Orsted A/S

Ladies and gentlemen, welcome to the Earth Day Interim Report for the second quarter of 2026 conference call. I am Heli, the chorus call operator. I would like to remind you that all participants will be in listen-only mode and the conference is being recorded. The presentation will be followed by a Q&A session. You can register for questions at any time by pressing star and one on your telephone. For operator assistance, Please press star and zero. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Group President and CEO Rasmus Errboe and CFO Trond Westlie. Please go ahead.

Thank you very much. Hello everyone and thank you for joining today's call. The first half of 2026 has once again reminded us how quickly geopolitical tensions can impact global energy markets. The volatility has underlined the importance of European energy independence, which cannot be taken for granted. But these challenges also represent an opportunity for Europe to strengthen competitiveness for businesses through electrification and lowering of energy costs. An opportunity to ramp up production of homegrown, affordable and reliable energy, so global shocks to energy markets do not limit prosperity. Renewable energy is central to this necessary transition. And as a reminder, each of the recent 10 years have been the 10 warmest years ever recorded on Earth, and combined with wildfires across southern Europe this summer, this obviously further underscores the need for a rapid acceleration of the energy transition. To improve European sovereignty and resilience, increased investments into renewable energy is central and necessary. With the right actions now, offshore wind can provide several significant benefits for Europe and the energy transition as a whole. As we highlighted in our recent paper, The Real Value of Offshore Wind, the build-out of renewables with offshore wind as a significant component can reduce annual fossil fuel imports by more than 30% of the current import need. Further, these investments can reduce total European electricity system costs by up to 30% by 2040, as the integration costs of solar and wind are marginal compared to the large savings from reduced use of fossil fuels in power generation. Finally, the paper shows that an investment level into offshore wind in line with the ambitions outlined in the Hamburg offshore wind investment pack can cut annual carbon emissions in Europe by 20% compared to 2023 levels corresponding to 550 million tons of CO2. When we assess the outlook for offshore wind, we see several positive signs for our industry, and we remain optimistic about the prospects for the sector. In the short term, there are several attractive offshore wind opportunities, where the regulatory frameworks have improved and contributed to strengthening the investment certainty for future projects. We have seen improvements in the framework across several markets in Europe, including Denmark, UK and Poland. And most recently, the budget for the upcoming CFD tender round in the Netherlands was also increased. Our solid progress across our major construction portfolio, where we continue to progress all projects on time and on budget, should also give policymakers and other key stakeholders increased confidence that the offshore wind industry can in fact deliver renewable energy at massive scale as long as sufficient volumes are tendered out on a recurring basis with the right frameworks. In the mid to long term, the outlook for offshore wind, particularly in Europe, also remains strong. This is underlined by the 300 gigawatt offshore wind build-out target agreed in Hamburg in January 26. Compared to 2024 levels, this build-out in the North Sea would amount to an increase in the capacity of European offshore wind by a factor of 8, representing a significant growth opportunity for the industry. and at the European political level, the need for an acceleration of the energy transition is also recognized. The recently proposed review of the EU emissions trading system reflects the EU's continued reliance on a rules-based carbon market as its central climate policy instrument. At the same time, The Electrification Action Plan and the Proposal on Electricity Network Charges reinforces the Commission's focus on accelerating electrification across sectors to strengthen Europe's competitiveness, energy security and decarbonization, highlighting the need for continued investments in renewable generation, stronger electricity grids and greater system flexibility. We are encouraged with the continued positive science for our industry and we will continue to be a close partner to governments and industry peers to provide solutions for the acceleration of offshore wind. By continuing to deliver on our business plan, we will become a more focused, competitive and stronger company, and we will assess the upcoming tenders and auctions with a disciplined approach to capital allocation, as we are ready to pursue the most value-creating opportunities to remain the global leader in offshore wind. Let's continue to slide 5 and an update on the strategic priorities and our operational performance. Our first priority is to strengthen our capital structure, and with the closing of the divestment of the European onshore business in April, we have made further progress on this. Also, the divestment of a 50-50% stake in our Greater Tiangua II project is still expected to close later this year, following the commissioning of Greater Tiangua IIb and IV. Lastly, our continued strong business performance is driving our solid earnings generation, which is supportive of our financial foundation. With the measures we have taken during the last 18 months, we have the necessary robustness to pursue new value-creating opportunities within offshore wind, while also reinstating a dividend payout in line with our previous commitments. Trond will cover the details of the dividend policy later in the presentation. Our second priority is to deliver on our 8.1 GW offshore wind construction portfolio, where we expect to commission three projects with a total capacity of 2.5 GW this year. We have achieved significant progress during the quarter and are progressing according to schedule and budget. I will shortly go through the construction progress in more detail. Our third priority is a focused and disciplined approach to capital allocation. As we look ahead for new offshore wind opportunities in Europe and select markets in APAC, we will maintain our disciplined approach with a focus on value. Our fourth priority is to improve our competitiveness, and we are continuing to progress as planned on numerous measures across our organization to achieve a stronger and more competitive Ørsted. As part of improving our competitiveness, we recently outlined our decarbonization efforts towards 2040 in our Next Zero paper, which describes how we, with our partners, will work to achieve cost-effective reductions of key emissions hotspots across the offshore wind value chain. Reducing value chain emissions is essential from a climate impact perspective and will improve our value proposition in future offshore wind auctions. Turning to the operational highlights of the first half of the year, I am very satisfied with our operational performance. Our EBITDA, excluding new partnerships and cancellation fees, amount to 15 billion, which is an increase of more than 1 billion compared to first half of 2025. This was driven by ramp-up generation in offshore and slightly higher than normal wind speeds. The performance was also supported by good availability within our offshore business. Our financials for the first half of the year keeps us fully on track to deliver on our full year guidance. When it comes to safety, we have seen an increase in our total recordable injury rate compared to first half of 2025. The increase was primarily driven by an incident related to food poisoning at one of our power plants, which we consider a one-off event. In addition, the organization adjustments undertaken means that a reduced share of our colleagues are working in the offices and relatively more are working directly at our assets. Safety remains a top priority for us and our employees, and we continue to strengthen our safety commitments through targeted initiatives and sharing of best practices with suppliers, all aimed at preventing incidents and bringing our people home safe every day. Let's turn to slide 6 and an overview of our construction portfolio. I will start by covering our projects that are near commissioning and subsequently cover the other projects individually in more detail. For Borkum Riftgrund 3, turbine commissioning is progressing as planned. The project is more than 99% complete and we are expecting to commission the project during the third quarter. For Greater Tiangua IIb and IV, the project ensured further progress during the quarter as all turbines at Greater Tiangua IV have started producing power and completed all main scopes. In addition, the project has completed all the onshore works related to the upcoming repair of the export cable related to Greater Chang'e 2B. With this, the degree of completion is now at 85% up from 80% in the first quarter. The project remains focused on the installation and initialization of the export cable for the Greater Chang'e 2B section. The repair work is expected to be completed in the coming period and subsequently the export cable will be energized before turbine commissioning will commence. The project remains on schedule for commissioning at the back end of the third quarter. For Revolution Wind in the US, the project continues to ramp up production with the commissioning of turbines. Currently, the project has 61 of the 65 turbines installed, and the project intends to install the remaining turbines this year. The project is more than 95% complete, and the project remains on track towards full commercial operations in the second half of 2026. Turning to slide 7 and an update on our Baltica II project in Poland. During the quarter, the project has made significant progress, particularly with the installation of monopile foundations. Since the installation campaign was initiated in May this year, the project has installed 103 monopile foundations out of the planned 111, including all four of the monopile foundations for the offshore substations. This is a significant achievement by the team and a testament to the execution ability. With the progress achieved during the quarter, the degree of completion has increased to approximately 40% up from 30% in the first quarter. For the offshore substations, the manufacturing of the structures is progressing as planned. And in the third quarter, all four top sites will be transported to the site for installation later this year. The fabrication of the export and array cables are progressing as planned, with two of the four export cables having passed final acceptance tests. The onshore substation work is well progressed and nearing completion, with onshore cables manufactured and installation on schedule. In the coming period, the focus of the project will be the continued installation of the remaining turbine foundations and secondary structures, as well as tracking progress on the cable manufacturing. Also, the loadout and transportation of the two complete export cables will commence in the third quarter, and finally the work on the onshore substation will continue, including termination of the cables to the onshore substation. Turning to slide 8 and an update on our Sunrise Wind project in the US. During the quarter, the project has continued to make solid progress. This includes both progress on the installation of turbine, foundations, array cables and turbines. With the progress achieved during the quarter, the degree of completion has increased to approximately 50%, up from 47% in the first quarter. For the installation of turbine foundations, the work has been resumed after the seasonal installation restrictions ended in May. Since the installation resumed, it has progressed well, with 77 of the 84 positions now installed. The remaining work on foundation installation is planned to be completed within the current installation window. On turbine installation, a total of 20 turbines and 20 array cables have been installed. On the export cable, all sections have been installed, joined and energized, and the offshore converter station has been energized. For the onshore substation, the converter station and export cable route is complete. In terms of turbine fabrication, all equipment remaining to be installed have been manufactured. In the coming period, the project is expected to complete monopile installation and continue the installation of turbines and array cables. Commissioning works will also continue in the offshore converter station, and the project is expected to start commissioning of turbines later this year. Turning to slide 9 and an update on the progress at Hornsea 3 in the UK. The project has made further progress across several scopes. Since the commencement of turbine foundation installation, the project has installed 43 out of the total of 197 positions. With the progress achieved during the quarter, the degree of completion has increased to approximately 30%, up from 25% in the first quarter. Regarding the enabling and reinforcement works at the Norwich Main substation, where the project is due to connect to the UK transmission grid, the work is progressing according to the updated schedule and expected to be completed next month. We are continuing to engage closely with National Grid Electricity Transmission and the National Energy System Operator as they work to minimize the delay and mitigate any further delays from occurring and impacting the schedule. On the export cable, the installation work has continued. For the offshore converter station that is already installed, the associated export cable has also now been installed and tested and is ready for energization. For the export cable to be installed at the project's second offshore converter station, the near-shore section has also been installed. The manufacturing of the mid- and far-shore section is complete and is planned to start installation later in the year. In the coming period, the focus of the project is to progress foundation installation according to plan, with the manufacturing and supply of foundations on track. Also, the installation of the project's second offshore converter station is planned for the third quarter. And finally, the installation of the turbines is planned to start later this year, with two installation vessels that are currently active on other projects before commencing work on Horn C3. With this, let me hand over the word to you, Trond.

Thank you, Rasmus, and good afternoon, everyone. Let's start with slide 11 and the EBTA for the second quarter of 26. And as always, unless I state otherwise, the numbers I refer to will be in Danish kroners. In the quarter, our operational performance was in line with expectations, and we delivered an EBITDA excluding new partnerships and cancellation fees of 5.4 billion. Let me walk you through the main developments. For our offshore business, total earnings came in 400 million higher than last year, coming from higher earnings within construction agreements, partly offset by slightly lower sites earnings. Site's earnings came in 200 million lower compared to last year. In this second quarter, our trading business delivered earnings as expected, but not to the same extent as last year. During the quarter, a planned maintenance outage at Hornsea 1 during most of June also impacted earnings. And finally, there was a year-over-year effect from Godevind 1 and Godevind 2 gradually stepping out of its subsidy during the first half year and is fully reflected in our full year guidance. This was partly offset by higher wind speeds in the quarter as well as higher power prices. Earnings from offshore sites excluded contribution from trading activities was approximately 5% higher than the same period last year. Earnings within existing partnership increased compared to last year, mainly related to construction agreement from Horn C3 and updates to other construction agreements. In our onshore business, earnings decreased by approximately 200 million to last year. This was mainly due to sale of components in second quarter of last year, which was not repeated this quarter, while earnings from offshore sites were at the same level as last year. Within bioenergy and other, earnings were in line with last year, driven by higher generation and prices at our combined heat and power plants. This was offset by lower contribution from ancillary services and a provision related to our gas storages. Then going to slide 12. In the second quarter of 26, we incurred a non-cash impairment loss of 1.2 billion relating to our U.S. offshore project as a result of an increase in the long-dated U.S. interest rates. Our net profit for the quarter totalled 700 million. Compared to last year, net profit was impacted by non-cash impairment loss that I just described, as well as lower EBITDA from new partnerships. In the second quarter of 2025 that were not repeated in this quarter. Net profit adjusted for impairments, new partnerships and cancellation fees amounted to 1.9 billion this quarter versus 2.1 billion in the same quarter last year. Adjusted for impairment and cancellation fees, our return on capital employed came in at 6.6%, a decrease compared to last year due to lower EBITDA for the 12-month period and higher capital employed. The reported return on capital employed came in at 3.1%. Let's turn to slide 13 and our net interest-bearing debt and credit metrics. At the end of the second quarter, a net debt amounted to 22 billion, representing an increase of 700 million during the quarter. Cash flow operating activities included contributions from our operational earnings as well as work in progress relating to the offshore construction portfolio and changes in other working capital. Divestments mainly relate to the sale of our European onshore portfolio. Our gross investments amounted to 10.1 billion, reflecting the continued investment into our renewable construction projects. Our credit metric FFO2 adjusted net debt stood approximately at 45% at the end of the second quarter. which is well in line with our target of more than 30%. The increase is driven by an increase in the fund from operation over the last 12 months, the proceeds from the rights issue and closing of various farm downs. At the end of the quarter, we had a total liquidity reserve of more than 115 billion. We remain committed to a solid investment grade rating and in early July we discontinued the rating agent with the Standard & Poor's as we continuously review the cost benefit of maintaining multiple ratings and concluded that Moody's and Fitch provide sufficient coverage for our investor base. The decision will not change our funding plan or how we will be utilizing hybrids as they remain a permanent part of our capital stack. However, the decision will reduce the administrative burden and fees without affecting our capital market access. Turning to slide 14. I will introduce the dividend policy within our capital allocation principles. Our capital allocation principles remain unchanged and are in a ranked order. Firstly, to have a strong balance sheet targeting an FFF to adjusted net debt above 30%, which is aligned with a solid investment grade rating, as I just mentioned. Secondly, to reinstate the dividend for the financial year 2026 as we have committed. And thirdly, a disciplined approach to pursue value-creating opportunities for further growth. Finally, we will consider additional shareholder remuneration should we be overcapitalized after 2027. As previously communicated, we target to reinstate the dividend as part of the financial year 2026 with the first payout in 2027. This dividend policy will replace the previous one and the policy will apply for the financial years 2026 to 2028. The dividend amount will be announced together with the annual report for 2026 in February of 2027 and formally proposed by the board of directors when calling for the annual general meeting in 2027. We believe Thank you very much. One, our continued commitment to a strong capital structure aligned with a solid investment grade rating. Two, the ongoing investments into 8.1 gigawatts offshore wind construction program through 2027. That includes, of course, the 90 billion of capital committed through 2026 and 2027. The uncertainties regarding the ongoing regulatory risk for offshore wind in the US, together with ongoing legal and arbitration proceedings. Our opportunities to invest into new value-creating growth. Within this policy, the dividend amount is expected to start at a modest level and increase each year. As part of our second quarter 26 consensus, we received 13 contributions on dividend per share for 26, ranging from 2 kroners a share to 5 kroners a share. And while no decisions have been made at this point in time, we currently expect that the starting point of our dividend distribution to be in the lower part of this range. Finally, let's turn to slide 15 and our outlook for 26. With the operational performance and progress on our construction portfolio, in line with expectation for the second quarter, we maintain our full year EBTA guidance excluding new partnerships and cancellation fees of more than 28 billion. We still expect the offshore business to come in higher than last year and onshore in line with 25. We have changed the directional guidance for bioenergy and other from inline to lower due to the lower contribution from ancillary services and a provision related to our gas storages in second quarter in 26. On CapEx, we maintain our gross investment guidance for 26 of 50 to 55 billion. And with that, we will now open for questions. Operator, please.