Turbine maker beats gloom

Vestas Wind Systems beat earnings estimates for the third quarter as sales soared 30% and orders hit a record, contrasting with stumbling results from rival manufacturers.

The world’s biggest maker of wind turbines upgraded its outlook for revenue from its service business and said it’s continuing to pare back costs. Earnings before interest and taxes excluding special items rose 55% to €429m, exceeding the highest estimate.

The figures contrast with a gloomier outlook coming from much of the rest of the industry, which is suffering from compressed margins and trade tensions that delayed sales. Vestas said it’s benefiting from a growing business outside Europe.

“We are very pleased with the performance,” Henrik Andersen, who took over as chief executive officer in August, said in an interview. In a statement, the CEO said “profitability remains impacted by tariffs and increased execution costs”.

There is a 1.5% impact on margins from cost increases across trade, transport and raw materials for 2019, which represents a 0.5% increase on what the company anticipated at the start of the year, chief financial officer Marika Fredriksson, told analysts. The manufacturer, based in Aarhus, Denmark, rose by as much as 11% in Copenhagen trading.

Vestas said it had orders of 13 gigawatts already in 2019 and expects a “very busy 2020”. The company maintained its full-year guidance on revenue of as much as €12.2bn with earnings margin still set at 8% to 9%.

Revenue from the growing service business grew 8% compared to the same period last year to €422m, reflecting the growing importance of keeping their existing turbine portfolio in good working order.

“Vestas’ strong activity growth and order execution lends confidence that the turbine maker is on-track to meet full-year guidance before an anticipated surge in 2020,” said James Evans, an analyst at Bloomberg Intelligence in London.

In September, it outlined job cuts in Germany and Denmark. Other wind turbine makers are similarly impacted. Siemens Gamesa Renewable Energy has announced 1,200 cuts this year.

Last month, Orsted shares tumbled after an admission the company overestimated the amount of power its turbines would produce, potentially harming revenue projections.

It’s new territory for a market that enjoyed a boom in global demand for clean energy and generous support from governments.

Bloomberg