Aug. 15 (Bloomberg) -- Vestas Wind Systems A/S, the world's biggest wind-turbine maker, said second-quarter profit rose 27 percent as surging demand for alternative energy sources pushed up prices.

Net income climbed to 65 million euros ($96 million) from 51 million euros a year earlier, the Randers, Denmark-based company said today. Profit missed the 69 million-euro median estimate of six analysts surveyed by Bloomberg News. Vestas gained the most in three months after its order backlog jumped 67 percent to 7.2 billion euros at the end of June.

Government subsidies and incentives for wind-energy generation have spurred demand for turbines and pushed prices 74 percent higher in the past three years, according to BTM Consult APS, a Danish wind power consultant. Vestas said today it will expand production facilities in China and the U.S. to meet demand and offset the weaker dollar.

``The order back log is surprisingly strong and that outweighs the earnings results,'' Christian Nagstrup, an analyst at Jyske Bank A/S in Silkeborg, Denmark, said in an e-mail note to clients.

Vestas added 43 kroner, or 7.3 percent, to 629 kroner, the steepest one-day gain since May 8. The shares have gained 14 percent this year, compared with a 22 percent decline in the Bloomberg European 500 Index of the continent's most highly capitalized companies.

`Very Encouraging'

The order back log ``is very encouraging,'' Chief Executive Officer Ditlev Engel said in a television interview. The company's global market share will grow to around 25 percent this year from 23 percent in 2007, he said.

Sales increased 2.5 percent to 1.09 billion euros. The company kept its full-year revenue outlook of 5.7 billion euros and a margin for earnings before interest and tax between 10 percent and 12 percent.

Demand for wind turbines is also being driven by high oil prices, which reached $140 a barrel at the end of the quarter, double its year-earlier level.

Vestas will build an additional blade factory in Brighton, Colorado for 125 million euros, which will double capacity to 3,600 blades a year from 2010. The company will also construct its first nacelle factory in the U.S. at the same site for a cost of 75 million euros, which will be able to produce the structures that house the generating components and gearbox.

U.S. Expansion

``We feel that this is a good time to go into the U.S. market on a much bigger scale,'' Engel said. ``We've had an imbalance between euros and dollars and being more present in the local market is really helping.''

In China, Vestas said it will extend its generator and machining factories in Tianjin. The company will hold talks with employees at its Scottish plant in Campbeltown concerning their future, as the factory doesn't generate ``satisfactory'' earnings.

Vestas said at the beginning of the year it would book less than a third of its annual sales in the first half of 2008 because of a shortage of components that delayed deliveries. Today, Vestas said it still has to wait as much as 15 months for delivery of some ``key'' components.

Vestas had an order backlog of turbines with a combined capacity of 6,529 megawatts at the end of June, with 58 percent of those orders in Europe, 28 percent in the Americas and 14 percent in Asia and the Pacific.

Wind power will make up 3 percent of the world's electricity production in 2012, up from 1 percent in 2007, according to the Global Wind Energy Council.

Vestas, whose largest competitor is the wind division of General Electric Co., aims to increase annual turbine manufacturing to 10,000 megawatts by 2010. At the end of 2007, Vestas had installed 35,000 megawatts over 28 years.

To contact the reporter on this story: Christian Wienberg in Copenhagen at cwienberg@bloomberg.net

Last Updated: August 15, 2008 12:29 EDT