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Equinor Shifts Focus to Boost Profit, Downsizes Renewables
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Equinor ASA (EQNR - Free Report) , the Norwegian energy giant, is set to scale back its renewables unit, prioritizing profitability over expansion in the wake of escalating costs and diminishing returns, per a Bloomberg report. The move marks a strategic shift for the company as it navigates the challenges currently facing the renewable energy sector.
Equinor’s Strategic Shift in Focus
According to an internal memo reported by Bloomberg, Equinor will undertake fewer renewable projects and limit its operations to certain markets. The decision to pivot away from rapid expansion followed the company’s navigation of it describes as a "down cycle" for renewables.
Pal Eitrheim, head of Equinor’s renewables unit, highlighted the necessity for the company to adapt to current market conditions. He noted that the renewables sector is currently in a down cycle. In the next two to three years, EQNR will focus on positioning itself to compete effectively once the industry recovers, Eitrheim added. Although Equinor remains dedicated to its long-term renewable energy goals, the immediate emphasis will shift from growth to enhancing profitability.
EQNR’s Ongoing Projects and Market Exits
Despite the pivot, Equinor's renewables division is set for its "busiest year of execution ever," with three major offshore wind projects currently underway. These projects include Dogger Bank in the U.K., Empire Wind 1 in the U.S., and Baltyk 2 and 3 in Poland, demonstrating Equinor's continued investment in key markets despite broader cutbacks.
However, the company has already started scaling back its international footprint. Earlier last week, Equinor canceled offshore wind projects in Spain and Portugal. This followed the company’s previously announced exit from Vietnam, hinting at potential withdrawals from other countries as part of its efforts to rein in spending and focus on markets where profitability can be maximized.
EQNR’s Move Reflects Broader Industry Challenges
Equinor’s decision to downsize its renewables division reflects a broader trend among European energy companies that are recalibrating their strategies in response to economic pressures. The clean energy sector has been grappling with high costs and lower-than-expected returns, prompting companies like Equinor to reassess their approach to renewable energy investments.
The decision to prioritize profitability over growth marks a significant shift in the company’s approach to energy transition, underscoring the complexities and challenges faced by the sector.
MPLX derives stable fee-based revenues from long-term contracts, with minimal exposure to commodity-price fluctuations. The partnership’s robust capital expenditure forecast for 2024, along with significant expansion initiatives, underscores its commitment to sustainable growth.
The Zacks Consensus Estimate for MPLX’s 2024 EPS is pegged at $4.29. The company has a Zacks Style Score of B for Value. It has witnessed upward earnings estimate revisions for 2024 and 2025 in the past seven days.
Core Laboratories, an oilfield services company, has a deep portfolio of sophisticated, proprietary products and services that positions it to take advantage of the growing maturity in the global hydrocarbon reserve base. CLB’s expanding international upstream projects indicate a positive trajectory for revenue and profitability, especially as oil demand continues to rise globally.
The Zacks Consensus Estimate for CLB’s 2024 EPS is pegged at $0.95. The company has a Zacks Style Score of B for Value. It has witnessed upward earnings estimate revisions for 2024 and 2025 in the past seven days.
TechnipFMC is a leading manufacturer and supplier of products, services and fully integrated technology solutions for the energy industry, with a focus on the subsea segment in offshore basins worldwide. FTI’s growing backlog ensures strong revenue visibility and supports margin improvements.
The Zacks Consensus Estimate for FTI’s 2024 EPS is pegged at $1.34. The company has a Zacks Style Score of B for Value. It has witnessed upward earnings estimate revisions for 2024 and 2025 in the past 30 days.
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Equinor Shifts Focus to Boost Profit, Downsizes Renewables
Equinor ASA (EQNR - Free Report) , the Norwegian energy giant, is set to scale back its renewables unit, prioritizing profitability over expansion in the wake of escalating costs and diminishing returns, per a Bloomberg report. The move marks a strategic shift for the company as it navigates the challenges currently facing the renewable energy sector.
Equinor’s Strategic Shift in Focus
According to an internal memo reported by Bloomberg, Equinor will undertake fewer renewable projects and limit its operations to certain markets. The decision to pivot away from rapid expansion followed the company’s navigation of it describes as a "down cycle" for renewables.
Pal Eitrheim, head of Equinor’s renewables unit, highlighted the necessity for the company to adapt to current market conditions. He noted that the renewables sector is currently in a down cycle. In the next two to three years, EQNR will focus on positioning itself to compete effectively once the industry recovers, Eitrheim added. Although Equinor remains dedicated to its long-term renewable energy goals, the immediate emphasis will shift from growth to enhancing profitability.
EQNR’s Ongoing Projects and Market Exits
Despite the pivot, Equinor's renewables division is set for its "busiest year of execution ever," with three major offshore wind projects currently underway. These projects include Dogger Bank in the U.K., Empire Wind 1 in the U.S., and Baltyk 2 and 3 in Poland, demonstrating Equinor's continued investment in key markets despite broader cutbacks.
However, the company has already started scaling back its international footprint. Earlier last week, Equinor canceled offshore wind projects in Spain and Portugal. This followed the company’s previously announced exit from Vietnam, hinting at potential withdrawals from other countries as part of its efforts to rein in spending and focus on markets where profitability can be maximized.
EQNR’s Move Reflects Broader Industry Challenges
Equinor’s decision to downsize its renewables division reflects a broader trend among European energy companies that are recalibrating their strategies in response to economic pressures. The clean energy sector has been grappling with high costs and lower-than-expected returns, prompting companies like Equinor to reassess their approach to renewable energy investments.
The decision to prioritize profitability over growth marks a significant shift in the company’s approach to energy transition, underscoring the complexities and challenges faced by the sector.
EQNR’s Zacks Rank & Key Picks
Equinor currently carries a Zacks Rank #3 (Hold).
Investors interested in the energy sector may look at some better-ranked stocks like MPLX LP (MPLX - Free Report) , Core Laboratories Inc. (CLB - Free Report) and TechnipFMC plc (FTI - Free Report) . While MPLX currently sports a Zacks Rank #1 (Strong Buy), Core LaboratoriesandTechnipFMC carry a Zacks Rank #2 (Buy) each. You can see the complete list of today’s Zacks #1 Rank stocks here.
MPLX derives stable fee-based revenues from long-term contracts, with minimal exposure to commodity-price fluctuations. The partnership’s robust capital expenditure forecast for 2024, along with significant expansion initiatives, underscores its commitment to sustainable growth.
The Zacks Consensus Estimate for MPLX’s 2024 EPS is pegged at $4.29. The company has a Zacks Style Score of B for Value. It has witnessed upward earnings estimate revisions for 2024 and 2025 in the past seven days.
Core Laboratories, an oilfield services company, has a deep portfolio of sophisticated, proprietary products and services that positions it to take advantage of the growing maturity in the global hydrocarbon reserve base. CLB’s expanding international upstream projects indicate a positive trajectory for revenue and profitability, especially as oil demand continues to rise globally.
The Zacks Consensus Estimate for CLB’s 2024 EPS is pegged at $0.95. The company has a Zacks Style Score of B for Value. It has witnessed upward earnings estimate revisions for 2024 and 2025 in the past seven days.
TechnipFMC is a leading manufacturer and supplier of products, services and fully integrated technology solutions for the energy industry, with a focus on the subsea segment in offshore basins worldwide. FTI’s growing backlog ensures strong revenue visibility and supports margin improvements.
The Zacks Consensus Estimate for FTI’s 2024 EPS is pegged at $1.34. The company has a Zacks Style Score of B for Value. It has witnessed upward earnings estimate revisions for 2024 and 2025 in the past 30 days.