World's largest wind turbine maker Vestas trims profit outlook as higher costs bite
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Vestas, the world’s largest maker of wind turbines, warned of a second-quarter loss on Monday and trimmed its full-year profit margin and revenue outlook, sending the company’s shares down 5%.
Vestas’ service business, usually a bright spot, would book a one-off $300m (€274m) second hit in the three months to the end of June, it said, affected by sustained inflation, increased repairs, upgrades and operational inefficiencies.
The company said it now expects a full-year operating profit margin of between 4% and 5% compared to previous guidance of between 4% and 6%, and narrowed its full-year revenue outlook of between €16.5bn and €17.5bn from previous estimations of €16bn to €18bn. Sydbank analyst Jacob Pedersen told Reuters:
Shares in the company fell 5% in afternoon trading.
Vestas, which earlier this year reported a surprise loss for the first quarter, said on Monday it expected a preliminary negative operating profit margin before special items of 5.6% for the group in the second quarter.
Preliminary revenue for the quarter stood at €3.3bn, below the €3.8bn forecast in a poll provided by the company.
Vestas will report final second-quarter earnings on August 14.
Meanwhile, Siemens Energy raised its free cash flow outlook last week for the second time in three months, citing stronger demand for its power grid equipment and gas turbines as the group recovers from a crisis at its wind division.
The company, which supplies the utility sector with components and services, had to seek help from the German government last year in the form of project guarantees to tackle serious quality problems at its wind turbine business.
But rising electricity demand, and the need for gas turbines, network parts and maintenance, have provided tailwind for the group that competes with US-based GE Vernova, Denmark’s Vestas, and China’s Goldwind.
“The rapidly growing electricity market requires a wide range of our products. Especially our grid and gas turbine businesses are benefiting from this momentum,” Siemens Energy chief executive Christian Bruch said recently.
The group said it now expects free cash flow before tax of between €1bn to €1.5bn in 2024, up from up to €1bn previously. Third-quarter sales rose 18.5% to €8.8bn, beating the analyst consensus of €8.6bn on LSEG data.
- Reuters