Orsted’s (ORSTED.CO) recent implosion has finally prompted a reaction. Denmark’s $17 billion offshore wind producer on Tuesday said Chief Financial Officer Daniel Lerup and Chief Operating Officer Richard Hunter were stepping down. After shocking investors with $4 billion of impairments in the United States and losing 60% of market value this year, a change was in order. The question is whether battered investors see this as sufficient.
Cost inflation is menacing the whole wind sector, but Hunter and Lerup’s exits are easy to justify. The COO is responsible for the procurement, construction, and operations of the wind farms, and supplier delays accounted for the lion’s share of Orsted’s U.S. writedowns. Lerup insisted U.S. projects were “value-creating” as late as June, and Orsted had made more aggressive assumptions than peers about U.S. government subsidies when calculating its project returns.
Yet Mads Nipper, who became Orsted chief executive in early 2021 and handpicked the departing duo, has been spared for now. While most of Orsted’s problematic U.S. projects were awarded before his term started, a key problem in recent months has been management saying one thing and then doing another. Nipper’s credibility has hence suffered too. Unless he can engineer a major turnaround, investors may require a new face – perhaps even predecessor Henrik Poulsen - at the top. (By Yawen Chen)
(The author is a Reuters Breakingviews columnist. The opinions expressed are their own.)
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