The company reported a drop in profit of 77 per cent to DKK8.8bn (£1.07bn) in 2009 from DKK4.8bn ($568m) the year before.

Danske Bank senior analyst Jakob Magnussen told NewNet that Dong had issued prior warnings that earnings would be down in 2009 but its guidance that this would rebound during 2010 is realistic.

‘They have been guiding throughout the year for a very bad result so there was no big surprise,’ Magnussen said.

‘They are guiding for significant improvements in earnings and that is quite a credible guidance. They had some accounting policies that impacted its results negatively in 2009 and these will reverse in 2010 and actually contribute positively.’

Higher power prices and cost cutting initiatives are also expected to will also pull-up revenues in 2010.

During the year it brought five new wind farms - Horns Rev 2, Gunfleet Sands, Karnice 1, Storrun and Avedøre - on-stream as it aims to generate 50 per cent of its power from renewable sources by 2020, an increase from today’s level of 15 per cent.

Dong also cancelled planned coal-fired power plant investment during the year.

‘The public reacted well to this but in terms of enterprise value I don’t think it was necessarily a good thing because green energy, and in particular wind energy, is curently only economically viable through government subsidies, exposing DONG to the risk of a change in political climate towards green investments,’ Magnussen said.

Dong, which is 73 per cent state-owned with the remainder controlled by domestic utilities, did not witness a dramatic shift in its bond price on the back of the news today.

‘This result has not had any impact on the pricing of the bonds but if the power prices stay at this high level and if gas prices start to rise I think we will see a good performance on the bonds. If the whole market goes sour, however, the prices of Dong’s bonds will also fall.’

Revenue was down 19 per cent but Dong said given the tough market conditions EBITDA was considered to be satisfactory.

Source: http://www.newenergyworldnetwork.com/Dong-Energy-increases-renewables-push-as-profits-drop-three-quarters-in-2009