Orsted (CSE:ORSTED), a leader in offshore wind farm development, has announced a write-off of up to $5.6 billion due to the cancellation of its Ocean Wind 1 and 2 projects off the coast of New Jersey. The decision comes in the face of a series of challenges, including heightened inflation, rising interest rates, and costly delays from the Trump administration.
Amid these difficulties, Orsted's shares have seen a notable drop of 20% following a third-quarter loss of $3.2 billion. Despite these setbacks, the company is pressing on with its $4 billion Revolution Wind project in Rhode Island. The ongoing struggles in the US offshore wind market are leading to higher electric bills for consumers due to increased power supply prices.
The issues facing Orsted are reflective of broader difficulties within the sector, which are causing significant roadblocks to the Biden administration's green energy goals. Other developers, despite facing similar hurdles, continue to progress with their projects, such as Vineyard Wind.
Major energy companies BP (NYSE:BP) and Siemens Energy are also grappling with similar challenges in the offshore wind market. BP recently wrote down $540 million on three planned wind projects in New York. Siemens Energy, on the other hand, is seeking government aid due to losses in its wind turbine unit, Siemens Gamesa.
Despite these setbacks, Orsted continues to maintain a diverse global portfolio with projects in various countries around the world.
InvestingPro Insights
Drawing on real-time data from InvestingPro, Orsted has a market capitalization of 17027.58M USD. The company's P/E ratio stands at 11, reflecting its low earnings multiple compared to near-term earnings growth, a key InvestingPro Tip. Despite a 20% drop in share value following the Q3 loss, Orsted's shares remain a potential value buy, trading near their 52-week low.
Over the last twelve months as of Q2 2023, Orsted's revenue growth was 12.19%, although the growth has been slowing down recently. The company has also been profitable over the last twelve months, with a diluted EPS of 3.86 USD.
InvestingPro Tips also highlight that Orsted has raised its dividend for seven consecutive years, with a dividend growth of 8.0% as of Q2 2023. This, coupled with the fact that liquid assets exceed short-term obligations, suggests that despite current challenges, Orsted maintains a strong financial foundation.
In total, InvestingPro offers 18 unique tips regarding Orsted, providing a comprehensive overview for potential investors. These insights, combined with real-time data, can provide valuable guidance in navigating the current market landscape.
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