Orsted CEO Ousts Top Executives After $4 Billion Impairment

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Orsted A/S’s chief Mads Nipper dismissed two top executives as the company fights to recover from huge writedowns connected to abandoned projects.The Danish wind developer needs to present a fast turnaround strategy with shares languishing near the lowest for six years. The immediate departure of Chief Financial Officer Daniel Lerup and Chief Operating Officer Richard Hunter on Tuesday is meant to send the message to investors that a plan is underway. For now, chief executive Nipper still has his job but it’s uncertain how long he will last.

“Investors have waited for Orsted’s organizational reply and presumably a large part had expected that Mads Nipper was in imminent danger of being fired,” said Per Hansen, an investment economist at Nordnet AB, a Nordic retail share investor platform. “It didn’t turn out that way, at least not at this stage.”

Orsted is at the center of a crisis for the offshore wind industry with companies struggling to fund large developments. Higher financing and component costs combined with increased competition have slowed the pace of renewable energy around the world, making it harder for developers and suppliers to make new projects profitable. The company hasn’t yet presented a strategy to get back back on track.

“On first sight, market should welcome a change of senior management at Orsted given a number of past disappointments and the de-rating of the share price,” Citigroup Inc.’s Jenny Ping wrote in a note. “However, this will also bring uncertainty with it: More financial write-downs/ cash termination costs? Will new COO push ahead with US projects?”

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Since Chief Executive Officer Nipper took over in January 2021, shares have slumped more than 70%. Nipper told Bloomberg that he’s offered to resign when it became clear that two offshore projects in the US would need impairments. He said in a September interview that he retains the support of the board despite the plunge in market value.

In the meantime, the company named two internal employees as interim stand-ins and said it has started a process to hire permanent replacements as soon as possible.

A future CFO will have tough decisions to make to get the company back on track after two US wind projects were dropped, necessitating a $4 billion writedown. Orsted announced on Monday a strategic exit of offshore wind in Norway, as it prioritizes its investments.