Vestas ups guidance after strong quarter

DENMARK: Vestas has upgraded its full-year guidance after a strong quarter, with income up 26% on a year ago.

The company posted revenues of EUR 1.8 billion, helping it to bank a pre-tax profit of EUR 163 million, an increase on EUR 96 million over the same period in 2013.

This led to Vestas raising its expectations for full-year revenues to EUR 6.4-7 billion, from EUR 6 billion previously. It also upgraded its margin guidance to 7-8% from 6% previously.

The upgrades are based on the expected delivery plan for the remainder of the year and an improved cost base, the company said.

Senior vice president, marketing and communications Morten Albaek told Windpower Monthly: "Fixed capacity costs have come down – they are the same level as the previous Q3 even though activity level has increased significantly and we have more employees.

"We have also decreased our costs when it comes to sourcing, with more efficient and effective process in place. And thirdly the cost of developing, manufacturing and delivering our projects has come down."

Vestas produced and shipped 2.2GW over the period, an increase of 36%.

But orders have not performed well this quarter, with a reduction of 24% year on year to 1.2GW in the third quarter. For the full year to date, however, orders remained 12% up compared with last year.

The value of the turbine backlog amounted to EUR 6.7 billion on 30 September, a decrease of 9% compared with the same time last year.

There was a 3% increase in orders from the Americas, but was offset by a decrease in Europe and Africa and Asia Pacific of 2% and 31% respectively. Vestas has been struggling to maintain its market share in China.

"China's market is very unique. We have not been capable of delivering our products at a cost that has made us competitive and since profitability is always more important than growth we've had to say no to orders," said Albaek.

But Vestas recently introduced a new strategy in China, including the introduction of new turbines and improved servicing packages.

"These are things that we haven't done in the past and we are confident that this will have a positive effect on Vestas' position in China. But it takes more than a couple of quarters to turn things around," said Albaek.

Onshore service revenue – an area the company has been looking to increase - came in at EUR 235 million in the third quarter of 2014, an increase of 11%.

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