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Vestas upgrades forecast on steady Q3

DENMARK: Revenue in the third quarter increased 17% year-on-year for manufacturer Vestas as it upgrades its forecasts and begins a share buy-back initiative.

Vestas' revenue was up 17% year--on-year in Q3
Vestas' revenue was up 17% year--on-year in Q3

Revenue totalled €2.12bn in Q3 up 17% on 2014 figures for that period and 21% higher than Q2 this year, despite a fall in order intake. New orders received in Q3 were 1.5GW, up from 1.2GW in the previous year, but only half of the previous quarter's total.

"There's always going to be a degree of lumpiness in the way that orders come in. Q2 was an exceptional quarter and in Q3 it was obviously less. And it's possible that some of the orders that we took in to Q2 might otherwise have come in Q3 instead. That's the name of the game," said Vestas' head of investor relations Hans Martin Smith.

"It's been a good, strong quarter; we're seeing good performance on a lot of key parameters," he said.

Vestas' order backlog has reached €16.4 billion, split equally between turbine orders and service agreements and up €3 billion from a year earlier, the company said.

On the back of the strong figures adding to a positive year to-date, Vestas has also increased it forecast for 2015. Revenue forecast has increased from €7.5 billion set after Q1 to €8-8.5 billion for the year. At the start of the financial year, Vestas set a target of €6.5 billion in revenue.

"Our guidance always reflects how we see the world. Clearly as you move through the year you get better visibility as is also the case of the increased guidance we're looking at now, we have a much better view than we had half a year ago or ten months ago," Smith said about the increases.


The manufacturer has also set up a €150 million share buy-back scheme between 5 November and 31 December. Vestas said the scheme is used to adjust its capital structure.

"The buy-back system is basically one where we buy back shares from the markets and use that to offload some of the cash that we would have on the balance sheet. It's something that the big investors would be very pleased that companies would be doing. From what I recall we've never done it before," explained Smith.

"Clearly I think it's a sign of the stability we want to achieve. It's something that highlights the industry is maturing and Vestas is turning into a company that is increasingly delivering a stable performance," he added.

Senior analyst at Danish bank Sydbank Jacob Pedersen said the buy-back showed how confident Vestas is on its future performance. 

"If you look at the share buyback it is really just another type of dividends. Vestas is stockpiling cash at the moment, cash that is really more useful in the hands of its owners than in the company," Pedersen said.

It's a pretty good signal because if Vestas had believed it was in front of a very difficult future with low order intake or low pre-payment and a pressure on cashflows, the company probably would not have done this," Pedersen added. 

Following the announcement, Vestas' shares opened 5% higher on the Copenhagen stock exchange.

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