Vestas Wind Systems A/S said it expects increased costs from a backlog of wind turbine orders and service agreements to drag down full year earnings but declined to give details on knock-on effects from the broader quality issue affecting the industry. A key supplier of blades to Vestas published a profit warning last month after higher inspection and repair costs after it found issues at one blade type at one of its factories. Investors have been questioning whether there could be an impact for the Danish company as concerns grow about the fast ramp up of the sector.
Vestas Wind Systems A/S said it expects increased costs from a backlog of wind turbine orders and service agreements to drag down full year earnings but declined to give details on knock-on effects from the broader quality issue affecting the industry. A key supplier of blades to Vestas published a profit warning last month after higher inspection and repair costs after it found issues at one blade type at one of its factories. Investors have been questioning whether there could be an impact for the Danish company as concerns grow about the fast ramp up of the sector.
- Company EBIT swings back to losses during second quarter
- CEO says Vestas is focused on return to full profitability
Vestas Wind Systems A/S said it expects increased costs from a backlog of wind turbine orders and service agreements to drag down full year earnings but declined to give details on knock-on effects from the broader quality issue affecting the industry.
A key supplier of blades to Vestas published a profit warning last month after higher inspection and repair costs after it found issues at one blade type at one of its factories. Investors have been questioning whether there could be an impact for the Danish company as concerns grow about the fast ramp up of the sector.
Vestas’ warranty costs were up 39% year-on-year, better …
... more [truncated due to possible copyright]- Company EBIT swings back to losses during second quarter
- CEO says Vestas is focused on return to full profitability
Vestas Wind Systems A/S said it expects increased costs from a backlog of wind turbine orders and service agreements to drag down full year earnings but declined to give details on knock-on effects from the broader quality issue affecting the industry.
A key supplier of blades to Vestas published a profit warning last month after higher inspection and repair costs after it found issues at one blade type at one of its factories. Investors have been questioning whether there could be an impact for the Danish company as concerns grow about the fast ramp up of the sector.
Vestas’ warranty costs were up 39% year-on-year, better than feared given the wider industry turmoil, Danske Bank A/S’s Credit Analyst Jakob Magnussen wrote in a note.
“We continue to work diligently with quality,” Chief Financial Officer Hans Martin Smith said in an interview, declining to comment on its supply contracts with TPI Composites Inc. “It’s a topic that has been on the agenda for quite a while and we are proactively working to address.”
Siemens Energy launched a strategic review of its wind power business as problems with its turbines are expected to cause a €4.5 billion net loss in one of industrial Germany’s biggest debacles.
The Danish company still expects full year earnings before interest and taxes to be in a range of -2% to 3%, it said Wednesday in its second-quarter results. That would mark a vast improvement from the -8% for 2022 but costs for the backlog swelled €3.7 billion ($4.1 billion) to €51.6 billion from a year earlier.
Vestas, along with its competitors in the wind turbine industry, faced steep losses in recent years after costs of steel and other key materials soared and it grappled with delays due to supply chain disruptions. Now the company is focused on returning to profitability as it raises prices and works through a backlog of unprofitable contracts.
“Although supply chain disruptions are easing off, we expect disruptions to continue throughout the second half of the year,” Chief Executive Officer Henrik Andersen said. “Vestas remains fully focused on becoming profitable.”
Shares rose as much as 3% in Copenhagen, the highest since July 27.
An expanding order backlog, which increased 2% sequentially to €20 billion, positions the company for “rapid growth” in 2024-26, according to Rob Barnett, an energy analyst at Bloomberg Intelligence.
Vestas says it is in turnaround mode even after it swung back to a loss in the second quarter, after a surprisingly positive first three months. The company posted an earnings loss before interest, taxes and special items of €70 million, in line with loss estimates of €69.7 million. That compares to a loss of €182 million in the same period a year ago.