Vestas profit rises amid 'higher activity and pricing'
Danish wind turbine manufacturer now sees profit margin coming in at lower end of guidance and points to geopolitical uncertainty
Revenues and profit rose at Vestas in the third quarter of 2024 amid higher volumes of wind turbines delivered at higher average prices, but the Danish OEM now sees a profit margin at the lower end of expectations.
Revenue in the quarter rose by 18.9% from the year-earlier period to €5.18bn ($5.64bn) as sales in power solutions increased by €900m, driven by a higher volume in MWs, while revenue from services was stagnant and foreign exchange rates had a negative effect.
The company had an earnings before interest and taxes (Ebit) margin of 4.5% in the quarter, compared to an Ebit margin of only 1.6% a year earlier. The Ebit margin is a measure of operational profitability.
Net profit during the third quarter rose to €127m, up from €28m in the same quarter in 2023.
“In the quarter, we received 4.4GW of orders with an average selling price of €1.10m/MW [from €1.09/MW] that elevates our turbine order backlog to an all-time high of €28bn, underlining our continued strong commercial discipline,” CEO Henrik Andersen said.
“Higher activity and higher pricing on deliveries continue to drive significant progress in our underlying business and especially Power Solutions, but the quarter was negatively impacted by a slightly slower-than-expected margin improvement in Service and elevated warranty provisions in the quarter.
“We maintain our guidance on revenue and Ebit for the year but adjust Service Ebit and total investments. We continue to execute on our strategy and are focused on ending the year strongly.”
The company expects to achieve an Ebit margin before special items of 4-5% for the whole year, but now said it will more likely end up at the lower end of the guidance range.
Andersen cautioned that the manufacturer operates “in an environment impacted by geopolitical uncertainty and trade volatility”.