Ørsted has urgently replaced its CEO, Mads Nipper, amid challenges in the offshore wind sector and a declining stock price. Effective February 1, Rasmus Errboe, who is currently the deputy CEO and chief commercial officer, will take over leadership.
Nipper, who has led the company since 2021, steps down following recent announcements of significant writedowns related to its operations in the US, attributing the difficulties to high interest rates and an unstable market outlook.
The company expressed that the tough conditions in the offshore wind sector, including supply chain issues, rising interest rates, and a shifting regulatory environment, have required a change in focus. The return of a Donald Trump administration, which has indicated a reversal of support for renewable energy and suspended new offshore wind leases, has further complicated Ørsted’s position in the US.
Originally known as Danish Oil and Natural Gas, Ørsted was recognized for its transition from fossil fuels to renewable energy. However, rising interest rates and skepticism from investors regarding the pace of the global shift away from fossil fuels have hindered its progress. Since Nipper assumed his role during a period of strong growth for ESG stocks, the company’s shares have declined by 80%.
Despite the challenges, Ørsted’s shares saw a slight increase of 0.5% in morning trading in Copenhagen. The company has faced specific difficulties in the US offshore wind market due to an underdeveloped supply chain and strict regulations regarding installation vessels.
In November 2023, Ørsted reported multibillion-dollar impairments after abandoning two significant US projects. The financial strains contributed to the departures of its finance chief and chief operating officer, while Nipper remained with the support of the board. He had previously accepted full responsibility for the company’s troubles and committed to making efforts to redirect its course.
In February 2024, plans were announced to reduce the workforce by 800, retreat from certain offshore wind markets, and suspend dividends in a bid to streamline operations. This month, new writedowns amounting to DKr12.1bn ($1.7bn) were disclosed, raising further concerns regarding the management’s reliability.
Ørsted currently boasts nearly 16 gigawatts of installed wind and solar capacity worldwide, largely from offshore sources. In the first three quarters of the last year, the company reported profits of DKr6.1bn.
photo credit: www.ft.com
