Dong posts improved second quarter financials
Burbo Bank Extension contributes to increased wind earnings
Dong Energy has posted positive financial results for the second quarter of this year, increasing its operating profit by 1.8 billion Danish krone (£218.5 million) to DKK 4.4bn (£534.2m), compared to the same quarter last year.
Strong performance was seen from Dong's operations in wind power, including six offshore windfarms in the UK - most notably Burbo Bank Extension which Dong opened in May this year.
Overall, earnings from operating offshore windfarms were up 32 per cent relative to the fitst half of 2016. The Danish energy giant's interim report also noted its intention to submit a bid in the UK contracts for difference auction for the Hornsea 2 project on 14 August.
On the back of its results, Dong raised its profit forecast for the full year from DKK 15-17 billion (£1.8 to 2.1 billion) to DKK 17-19 billion (£2.1 to 2.3 billion). This corresponds to an underlying growth of 18-32 per cent.
In the first half of the year, operating profit climbed to DKK 7.7 billion (£935 million), but this a fall of DKK 2 billion (£ 243 million) against the same period last year.
Dong said the fall was expected, after profit was boosted by one off payments in 2016 as a result of the renegotiation of gas purchase contracts and from the divestment of a gas distribution grid, concluded in the third quarter of last year.
Underlying operating profit was up 74 per cent against the same quarter last year. This was attributed to higher earnings from new offshore wind farms.
Dong also boosted earnings through the sale of its 50 per cent stake in the Race Bank offshore wind project.
Gross investments reached DKK 4.3 billion (£522 million), while the outlook for gross investments is unchanged compared to the predictions set out in the group’s 2016 annual report, with Dong still expected to invest DKK 18-20bn (£2.2-£2.4bn).
The uptick in project investment contributed to an increase in net debt, which grew by DKK 3.8bn (£461m). Net debt across the group stood at DKK 10.3bn (£1.25bn) as of the end of June.
However, the company said its debt level was well within its leverage range.
Dong Energy also plan to expand it operations to the US, having entered in to a partnership agreement with Virginia based Dominion Energy to erect a 12MW demonstration plant, which may pave the way for future projects in the state.
Recently, Virginia was awarded the United States’ first wind energy research lease in federal waters. The state has previously shown support for the offshore wind industry, and has a state offshore wind development authority in operation.
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