Biggest IPO in Denmark Draws Closer as Wind Beats Oil for Dong

  • CEO says offshore unit will grow as oil business slows down
  • IPO hinges on performance of wind power, Sydbank says

Denmark moved closer to what is set to become its biggest initial public offering as Dong Energy showed that its wind power unit can make profits faster than its oil and gas division can burn them.

The energy conglomerate said on Wednesday net income tripled last quarter -- even as oil prices plunged about 30 percent -- as more of its wind parks have come online. The company’s owners, who include Goldman Sachs and the Danish government, have set a deadline for an IPO for in about a year, yet people close to the preparations said this month it could happen as early as this quarter.

“Dong is moving quickly toward an IPO,” Jacob Pedersen, head of equity analysis at Sydbank, said in a telephone interview. “They’re improving the performance in the important unit, the wind business, and that’s what it’s all about.”

Dong also on Wednesday laid out a new dividend plan, suggesting the IPO could happen soon. It will give shareholders a 2.5 billion-krone ($380 million) dividend payment for 2016 if it succeeds in listing before April 2017. Payouts would subsequently increase, helped by higher wind energy revenue every year toward 2020.

“We expect growth in offshore wind going forward” Chief Executive Officer Henrik Poulsen said in an interview. “We’re guiding for the company to continue growing overall. That’s hiding an inevitable slowdown in oil and gas due to lower prices and an expected decline in production. Wind energy is set to grow and outpace those declines.”

First-quarter net income jumped to 5.22 billion kroner from 1.74 billion kroner a year earlier. Last year, the oil unit made writedowns of almost 16 billion kroner as energy prices plunged.

Dong, which is the largest offshore wind park operator in the world, is working on six new parks and is searching for projects to bid for across Northern Europe, the U.S. east coast and Asia.

“There’s a long list of things that needs to be in place to be able to push the button on the IPO,” Poulsen said. “We won’t comment in detail but just say that everything is proceeding as planned. Ultimately, that’s for our owners to decide.”

Before it's here, it's on the Bloomberg Terminal.