Mads Nipper is resigning as CEO of Danish wind developer Orsted A/S following significant writedowns over the past few years and a sharp decline in the company’s share price. His deputy, Rasmus Errboe, will take over the role on Saturday, as announced by the company. Nipper has led Orsted for four years but faced challenges in enhancing its financial performance due to setbacks and rising costs in several major projects. During his tenure, Orsted’s shares have plummeted approximately 80% from their peak in early 2021, and they have decreased about 18% this year. The latest writedown, amounting to $1.7 billion in the US earlier this month, jeopardized Nipper’s position. The future of growth in the US is uncertain, especially after President Donald Trump halted federal permitting and leasing for new offshore wind projects.
Lene Skole, chair of Orsted’s board, noted that the company is grappling with a challenging offshore wind industry landscape, including supply chain issues, rising interest rates, and a shifting regulatory environment. Orsted has been a pioneer in offshore wind, having built the world’s first offshore wind farm in Denmark in the early 1990s and expanding its global project portfolio. The sector had previously benefited from declining supply chain costs and low interest rates, but disruptions from the Covid-19 pandemic and increasing interest rates have led to soaring project expenses. Orsted is set to release its 2024 results on February 6. Analysts at RBC Europe Ltd. highlighted ongoing significant challenges in the company’s US operations and expressed interest in the new CEO’s insights during the year-end results.
Errboe, who has been with Orsted since 2012, played a key role in the company’s listing in 2016 and the divestment of its Oil & Gas business in 2017. A critical question will be whether he can introduce innovative strategies to enhance the company’s performance. Citigroup Inc. analyst Jenny Ping suggested that Errboe might initiate a strategic review of the group’s operations. If Orsted can address its strained balance sheet without selling off more of its valuable assets, there could be potential for a more substantial re-rating of its shares.
