3 Min Read
COPENHAGEN, April 27 (Reuters) - Danish energy group DONG Energy posted first quarter profit below analyst expectations on Thursday, with the lack of any wind farm divestments so far this year proving a drag.
The Danish company, whose listing in Copenhagen in June was one of the biggest globally last year, has profited from being a pioneer in offshore wind for two decades and has build more than a quarter of the world's wind farms at sea.
However, its wind division lagged expectations as its operating profit declined by 26 percent to 2.14 billion in the first three months of the year from 2.9 billion in 2016.
"It looks dramatic but it has nothing to do with the operations. It is about when you realise your incomes," Sydbank analyst Morten Imsgard told Reuters.
With the upcoming 50 percent divestment of its Walney Extension wind farm in the Irish Sea and the construction of its Race Bank farm off the east coast of England, DONG said partnership incomes would feed through later in the year
"All in all the partnership gains will exceed what we've seen in 2016 so it's just a matter of timing," said Chief Financial Officer Marianne Wiinholt. That figure was 1.6 billion crowns last year.
The shares fell 2.7 percent to 265.60 crowns by 0740 GMT, compared with a flotation price of 258 crowns.
DONG Energy, the biggest owner of offshore wind power in Europe followed by Sweden's Vattenfall, has a strategy of farming down, or selling off, stakes in wind farms in order to use the capital to invest in new projects.
But over the past year, prices for new projects were pushed to record lows by companies eager to establish a foothold in the market, which could mark an end to high returns in the industry.
The firm reported earnings before interest, taxation, depreciation and amortization (EBITDA) of 3.3 billion crowns, compared with 4.04 billion crowns seen in a Reuters analyst survey.
DONG, which is still aiming to sell its oil and gas business this year, maintained its expectations for EBITDA for continuing operations of 15-17 billion crowns this year and investments of 18-20 billion crowns. (Reporting by Nikolaj Skydsgaard, additional reporting by Jule Astrid Thomsen, writing by Stine Jacobsen; Editing by Keith Weir)