Orsted Pauses Dividend as CEO Tries to Cut Spiraling Costs

(Bloomberg) -- Orsted A/S will pause dividend payments until at least 2025 and slash plans to build new projects this decade as part of a wide array of cost-cutting measures outlined by chief executive officer Mads Nipper.

The Danish wind-power giant will cut its target for its green power project construction by at least 24% to 35 to 38 gigawatts by 2030, down from a previous goal of 50 gigawatts, according to a statement Wednesday. That will help limit capital expenditure with Nipper also ramping up asset sales as he tries to haul the company back from huge writedowns on unfulfilled projects. 

Orsted needs to cut costs and recover from a 28.4 billion Danish kroner ($4.1 billion) hit last year as costs spiraled for its portfolio of wind farms planned off the coast of the US. The firm took the decision to cancel development of two of those projects and dismissed two top executives as part of an effort to put the company back on stable footing. Nipper is under pressure to show that the worst is over and the company has a credible plan to get back on track.

The company will chop as many as 800 jobs, starting with 250 redundancies in the coming months. Orsted will exit some emerging offshore wind markets and narrow the focus of its US offshore portfolio to the North-East Atlantic. Project cancellations and changes to buildout plans will save the company 35 billion Danish Kroner ($5.1 billion) through 2026. 

“In order to improve our competitiveness, ensure value creation, and ensure our ability to attract capital to the renewable build-out, we will make Orsted a leaner and more efficient company,” Nipper said in a statement.

Orsted’s stock slumped over 40% last year and is trading at less than a third of its value at the peak in early 2021. The company said its plans are fully funded without any need to raise new equity. 

Nipper will outline more details of the plans for investors at an event Wednesday afternoon. 

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