Imsgard from Sydbank said.
On the positive side DONG won a tender last month to build two large wind farms off the coast of the Netherlands by promising to produce electricity at a record-low price for offshore wind farms.
DONG said it could produce electricity at 72.7 euros per megawatt hour at the two farms, vastly exceeding its own target of 100 euros per megawatt hour by 2020, set four years ago.
"We have made more progress, faster, in terms of reducing the cost of offshore wind than we had dared to expect when we set the target four years ago," Chief Executive Henrik Poulsen said on a conference call with reporters.
Making offshore wind power cheaper is crucial to the technology's long-term viability.
"In the last two to three years in particular we have seen tremendous progress in terms of bringing down the cost of electricity," Poulsen said. "We expect this downwards trend to continue".
Poulsen said he did not expect Britain's decision to leave the European Union would cause fundamental changes to the country's commitment to offshore wind projects but it had increased currency exchange risks given DONG's large investments in the country.
DONG's exposure to sterling currently amounts to 16 billion Danish crowns (1.8 billion pounds) after hedging up to the end of 2021. The Danish crown is pegged to the euro which has strengthened significantly since Britain's June 23 election.
DONG's shares were down 3 percent at 273 crowns by 1026 GMT, still 16 percent above their flotation price.
Trading in the shares in Copenhagen opened on June 9 at 235 crowns, to value the group at around 98 billion crowns ($15 billion) following the largest European initial public offering for five years, with the share price closing the first day's trading at 258 crowns.
(Additional reporting by Nikolaj Skydsgaard; Editing by Greg Mahlich)
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