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Turbine-maker Vestas rises on futures hopes despite Q3 loss

Marie Mannes
Updated ·2-min read
FILE PHOTO: Workers use tools to smooth out a blade for a wind-turbine at the Vestas Wind Technology company's factory in Tianjin

By Marie Mannes

(Reuters) -Denmark's Vestas reaffirmed its long-term earnings goal and said it would increase margins by charging more for its wind turbines, boosting its share price on Wednesday, even after it posted a bigger-than-expected third-quarter loss.

The company cut its 2022 profit margin outlook to minus 5% from between minus 5% and 0%, but said the longer term was stronger as more countries would turn to renewable power.

It also said it would be able to meet its goal of lifting the operating earnings margin to 10% in 2025 by increasing the average selling price (ASP) of its turbines.

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Chief Executive Henrik Andersen told a call with analysts he was "comfortable with our balance sheet" and confident efforts to boost the ASP would improve margins despite inflation and supply chain disruptions.

Chief Financial Officer Hans Martin Smith told Reuters it may take time, given planning and permitting issues, but there was every reason to be hopeful longer term.

"I think it is evident that the world needs more renewable energy and I think that's what everyone is expecting," he said.

Vestas' shares initially fell 5% but soon erased losses and traded up 3.4% by 1442 GMT, driven by management's outlook comments, Sydbank analyst Jacob Pedersen said.

Vestas reported a total onshore and offshore intake order of 1,895 megawatts in the quarter, below an average estimate of 2,482 MW seen in a company-compiled consensus.

In addition to cutting its EBIT (earnings before interest and tax) margin expectations for 2022, Vestas narrowed its full-year revenue forecast to 14.5-15.5 billion euros from a previous forecast of 14.5-16 billion.

The company's operating result before special items sank to a loss of 127 million euros ($125.5 million) from a profit of 325 million, lagging a 40 million euro loss forecast by analysts in a poll compiled by the company.

Supply chain concerns and inflation also hit main rival Siemens Gamesa which has issued profit warnings and said it plans to cut nearly 3,000 jobs.

($1 = 1.0118 euros)

(Reporting by Marie Mannes and Jagoda Darlak, editing by Terje Solsvik, Elaine Hardcastle and Barbara Lewis)