Danish National Audit Office (Rigsrevisionen) has today published its report on DONG Energy. The report has been prepared at the request of the Danish Public Accounts Committee.
In its report, Rigsrevisionen attaches importance to the fact that, since the merger in 2006, DONG Energy has been pursuing a strategy designed to realign the company’s business model to secure its future revenue base. This has taken the form of investment in building up two new business units, in offshore wind and in oil and gas production. It is against this background that the company’s large investments and financial performance should be viewed.
“In our opinion, Rigsrevisionen has prepared a thorough report and its conclusions tally largely with our own impression of DONG Energy. The report points out that DONG Energy is in the middle of a major transformation and that the company’s financial position has worsened due to extensive investments and unforeseen losses in the gas market in 2012, putting key ratios under pressure,” says DONG Energy CEO Henrik Poulsen.
Rigsrevisionen concludes that DONG Energy’s equity ratio in the period 2007-2011 was satisfactory, but also concludes that 2012 was a problem year, with DONG Energy’s earnings being unsatisfactory.
Henrik Poulsen responds: “It is correct that 2012 seems a problem year for DONG Energy. As we explained in connection with our quarterly financial statements in November 2012, DONG Energy has been hit hard by the trend in the gas market, like other large energy companies, and has therefore had to recognise a number of impairment losses that have affected the company’s provisions, profitability and equity ratio in 2012.”
Henrik Poulsen stresses that management has already put various initiatives in place that are to strengthen DONG Energy’s earnings and capital structure: “In connection with our new strategy, which we will be presenting on 27 February, we will also provide an update on our efforts regarding the financial recovery plan.”
“We are now going to study Rigsrevisionen’s report in order to handle the areas in which we can improve our performance,” says Henrik Poulsen .
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Press release, January 23, 2013; Image: DONG Energy