Danish wind turbine manufacturer Vestas has lowered its full-year operating profit margin guidance from the previous five to seven percent to around four per cent, citing the impacts of the supply chain instability and cost inflation caused by the COVID-19 pandemic.
”Based on how 2021 has evolved and how we expect to finish the year, we are adjusting our EBIT margin guidance to around 4 percent with revenue expectations unchanged,” Group President & CEO of Vestas, Henrik Andersen, said.
”With supply chain instability and high component, material and transport costs expected to last throughout 2022 as well as the growing climate and energy crises making our solutions ever more important, our full focus is to mitigate impact from external factors to protect profitability and execute on our strategy without compromising on safety or quality.”
In the third quarter of 2021, Vestas generated revenue of EUR 5.538 billion, an increase of 16 per cent compared to the year-earlier period. This was also the company’s highest-ever quarterly revenue recorded.
The operating profit (EBIT) before special items decreased by EUR 87 million to EUR 325 million for the quarter. This resulted in an EBIT margin before special items of 5.9 per cent, compared to 8.6 per cent in the third quarter of 2020. Free cash flow amounted to EUR 300 million compared to EUR 547 million in the third quarter of 2020.
The quarterly intake of firm and unconditional wind turbine orders amounted to 3,727 MW. The value of the wind turbine order backlog was EUR 19.3 billion as at 30 September 2021. In addition to the wind turbine order backlog, at the end of September 2021, Vestas had service agreements with expected contractual future revenue of EUR 28 billion. Thus, the value of the combined backlog of wind turbine orders and service agreements stood at EUR 47.3 billion, an increase of EUR 13.4 billion compared to the year-earlier period.
Vestas still expects revenue of EUR 15.5-16.5 billion, including Service, and total investments below EUR 1 billion in 2021.
”During the third quarter of 2021, everyone at Vestas did an outstanding job to ensure record-high revenue and activity levels in spite of an increasingly challenging global business environment for renewables,” Andersen said.
”The quarter was thus characterised by supply chain instability and rising energy prices as well as accelerated cost inflation from raw materials, transport, and turbine components, which severely impacted profitability and limits visibility. In this environment, and with additional warranty provisions of EUR 50m to cover the execution of previously announced blade repairs and upgrades, we achieved revenue of EUR 5.5bn, order intake of 3.7 GW, 23 percent growth in Service, an EBIT margin of 5.9 percent, and the largest preferred supplier agreement in our history for a 2.1 GW offshore project in the USA.”