Vestas Gains After Winning Largest Wind-Turbine Order

Wind turbine blades at the Vestas factory
Completed wind turbine blades are stored at the Vestas blade factory in Lem, Denmark on Nov. 18, 2009. Photographer: Chris Ratcliffe/Bloomberg

Vestas Wind Systems A/S rose after winning an order that may be worth $2.9 billion, its biggest ever, to deliver and maintain turbines in Europe and North and South America for EDP Renovaveis SA.

The Danish wind turbine maker climbed 5.6 percent to 360.10 kroner in Copenhagen to close with its biggest gain in almost three weeks.

Vestas will supply the Portuguese utility with 1,500 megawatts of turbines in 2011 and 2012 with a possible additional 600 megawatts in 2010 and 2011, the company said, calling it its largest single order. It includes a two-year service and maintenance agreement. Vestas didn’t give the value or how many turbines it included.

“It’s a strong show of confidence in Vestas’ technology, as Vestas doesn’t offer the cheapest prices,” Jacob Pedersen, an analyst with Aabenraa, Denmark-based Sydbank A/S, said by telephone. The order may be worth 16 billion kroner ($2.9 billion), said Pedersen, who rates Vestas “overweight.”

Sales growth at Vestas slowed after the credit crisis prompted banks to restrict lending to wind park developers, causing project cancellations and delays. The order sends a “positive sign of renewed growth to the entire wind industry” and will help the company meet its 2015 target of revenue of 15 billion euros ($20 billion), Vestas said in a statement.

‘Bodes Well’

“If Vestas can become the preferred partner for EDP in the future, it bodes well for its chances of maintaining the position as the industry’s biggest company,” Pedersen said. General Electric Co., Siemens AG and Gamesa Corp. Tecnologica SA are the only other turbine makers big enough to have been among bidders for today’s order, he said.

“We have our hands full,” Vestas Chief Executive Officer Ditlev Engel said in an interview about the possibility of getting more contracts from the Portuguese company. “We have had a very good working relationship with EDP for a number of years.”

EDP Renovaveis, the renewable-energy unit of Portuguese utility EDP-Energias de Portugal SA, says it’s the world’s third-biggest wind power operator and targets wind-energy capacity of 10,500 megawatts across Europe and the U.S. in 2012.

12 Million Homes

Global installations of wind turbines this year will gain about 9 percent, adding 41 gigawatts to power capacity, Bloomberg New Energy Finance has estimated. That’s the equivalent of an investment of $65 billion and enough to power more than 12 million homes, according to data from the U.S. Department of Energy and the American Wind Energy Association.

Wind turbines in Europe last year accounted for 39 percent of the total regional investment in new power generation, including coal and natural-gas plants as well as solar panels, the European Wind Energy Association said on April 20.

The value of the Vestas turbines, excluding the service contract, is as much as 12.6 billion kroner, Birger Madsen, director at BTM Consult ApS, a consultant based in Ringkoebing, Denmark, said by telephone.

All the turbines will be for land-based projects, Michael Holm, a Vestas spokesman, said by phone. EDP hasn’t yet decided which of Vestas’ onshore turbine models it will order, he said.

Vestas, which reports first-quarter earnings on April 28, will fall short of its 7 billion-euro 2010 sales forecast, according to a Bloomberg survey of 35 analysts before today. The average analyst estimate is revenue of 6.9 billion euros.

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