Vestas Reports Steady But Unspectacular 2017

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Danish wind turbine manufacturer Vestas announced its full-year 2017 financial earnings on Wednesday, and if the company didn’t have a spectacular year, it nevertheless was able to report a steady year despite the growing competition inherent in the wind industry at the moment.

There were declines across the board, but the company remained upbeat, saying it remains “at a healthy level, despite highly competitive markets.” Revenue amounted to €10 billion as compared to €10.2 billion in 2016 and in line with the company’s own guidance of revenue between €9.50 to €10.25 billion. EBIT margin was 12.4% and free cash flow amounted to €1,218 million, as compared with 13.9% and €1,564 million in 2016 and guidance of EBIT between 12-13% and free cash flow of between €1,150 to €1,250 million.

The key statistics to take away from Vestas’ 2017 figures is that wind turbine order intake actually increased — from 8,943 megawatts (MW) in 2015, 10,494 MW in 2016, up to 11,176 MW in 2017, highlighting the increasing wind energy demand combined with decreasing wind energy costs.

This likely partly explains why investors were more than pleased with the company’s earnings report, with shares climbing marginally on the back of the news.

“2017 was a year that saw fierce competition, price pressure and the continued maturity of the wind energy sector,” explained Anders Runevad, Group President & CEO. “In this environment, Vestas’ 2017 performance was strong, as we once again led the industry on profit margins and produced solid revenue, free cash flow, record order intake, and a growing and profitable service business. We demonstrated that even in such challenging conditions, we can control costs and use our global presence and technology leadership to remain the industry leader.”

Looking forward, Vestas is guiding expected revenue in the range of €10 to €11 billion — which includes service revenue, which the company expects to grow in 2018. Total investments for the year are expected to be in the range between €600 million, with free cash flow expected to hit a minimum of €400 million. In other words, Vestas expects costs to continue to decline but demand to increase, in an industry which “is undergoing a transition towards a more mature, unsubsidised renewable energy industry” and one that will transition “to a highly competitive market, and will likely drive a further consolidation in the industry.”

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Joshua S Hill

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