Denmark

Denmark

Vestas' earnings fall as competition hits profitability

DENMARK: Fierce competition drove down Vestas' profits in the first quarter of 2018, CEO Anders Runevad claimed.

Vestas installed a prototype of its V120-2.0MW turbine at the Lem Kjær wind farm in western Jutland in Denmark in Q1 2018
Vestas installed a prototype of its V120-2.0MW turbine at the Lem Kjær wind farm in western Jutland in Denmark in Q1 2018

Vestas posted revenue of €1.69 billion for the quarter — down 10.1% from a year earlier — while its operating profit (Ebitda) fell 25% to €225 million.

Its gross profit also fell 25% year-on-year, from €377 million to €281 million, according to its Q1 2018 results.

The manufacturer ended the quarter with an "all-time high" order backlog value, however, with turbines and service agreements worth €21.6 billion — an increase of  €1.6 billion year-on-year.

Vestas maintained its 2018 guidance on revenue of between €10 billion and €11 billion, total investments worth €500 million (excluding its February acquisition of US energy analysts Utopus Insights) and a free cash flow of at least €400 million.

"The wind energy industry continues to drive down electricity prices and further enable integration of sustainable energy, creating a larger long-term market for wind power solutions," CEO Runevad said.

"In the short term, however, this has entailed fierce competition that has impacted profitability in the sector, which together with currency headwinds for Vestas resulted in first quarter 2018 results that are lower than last year’s historically strong first quarter," he added.

Firm and unconditional orders totalled 1,629MW in the first quarter, Vestas stated.

These included two 45MW orders for the Al Shobak project in Jordan and the Rom Klao project in Thailand, as well as its first order for a project in Kazakhstan.

The manufacturer also received an order for 400MW of turbine components from US developer sPower.

Vestas announced plans to build a hub and nacelle assembly plant in Argentina, and installed a single-converter wind-solar hybrid and a prototype of its V120-2.0MW turbine in the first three months of the year.

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