Danske Bank: Ørsted (MW) – Q1 21 first impression

Ørsted (MW) is out with a decent Q1 21 from a credit perspective. Earnings fell behind market expectations due to a one-off provision of DKK0.8bn related to one of its development projects. Clean EBITDA was down 29% y/y reflecting mainly the high positive one-off earnings impact from the Hornsea I transmission asset divestment in the same quarter last year. Underlying earnings benefitted from more renewable assets being on stream, but was offset by the divestment of the Danish DSO and supply business last year, as well as lower wind speeds. In spite of this, Ørsted’s net debt increased only marginally (up 7% q/q) as its cash flow was supported by a massive release of working capital relating to lower work in progress. Reported adj. FFO to NIBD deteriorated marginally to 45% from 48% q/q, leaving Ørsted comfortably aligned with the current ‘BBB+’ rating. FY outlook was maintained. Overall we see this as a credit neutral result.