Orsted to cut 2,000 jobs by end-2027

Orsted (ORSTED.CO), the world's largest offshore wind farm developer, announced plans to cut approximately 2,000 jobs, a quarter of its workforce, by the end of 2027. This strategic move aims to enhance competitiveness, refocus on European offshore wind, and address challenges including U.S. setbacks, global supply chain disruptions, surging interest rates, and project delays that have pressured its share price. The company recently raised $9.4 billion via a heavily discounted rights issue and expects these efficiency measures to yield annual cost savings of approximately 2 billion Danish crowns ($311.31 million) from 2028.

Analysis

COPENHAGEN, Oct 9 (Reuters) - Denmark's Orsted (ORSTED.CO), the world's biggest offshore wind farm developer, will cut approximately 2,000 jobs by the end of 2027, a quarter of its workforce, the Danish company said in a statement on Thursday. "The reasons for this are that the company will be focusing more on offshore wind and Europe, that a number of offshore wind farms will be finalised in the coming years, and that the company needs to improve its competitiveness," Orsted said. Make sense of the latest ESG trends affecting companies and governments with the Reuters Sustainable Switch newsletter. Sign up here. Advertisement · Scroll to continue The company expanded rapidly over the past decade but has recently faced setbacks in the United States in addition to global supply chain disruption, surging interest rates and project delays that hammered its share price. This week Orsted raised $9.4 billion through a heavily discounted rights issue after its U.S. operations were constrained by President Donald Trump's resistance to renewable energy projects. The staff cuts and other efficiency measures are expected to give Orsted annual cost savings of approximately 2 billion Danish crowns ($311.31 million) from 2028, the company added. ($1 = 6.4245 Danish crowns) Reporting by Stine Jacobsen, editing by Terje Solsvik Our Standards: The Thomson Reuters Trust Principles. Orsted (ORSTED.CO), the world's largest offshore wind farm developer, has announced plans to cut approximately 2,000 jobs, representing a quarter of its workforce, by the end of 2027. This significant restructuring is driven by a strategic refocus on offshore wind and European markets, the impending completion of several existing projects, and an imperative to enhance overall competitiveness. The company's share price has faced substantial pressure due to recent setbacks in the United States, global supply chain disruptions, and surging interest rates. This workforce reduction follows a period of rapid expansion and comes after the company raised $9.4 billion through a heavily discounted rights issue, partly to address constraints in its U.S. operations attributed to political resistance against renewable energy projects. The financial distress and need for recapitalization underscore the severity of the challenges faced, despite its leading position in the sector. The staff cuts and other efficiency measures are projected to yield annual cost savings of approximately 2 billion Danish crowns ($311.31 million) starting from 2028. This aggressive cost management strategy highlights Orsted's commitment to improving its financial resilience and operational efficiency amidst a more challenging global economic and political landscape.

Key Decisions for Investors

• Investors should closely monitor Orsted's execution of its restructuring plan, specifically focusing on the realization of the projected 2 billion DKK annual cost savings from 2028 and the successful pivot to a Europe-centric offshore wind strategy.
• Given the recent heavily discounted rights issue and macroeconomic headwinds like surging interest rates, investors should critically assess Orsted's balance sheet health, future capital expenditure requirements, and overall financial deleveraging capacity.
• Evaluate the competitive landscape and regulatory environment within the European offshore wind market, as Orsted's increased concentration in this region amplifies both potential opportunities and specific regional risks.