Ørsted Stands Firm: Affirming FY25 EBITDA and Investment Targets Amid Industry Headwinds

Offshore wind giant Ørsted has reaffirmed its full-year 2025 EBITDA guidance of DKK 25–28 billion and maintained its gross investment target of DKK 50–54 billion, signaling unwavering confidence in its strategic priorities despite a challenging operating environment. The company’s first-quarter 2025 results, released in May, underscored its ability to navigate supply chain disruptions, rising costs, and macroeconomic pressures while delivering strong operational performance. This analysis explores the drivers behind Ørsted’s reaffirmed targets, its strategic adjustments, and the outlook for long-term growth in the offshore wind sector.

Q1 2025 Performance: A Resilient Start

Ørsted’s Q1 2025 interim report revealed an operating profit (EBITDA) of DKK 8.9 billion, a 19% increase from the same period in 2024. Excluding earnings from new partnerships and cancellation fees, EBITDA reached DKK 8.6 billion, a 14% year-on-year rise. This growth was driven by the ramp-up of the Gode Wind 3 offshore wind farm in Germany, which contributed a DKK 7.7 billion increase in offshore earnings, and improved asset availability across its portfolio.

However, lower wind speeds during the quarter partially offset gains, highlighting the sector’s sensitivity to weather conditions. Despite these challenges, the company reported a profit of DKK 4.9 billion for the period, a DKK 2.3 billion increase from Q1 2024, with an adjusted return on capital employed (ROCE) of 10.2%—a robust metric reflecting efficient capital deployment.

Investment Targets and Strategic Adjustments

Ørsted’s reaffirmed DKK 50–54 billion gross investment target for 2025 aligns with its construction portfolio, which includes projects like the Baltica 2 wind farm in Poland and the Moray West project in the UK. Notably, the company announced the discontinuation of the Hornsea 4 project in its current form due to rising supply chain costs, higher interest rates, and execution risks. This decision underscores Ørsted’s commitment to prioritizing projects with the strongest value creation potential.

The company has also recalibrated its long-term investment program for 2024–2030, reducing it by 25% to DKK 210–230 billion** compared to its previous ambitions. This adjustment aims to strengthen its balance sheet and maintain an investment-grade credit rating, while focusing on markets like the UK and Poland, where regulatory frameworks and demand dynamics are favorable.

Strategic Priorities and Challenges

Ørsted’s strategic priorities emphasize cost efficiency, capital discipline, and geographic focus. The company aims to expand its efficiency program beyond the DKK 1 billion savings achieved in 2024, including rightsizing operations and optimizing project timelines. Geographically, it is concentrating on markets with strong regulatory support, such as the UK, where it secured 3.5 GW of offshore wind capacity in recent tenders, and Poland, where the Baltica 2 project is nearing Final Investment Decision (FID).

However, the company faces near-term headwinds, including:
- Supply chain bottlenecks: Persistent shortages of critical components like turbines and cables.
- Regulatory uncertainty: Delays in permit approvals and policy frameworks in key markets.
- US market challenges: Complex permitting processes and cost overruns in its US offshore wind portfolio, which contributed to credit metric pressures.

Looking Ahead: 2026 Targets and Dividend Policy

Despite short-term hurdles, Ørsted remains bullish on the offshore wind sector’s long-term fundamentals. The company expects its 2026 EBITDA to reach DKK 29–33 billion, excluding new partnerships, and aims for an average ROCE of 13% between 2024 and 2030**. Additionally, it plans to reinstate dividends from fiscal 2026, signaling renewed financial confidence.

The discontinuation of its earlier targets—such as 35–38 GW of installed renewable capacity by 2030 and a DKK 39–43 billion EBITDA target for 2030—reflects a more pragmatic approach to align with evolving market realities.

Conclusion: A Resilient Leader in a Transforming Sector

Ørsted’s reaffirmation of its FY25 EBITDA and investment targets, alongside its Q1 performance, demonstrates the company’s operational resilience and strategic agility. With 14% year-on-year EBITDA growth in Q1 and an adjusted ROCE of 10.2%, it has delivered tangible results amid a turbulent landscape. While challenges like supply chain constraints and rising costs remain, the company’s focus on high-value projects, cost discipline, and geographic diversification positions it to capitalize on the offshore wind sector’s long-term growth trajectory.

The global demand for renewable energy, driven by energy security priorities and climate policies, continues to favor Ørsted’s expertise. As the company progresses toward its 2026 targets and prepares to resume dividends, investors can take comfort in its proven ability to navigate industry headwinds while maintaining its position as a global leader in offshore wind.

In conclusion, Ørsted’s reaffirmed guidance and strategic adjustments reflect a balanced approach to balancing short-term challenges with long-term opportunities. For investors, this underscores the company’s role as a critical player in the energy transition—a sector poised for sustained growth as the world moves toward decarbonization.