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MarketScreener Homepage  >  Equities  >  NASDAQ OMX COPENHAGEN  >  Vestas Wind Systems    VWS   DK0010268606

VESTAS WIND SYSTEMS

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Wind turbine maker Vestas benefits from climate change action, sees orders jump

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11/07/2019 | 05:44am EST

Wind turbine maker Vestas' sales, orders and profit surpassed analysts expectations in the third quarter as the Danish firm enjoys one of its busiest periods on record, lifting its shares nearly 11 percent on Thursday.

Demand for renewable power sources has been growing in tandem with global efforts to combat climate change, boosting both Vestas' orders for new turbines and its service business, where it now maintains roughly 43,000 turbines.

"The industry we're representing is on very very high demand with all the focus on the environment and we see a strong message from most governments," Chief Financial Officer Marika Fredriksson told Reuters.

Operating profit before special items rose 55% to 429 million euros, topping the 351 million forecast in a Refinitiv poll. Its adjusted EBIT margin improved to 11.8% from 9.8% a year earlier.

Shares in Vestas jumped 10.7% at 0945 GMT as Vestas' order intake in the third quarter came in at 4,738 megawatt, well above the 3,412 MW expected by analysts.

However, Vestas is also grappling with higher costs and falling prices for its products. Its earnings are under pressure from higher prices for steel, imported components and transportation amid global trade tensions.

Group production costs were seen increasing by around 1.5 percentage point in 2019 which was higher than the previous estimate of 1 percentage point, Fredriksson told Reuters.

STABLE PRICES

The wind industry has seen a steep decline in prices and increased competition as governments move away from guaranteeing generous fixed, subsidised tariffs for power towards a competitive auction-based system that favours the lowest bidders.

The average selling price was 0.75 million euros per megawatt, slightly below a forecast of 0.76 million, but Frederiksson said underlying prices had stabilised despite the competitive environment.

Vestas still expects revenue between 11 billion and 12.25 billion euros (£10.55 billion) this year and an earnings before interest and tax (EBIT) margin before special items of 8-9%.

It now expects service revenue to grow at a 'minimum of 10%' up from 'approximately 10%'.

"While the debate on 2020 will remain until Vestas initiates 2020 guidance in February, we see these results as very re-assuring, especially after recent results from peers," said Citi analysts.

On Tuesday, Vestas' main rival Siemens Gamesa delayed its 2020 outlook for an operating profit (EBIT) margin of 8-10% by two years blaming lower prices for its turbines.

(Reporting by Stine Jacobsen; Editing by Edmund Blair and Elaine Hardcastle)

Stocks mentioned in the article
ChangeLast1st jan.
HUDSON'S BAY COMPANY 2.66% 8.88 Delayed Quote.18.66%
SIEMENS GAMESA RENEWABLE ENERGY 1.98% 15.215 End-of-day quote.43.00%
VESTAS WIND SYSTEMS -0.18% 681 Delayed Quote.38.63%
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Financials (EUR)
Sales 2019 11 725 M
EBIT 2019 996 M
Net income 2019 733 M
Finance 2019 2 712 M
Yield 2019 1,23%
P/E ratio 2019 24,6x
P/E ratio 2020 19,3x
EV / Sales2019 1,29x
EV / Sales2020 1,10x
Capitalization 17 834 M
Chart VESTAS WIND SYSTEMS
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Technical analysis trends VESTAS WIND SYSTEMS
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TrendsBullishBullishBullish
Income Statement Evolution
Consensus
Sell
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Mean consensus OUTPERFORM
Number of Analysts 19
Average target price 86,33  €
Last Close Price 91,04  €
Spread / Highest target 11,0%
Spread / Average Target -5,17%
Spread / Lowest Target -32,4%
EPS Revisions
Managers
NameTitle
Henrik Andersen President & Group Chief Executive Officer
Anders Erik Runevad Chief Executive Officer
Bert Åke Stefan Nordberg Chairman
Jean-Marc Lechêne Chief Operating Officer & Executive Vice President
Marika Fredriksson Chief Financial Officer & Executive Vice President
Sector and Competitors
1st jan.Capitalization (M$)
VESTAS WIND SYSTEMS38.63%19 857
SIEMENS GAMESA RENEWABLE ENERGY43.00%11 500
XINJIANG GOLDWIND SCIENCE & TECH CO LTD--.--%6 750
TITAN WIND ENERGY (SUZHOU) CO LTD--.--%1 527
TPI COMPOSITES, INC.-30.31%603
PNE AG65.84%338