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Orsted, Siemens Energy, and Vestas – the three biggest wind power developers and turbine makers in the world – warned that last year’s challenges in the industry would continue this year and suspended dividends as they look to return to profitability and reduce costs.
The wind industry, especially offshore wind, was plagued in 2023 by cost increases, rising interest rates, quality issues with turbines, and delays and cancelation of projects. The new year will not fix all those challenges immediately, the three companies say, still expecting losses and uncertainty in 2024.
Orsted, the biggest offshore wind project developer in the world, is pausing dividends for the financial years 2023 through 2025, aiming to reinstate dividends from 2026.
Orsted booked a net loss of $3 billion (20.2 billion Danish crowns) for 2023, as its financial results were adversely affected by the impairments it took on its U.S. offshore projects.
As a result of the sector challenges, apart from pausing dividends, Orsted will cut its fixed costs, including by a reduction of 600-800 positions globally. Not all of these will be redundancies, but “there will be redundancies throughout 2024,” the company said.
Ørsted is also exiting several offshore markets, including Norway, Spain, and Portugal, deprioritizing development activities in Japan, and planning for a leaner development within floating offshore wind and P2X.
“In order to improve our competitiveness, ensure value creation, and ensure our ability to attract capital to the renewable build-out, we will make Ørsted a leaner and more efficient company,” CEO Mads Nipper said.
Vestas, also of Denmark, the world’s top wind turbine maker, will not pay dividends to shareholders in 2024, either.
“Our performance in 2023 was helped by the improving business environment, but continued geopolitical volatility as well as slow permitting and insufficient grid build-out across markets are expected to cause uncertainty in 2024,” said Henrik Andersen, Group President and CEO.
Siemens Energy, for its part, expects its wind turbine-making unit, Siemens Gamesa, to post a loss of $2.16 billion (2 billion euros) for 2024.
For 2023, Siemens Energy’s free cash flow pre-tax was negative, “primarily due to Siemens Gamesa, which suffered a high cash outflow due to a loss and a build-up of operating net working capital in a seasonal weak quarter.”
“Our focus remains on solving the quality problems in our onshore wind business and making the most of the growth potential for the rest of the company,” said Christian Bruch, president and CEO of Siemens Energy AG.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.