Aug. 20 (Bloomberg) -- The yield on Dong Energy A/S’s hybrid bond declined in Copenhagen trading after Denmark’s biggest utility reported rising profits and improving cash flow.
The yield on Dong Energy’s 6.25 percent bond due 3013 declined to 6.08 percent in the Danish capital, matching a low since the bond started trading on June 24. The bond yielded about 6.11 percent yesterday, according to Composite Bloomberg Bond Trader prices.
Dong Energy today maintained its 2013 profit forecast and said it will cut 350 to 400 jobs in the coming weeks to save 300 million kroner ($54 million) starting 2014. The Skaerbaek, Denmark-based company this year introduced a plan that includes selling assets, cutting costs and finding a partner to inject equity. Those plans are designed to recoup cash after the company lost money on failed natural gas investments.
“It’s positive that Dong Energy is on track,” Jens Houe Thomsen, a credit analyst at Jyske Bank A/S, said by phone. “The company is improving earnings, cash flow and reducing debt, and this is driven by cost cuts and a better performance in the wind energy unit.”
Dong Energy said today earnings before interest, tax, depreciation and amortization rose to 3.14 billion kroner in the second quarter from 3.03 billion kroner a year earlier. Interest-bearing debt declined to 48.7 billion kroner at the end of the quarter from 50.4 billion kroner a year earlier. Cash flow from operating activities rose to 2.39 billion kroner from 1.82 billion kroner a year earlier.
“Dong Energy is showing that it has control over its cost cut plans,” said Thomsen. He’s advising clients to buy Dong Energy’s hybrid bonds.
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