Vestas sustains strong start to year

DENMARK: Vestas continued its strong start to the year with growth in revenues in the second quarter pushing the manufacturer into profit.

Vestas saw its order intake increase in terms of megawatts
Vestas saw its order intake increase in terms of megawatts

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As a result of a 13% jump in revenue to EUR 1.3 billion, the company upped its expectations for a full-year operating margin to 6%, from the previous guidance of 5%. Revenue is still expected to be a minimum EUR 6 billion for 2014.

The increase in revenues allowed the company to lift itself from a loss at the same time last year to a net profit of EUR 94 million this time around.

But the value of the company's order intake over the quarter fell from EUR 1.75 billion to EUR 1.68 billion. This is despite an increase in the megawatts ordered from 1.6GW to 1.9GW.

Vestas senior vice president Morten Albaek said this was due to "the market mix with a lot of American orders which are supply only".

The company increased its workforce by 2% over the period to 17,586. While this appears counter to a drive last year that saw the company reduce its number of employees, with a target of 16,000 for the end of 2013, Albaek disagrees.

"This works with our philosophy - what we said was that we want to be capable of scaling up and scaling down depending on demand and now there's a very strong demand so we're hiring for our factories in Colorado and Europe. If that drops off we can scale down again," said Albaek.

Despite a big push to make operations and maintenance key to the company's growth, onshore service revenues were EUR 244 million, an increase of just 6%, representing slower growth than group revenue.

"All in all we are happy with our strategy to grow our service business by 30% over the next three to five years. We had an abnormally good quarter for service margins in the comparable quarter, and we expect margins to be stable over the longer term," said Albaek.

The operating margin before costs for the service division came in at 25%, a decrease of 4 percentage points compared with the second quarter of 2013.

A shift in focus is evident from the results, with 800MW in orders coming from the US, with only 375MW in Europe. This compares with deliveries of outstanding orders of 267MW in the Americas and 792MW in Europe.

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