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Wind turbine manufacturer Vestas lowers expectations due to inflation and Covid-19

Turbine manufacturer reduces its full-year guidance despite higher operating income in the second quarter of 2021

Despite global challenges, Vestas CEO Henrik Andersen said Q2 was “commercially, very strong” for his company
Despite global challenges, Vestas CEO Henrik Andersen said Q2 was “commercially, very strong” for his company

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Vestas has downgraded its financial guidance for the 2021 financial year due to supply chain constraints and restrictions in key markets caused by the coronavirus pandemic, as well as cost inflation.

Meanwhile, its Ebit before special items nearly tripled in the second quarter of the year, and the company ended the period with a record-high order backlog.

CEO Henrik Andersen added that the quarter was also “commercially, very strong” due to the manufacturer receiving the first preferred supplier agreement for its 15MW offshore wind turbine and recording an average selling price of €790/kW for its onshore turbines – up from around €700/kW in 2020.

Vestas recorded revenue of €3.5 billion in the second quarter of 2021, which was roughly level with the total one year ago.

It also recorded Ebit before special items of €101 million in the period – up from €34 million one year ago – and an Ebit margin before special items of 2.9% – up 1.9 percentage points.

Vestas ended the period with a record-high combined order backlog of €21.2 billion at the end of June 2021. This was due to a strong order intake and the integration of offshore wind, after Vestas bought out joint venture partner Mitsubishi Heavy Industries (MHI).

Meanwhile, its service agreements with expected contractual future revenue stood at €26.9 billion at the end of the quarter.

However, Vestas downgraded its full-year guidance due to supply chain issues, cost inflation of raw materials and transportation, and restrictions in key markets caused by the coronavirus pandemic.

It now expects revenue of €15.5-16.5 billion (down from €16-17 billion previously) and an overall Ebit margin before special items of 5-7% (down from 6-8%). The firm forecasts total investments to be below the previously expected level of €1 billion this year.

Turbine manufacturer rival Siemens Gamesa also lowered its financial guidance for 2021 recently, citing supply chain issues and the rising costs of raw materials, among other factors.

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