The impact on the exchange rate between Sterling and other currencies in the case of the UK crashing out of the EU is a main concern for Orsted, its chief executive Henrik Poulsen said, as the offshore wind champion prepares itself for different scenarios.
“Obviously, in a situation which by nature is slightly unpredictable, our main concern is still around the currency impact and how a Brexit – in particular a no-deal Brexit - may impact the exchange rate of the Sterling,” Poulsen said at a conference call on the Danish utility’s first half results.
“That is a key concern.”
A lower value of the British Pound (GBP) would likely dent into Orsted’s profits measured in Danish Kroner (DKr) as the utility already has massive offshore wind operations in the UK. It is also currently building the world’s largest offshore wind arrays off England (the 1.2GW Hornsea 1 and the 1.4GW Hornsea 2 projects).
The Danish Kroner often tracks the Euro and US Dollar in its exchange rate against the British currency.
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The Pound was little changed against the Euro Thursday, up 0.027% at €1.084/GBP in early trading, but had fallen steeply from €1.18/GBP on May 6, 2019.
The slide of the UK currency has accelerated since Boris Johnson took over as Prime Minister on July 24, vowing to steer the country out of the EU even without a deal with Brussels – which is seen as a potentially disastrous move for the British economy.
Johnsons insists on changes to an exit deal with the EU that had been painfully negotiated by his predecessor, Theresa May, but found no majority in the British parliament. The EU has stated on numerous occasions that it is not willing to amend the deal, and won’t concede the UK a ‘cherry-picking’ of which links it wishes to maintain with Europe, and which to severe.
Poulsen added that another of Orsted’s key focus areas regarding Brexit is its offshore wind supply chain, but was more optimistic in that area.
“I’d say we have grown increasingly comfortable that we can manage the impact it may have on our ongoing construction of the major offshore wind projects that we are building in the UK,” he said.
Orsted in a presentation on half year financial figures stressed its major UK offshore wind developments are on track.
The utility expects Hornsea on to be completed in the fourth quarter of this year, with 131 out of 174 turbines already installed. The construction programme of Hornsea 2 is also on track – Orsted expects what will be the world’s largest offshore array to be operational in 2022.