Copenhagen — Wind turbine maker Vestas expects to deliver more positive results in 2023, its CEO said on Wednesday, as high costs from raw materials and transport, which hit second-quarter results, are passed on to customers.
Shares in Vestas rose 4% after the firm said it raised its prices in the second quarter by 22% compared with the same period in 2021, a sign that the company’s hard-hit profit margins could improve.
Heightened competition, supply disruptions due to the Covid-19 pandemic and soaring metals prices worsened by the war in Ukraine have made it difficult for wind turbine makers to generate positive margins, despite solid demand.
The Danish firm reported a quarterly loss of €182m before interest and tax (ebit) before special items, wider than the loss of 143 million forecast by analysts in a Refinitiv poll. That resulted in an ebit margin of -5.5%.
But the average cost of onshore products in the second quarter, known as the average selling price, had increased to €960,000/MW, Vestas said.
“The price on the orders they get is simply significantly higher than what we expected, and that makes it less bad that the total order intake is lower than expected,” Sydbank analyst Jacob Pedersen told Reuters.
“We have taken in orders at the highest price level in ten years,” CEO Henrik Andersen said. “Our price development will lead to a more positive 2023,” he added.
Andersen also said a new energy bill passed in the US Senate on Monday was “very supportive of renewable energy in the US over the next ten years.” If passed in the House of Representatives, it would strengthen Vestas’s order intake next year and in 2024, he added.
In May, Vestas slashed its 2022 margin forecast due to the war in Ukraine and writedowns in its offshore business. Rival Siemens Gamesa last week lowered its 2022 outlook and said earnings would remain negative through 2023.
“With guidance retained and onshore pricing on new onshore orders better than expected, we see two key positives to indicate improving momentum on profitability into H2 and 2023,” Citi analysts said in a note.
Reuters
