By Tim Barsoe
COPENHAGEN (Reuters) - Shares in the world's largest wind turbine maker, Vestas <VWS.CO>, hit a record high after the company reintroduced full year revenue guidance on Tuesday following a surge in second quarter sales.
The Danish company's earnings for April-June fell well short of analysts' expectations due to the one-off cost of upgrading older turbine blades and the company said the coronavirus pandemic had led to higher costs mainly due to transport issues.
However, Vestas is benefiting as demand for renewable power sources is growing in tandem with global efforts to combat climate change and it said its order backlog of turbine sales and service contracts combined was at a record high.
Shares in Vestas jumped 8.1% to an all-time peak of 915.6 Danish crowns at 0832 GMT, after already rising by around 28% this year.
"The global pandemic and economic downturn will continue to create uncertainty in 2020, but we remain confident in our ability to ensure business continuity across our value chain and are therefore reintroducing guidance for 2020," Chief Executive Henrik Andersen said in a statement.
Andersen said the pandemic had not impacted the pace of the transition to green energy across the globe.
Vestas' sales jumped 67% in the second quarter, but EBIT margin before special items fell to 1% from 6% a year earlier, which the company mainly attributed to an extraordinary warranty provision of 175 million euros (157 million pounds).
Andersen told Reuters by phone that the warranty provisions were related to a "limited" amount of turbines that needed repairing and upgrading to protect them against lightning strikes. He said he did not expect those costs would occur again.
Vestas reinstated its previous full-year revenue guidance at between 14 billion and 15 billion euros, originally given in February but later suspended due to the pandemic. However, it downgraded its expectations for annual EBIT margin before special items to 5-7%, from a previous estimate of 7-9%.
Vestas reported a second-quarter operating profit before special items of 34 million euros, well below the 127.4 million expected by analysts in a Refinitiv poll and down almost 75% from the same period last year.
(Reporting by Tim Barsoe; additional reporting by Nikolaj Skydsgaard, editing by Jason Neely, Kirsten Donovan, Susan Fenton)