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Denmark

Denmark

Vestas records strong Q1 results

DENMARK: Vestas moved into profit in the first quarter of 2014, announcing an operating profit of EUR 40 million compared with a loss of EUR 108 million over the same period last year.

This was achieved on the back of a 17% increase in revenue to EUR 1.2 billion. But a higher margin was also needed to help push the company back into profit.

The Danish manufacturer's operating margin was 18%, an increase of 3 percentage points compared with the first quarter of 2013. Vestas said that this was driven by "a higher activity level and lower costs".

Vestas chief financial officer Marika Fredriksson said: "Volume and margin will have an impact on profit, and we are improving on both of these, and we expect that to continue."

Orders also increased significantly, with the quarterly order intake up 84% to 1.19GW, of which 49% has been announced. Service revenue was also up by 4% to EUR 225 million.

Although the company’s turnaround programme was officially declared complete by CEO Anders Runevad at the end of the year, he was keen to stress that the company "is focused on further optimisation and improved efficiency" while announcing these latest results

There was a slight improvement in revenues from services, which is being pushed by Vestas as key to its growth, to EUR 225 million from EUR 217 million a year earlier. But the renewal rate for expiring service contracts slumped to just 50%.

Runevad was keen to point out that he sees this as an anomaly: "We don't think that this is a trend, and we expect improvement in this field."

A high contribution from the US, where supply-only contracts are more common, meant that services revenue did not't take off as much as could perhaps be expected considering Vestas' renewed focus on this area, the company said.

The price per megawatt fell over the period. This was largely due to "the competitive market packed with a lot of spuppliers, but we expect this to be fairly stable in the future", Vestas said.

The results exceeded the expectations of analysts canvassed by Reuters before the release of the results.

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