Interim financial report for the first nine months of 2012 – Lower full-year outlook

The Board of Directors of DONG Energy has today approved the interim financial
report for the first nine months of 2012 with the following outlook and
financial highlights compared with the first nine months of 2011:


-- EBITDA for the first nine months of 2012 was DKK 6.7 billion compared with
DKK 11.7 billion in the first nine months of 2011, reflecting a DKK 2.3
billion provision for three long-term, loss-making gas storage facility
contracts in Germany. These contracts were entered into in 2006/2007, when
only companies that had access to storage capacity were able to operate in
the market. The current market situation has significantly reduced the
value of storage flexibility and the contracts are therefore loss-making.
Furthermore, due to overcapacity in the market, a DKK 0.6 billion provision
has been made relating to a loss-making contract from 2007 for capacity in
the LNG terminal in the Netherlands. None of these provisions has any
effect on cash flows. EBITDA also reflected the discontinuation of
non-recurring income in 2011 from the renegotiation of gas contracts, low
output and spreads for the thermal power stations and costs for the repair
work to the Siri platform. By contrast, the wind activities generated
higher EBITDA as did Exploration & Production, which reported higher
production and prices
-- The result after tax was a loss of DKK 2.4 billion, down DKK 5.9 billion on
the first nine months of 2011. The decline reflected lower EBITDA,
impairment losses of DKK 2.7 billion and higher depreciation. A DKK 2.0
billion gain after tax on disposal of enterprises, on the other hand, had a
positive effect
-- Operating cash inflow decreased to DKK 5.0 billion from DKK 8.2 billion in
the first nine months of 2011, mainly due to lower EBITDA (before
provisions) and an increase in funds tied up in working capital
-- Net investments were DKK 11.6 billion in the first nine months of 2012
compared with DKK 12.3 billion in the same period the previous year. Gross
investments were DKK 14.8 billion and primarily related to the development
of wind activities and oil and gas fields, while divestments primarily
related to Oil Terminals
-- Interest-bearing net debt rose by DKK 9.6 billion from the end of 2011 to
DKK 33.2 billion

Henrik Poulsen, CEO

“The results we have delivered for the first nine months of the year are
unsatisfactory and so is the fact that we have had to lower our EBITDA outlook
for 2012. This is due, in particular, to a European gas market marred by
oversupply and low margins, partly because low CO2 and coal prices make the
coal-fired power stations more competitive than the gas-fired power stations.
This has been an instrumental factor in considerable provisions and a
significant deterioration in the earnings trend in the Energy Markets business
area. The other four business areas are performing in line with expectations.
For example, we still see great potential in our two primary growth areas,
Exploration & Production and Wind Power. The poor earnings performance in 2012
has intensified the need to significantly enhance DONG Energy’s earnings,
return on capital employed and capital structure. To that end, we are working
on an action plan to cut costs by DKK 1 billion by the end of 2012, divest
non-core activities, prioritise future investments and restructure our
loss-making activities in the gas market.”



Outlook

In connection with the interim financial report for the first half, it was
announced that the assumptions for the EBITDA outlook for Energy Markets in
2012 had deteriorated since the beginning of the year due to a series of
factors all of which depress EBITDA.

The DKK 2.9 billion provisions for loss-making contracts and the delayed
commissioning of London Array have led to a further lowering of the outlook
compared with the outlook in the interim financial report for the first half.

To improve DONG Energy’s future earnings capacity and enhance its future
capital structure, an efficiency plan will be implemented by the end of 2012 to
cut costs by DKK 1 billion annually. One of the ways in which this will be
achieved is by cutting 500-600 jobs. DONG Energy also expects to make
divestments to a value of DKK 10 billion in 2013-2014.

Based on the above, EBITDA in 2012 is expected to be DKK 8.5-9 billion. This is
a downwards adjustment compared with the outlook in the interim financial
report for the first half, when EBITDA in 2012 was expected to be around 10%
lower than in 2011.

EBITDA in 2013 is still expected to be significantly ahead of 2012, reflecting
cost cuts, new assets in operation and the discontinuation of the non-recurring
effect from the provisions for loss-making contracts in 2012. The capital
structure is expected to improve correspondingly. A more precise outlook for
EBITDA and the capital structure key ratio for 2013 will be provided no later
than in connection with the annual report for 2012.


In connection with the presentation of the interim financial report a
conference call for investors and analysts will be held on 1 November 2012 at
11.00am CET:

Denmark: +45 3272 8018
International: +44 145 255 5131

The conference call can be followed live at the following address:
http://www.dongenergy.com/en/investor/presentations/pages/webcasts.aspx


Presentation slides will be available prior to the conference call at the
following address:
http://www.dongenergy.com/en/investor/presentations/pages/financial_presentation
s.aspx


The interim financial report can be downloaded at:
http://www.dongenergy.com/en/investor/reports/pages/interimreports.aspx



For further information, please contact:


Media Relations
Helene Aagaard
+45 9955 9330


Investor Relations
Morten Hultberg Buchgreitz
+45 9955 9750



DONG Energy is one of the leading energy groups in Northern Europe. We are
headquartered in Denmark. Our business is based on procuring, producing,
distributing and trading in energy and related products in Northern Europe. We
have approximately 7,000 employees and generated DKK 57 billion (EUR 7.6
billion) in revenue in 2011. For further information, see www.dongenergy.com

Interim financial report for the first nine months of 2012 - Lower full-year outlook.pdf

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