The Danish wind turbine manufacturer, which is also the world’s largest wind energy supplier, posted disappointing results for the first quarter on higher expenses and lower-than-expected volume of new wind turbines orders. Vestas signed orders for 630 megawatts versus analysts’ estimates for 700 megawatts. Shares fell 10% to DKK159.40 on the Copenhagen stock exchange.
The first quarter "always the slow quarter and one has to be very careful to judge Vestas on the quarters," Engel said in an interview. He expects the company to break even for the first half of 2011, versus a loss of 219 million euros posted during the same period the prior year.
While order flow was weak during the first three months of the year, with no major deals signed in the U.S., the company maintained its guidance for the year to construct 7,000-to-8,000 megawatts of wind farm generation. European customers will continue to make up half of Vestas’ order flow, but the share from the Americas will drop to 20% from 25% as orders grow in Asia, Engel said.
Vestas generated first-quarter revenue of EUR 1,060m, an increase of 25 per cent relative to the first quarter of 2010, and as announced realised a loss. The EBIT margin fell from (4.6) per cent to (6.5) per cent. The development confirms that revenue and earnings may show major quarter-on-quarter fluctuations depending on the capacity utilisation and the type of projects handed over.
The first half year of 2011 is expected to break even against an EBIT loss of EUR 219m during the first half year of 2010. The free cash flow was improved compared to the first quarter of 2010 by EUR 116m to EUR (431)m. The first-quarter order intake of 630 MW was lower than expected. The backlog of firm and unconditional orders amounted to EUR 7.2bn at 31 March 2011.
Safety at Vestas’ workplaces was improved further, and renewable energy accounted for 31 per cent of Vestas’ total energy consumption in the quarter. Vestas has launched its V164-7.0 MW offshore wind turbine, which, subject to a satisfactory order intake, will be put into serial production from 2015. The outlook for 2011 is retained; an intake of firm and unconditional orders of 7,000-8,000 MW, an EBIT margin of 7 per cent, a positive free cash flow and revenue of EUR 7bn in a market in recovery, but at the same time influenced by fierce competition.