Wind turbine manufacturer Vestas shaken by supply constraints and costs
By Stine Jacobsen
COPENHAGEN (Reuters) – Vestas slashed its outlook for 2021 on Wednesday in response to higher costs and supply constraints, lowering its shares, as the world’s largest wind turbine maker reported profits from second quarter operations lower than expected.
Demand for Vestas wind turbines, seen as crucial in tackling global warming, remains healthy but has been affected by freight market constraints linked to the impact of COVID-19 which have helped drive supply chains global towards the breaking point.
“It’s not the usual when you have transport (cost) which in some parts of the world is potentially increasing by 800 to a thousand percent,” chief executive Henrik Andersen told Reuters.
“And it’s not just the cost of transportation … but it’s also whether you can actually expect the goods to arrive the same day,” he added.
Andersen said higher raw material prices also pushed up the cost of many of the components used in Vestas wind turbines.
The company is now forecasting annual revenue of 15.5 to 16.5 billion euros, down from previous forecasts of 16 to 17 billion euros. It also lowered expectations for its operating profit margin to 5-7%, from 6% previously to 8% – far from its long-term target of a 10% margin.
Its shares fell 7% when the market opened but reversed some losses and were down around 1.4% at 0750 GMT.
Analysts said the reduction in Vestas’ outlook was not surprising.
“We’ve heard and seen the same from GE and Siemens Gamesa, so it shouldn’t come as a major surprise,” said Jacob Pedersen, analyst at Sydbank.
Despite the challenges, Vestas’ operating margin remains well above that of its main rival Siemens Gamesa, which posted a negative 5.6% margin over the same period and reduced its profit margin outlook for the last month. year between -1% and 0.%.
Vestas reported operating profit before special items of 101 million euros ($ 118.32 million), lower than the 170 million euros expected by analysts in a survey.
(Reporting by Stine Jacobsen; editing by Jason Neely, Louise Heavens and Jane Merriman)