Danske Bank: Ørsted – Q4 21 initial reaction

Ørsted’s (UW) Q4 21 results came in slightly behind market expectations. Clean EBITDA grew 65% y/y owing mainly to farm down of the Greater Changua 1 off shore wind park farm-down. Ørsted’s net debt rose 15% q/q to DKK24.3bn. This mostly reflects higher collateral posting for out of the money energy hedges amid the surging prices seen in Q4. Subsequently Ørsted reports adj. FFO to NIBD at fell to 31.3% down from 42.3% y/y. Ørsted maintains its financial target of at least ‘BBB+’ and also that its FFO to NIBD should hover around 25% in 2022. For 2022, the group guides for EBITDA of significantly above DKK24bn when including farm-downs. With capex guidance also at par with last year, we overall see the outlook as supportive for Ørsted’s ability to defend its credit quality. S&P’s require the adj. FFO to NIBD metric to be at 23%-40% for the current ‘BBB+’ rating. Overall, we see today’s result as credit neutral at first glance.