Offshore wind has propelled Danish energy company Dong to an a record breaking operating profit in 2015 of £1.8billion as the company signalled its intention to shift its focus from oil and gas to renewables.
However, the plummeting oil price led to the company reporting a loss of £1.2billion (DKK12billion).
The Danish company said the result “can mainly be attributed to higher production from offshore wind, higher levels of activity in connection with the construction of offshore wind farms for co-investors, the completed renegotiation of an oil-indexed gas purchase contract and lower costs in oil and gas”.
Revenue was “partly offset by lower oil and gas prices, lower oil and gas production and unfavourable market conditions for thermal power generation”, it added.
Operating profit in the wind business was up by 2% to DKK6.2billion, although once divestment gains in 2014 are accounted the underlying profit growth was “significantly higher”. Revenues in wind were up 70%.
Dong posted a net loss of DKK12billion, compared with a loss of DKK5.3billion in 2014. This included impairment losses of DKK15.8billion in connection with the company’s oil and gas business.
Dong chief executive Henrik Poulsen said: “Despite strong headwinds in the commodity markets, we delivered a record-breaking operating profit in 2015. The Group’s operating profit (EBITDA) was up 13% at DKK 18.5 billion, which was within the guided range.
Towards 2020 we expect offshore wind and bioenergy to account for more than 80% of investments. The investment strategy will further reinforce Dong Energy’s position as a global leader in renewables and expand our strongholds in offshore wind, bioenergy, and green distribution and customer solutions.”
Operating profit (EBITDA) increased by 13% to DKK 18.5 billion in 2015 – an increase of DKK2.1billion on the previous year.
In a statement to investors, Dong said: “The positive development in operations compared to last year can mainly be attributed to higher production from offshore wind, higher levels of activity in connection with the construction of offshore wind farms for co-investors.
It said lower costs in oil & gas, partly offset by lower commodity prices, lower oil and gas production and unfavourable market conditions for thermal power generation had also affected the results.
Poulsen said: “The sharp drop in commodity prices will lead to a further shift in the investment mix of Dong Energy towards renewables.
“Towards 2020 we expect offshore wind and bioenergy to account for more than 80% of investments.
“The investment strategy will further reinforce DONG Energy’s position as a global leader in renewables and expand our strongholds in offshore wind, bioenergy, and green distribution and customer solutions.
“Areas that all are part of building green, reliable and efficient energy systems in the markets where we operate.”
The focus on renewables has turned Dong Energy into one of the fastest-growing energy groups in Europe.
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