It's been a quarter of ups and downs for the Danish energy giant Ørsted, which has been forced to deal with heavily fluctuating energy prices - for better and for worse.

Such is the response from CEO Mads Nipper on the company's fourth quarter report, which was released Wednesday morning.

"There have been many ups and downs, but we're landing within the upper end of our expectations, and we can't be displeased with that," says Nipper to MarketWire.

Prior to the final report, Ørsted had expected to land in the lower end of the interval with an operating result excluding new partnerships deals between DKK 15-16bn. This item ended up showing DKK 15.8bn.

On the list of ups, the Ørsted CEO points to a normalization of wind speeds, while a divestment of other shares in wind farms also had a positive effect.

However, the high volatility in energy prices impacted the wind parks.

"It's also been a quarter with very large fluctuations in energy prices - primarily driven by gas. In much the same way that it has affected district heating plants positively, it has also come with some not inconsiderable costs because we need to ensure that we're delivering exactly as agreed upon in the system. That's led to quite a lot of extra costs. So, we've had to use some extra money on buying us out of some of our hedges due to deviations in production," says Nipper.

The fluctuating energy prices have lowered earnings before interests, taxes, depreciations and amortizations by approximately DKK 1bn at the Offshore division, according to the financial report. In the fourth quarter, the operating result for Ørsted's largest unit came to DKK 5.2bn - up by 27 percent from the same quarter last year.

Sees increased earnings

Ørsted has also unveiled its 2022 forecast, which shows significant growth compared to 2021, which was characterized by markedly lower wind speeds. That - along with new projects - is what fuels Ørsted's expectations of an operating result in the range of DKK 19-21bn not including new partnerships.

"Even in an industry marked by significant growth, we contend that's pretty significant progress. The most significant growth comes from commissioning new assets - in onshore - but also the world's largest offshore wind farms Hornsea 1&2 as well as Changhua 1&2a. That comes with some gains. Also, we've assumed that the wind blows normally, which will actually yield a couple of billions, which is worth bearing in mind," says Nipper.

Also included in the upgraded forecast is that 2021 has been marked by a string of one-off costs - some related to cable issues.

"As opposed to wind and energy prices, we actually had something that was self-inflicted: cable issues. For this, we allocated DKK 800m, and that won't happen again. That also comes with a one-time improvement in 2022," the Ørsted CEO says.

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