Vestas Climbs After Winning Largest Turbine Order

Vestas wins largest turbine order
Vestas Wind Systems A/S 415-foot-tall wind turbines operate at the Sacramento Municipal Utility District 102 megawatt wind farm in Rio Vista, California. Photographer: Ken James/Bloomberg

Vestas Wind Systems A/S, the biggest maker of wind turbines, climbed in Copenhagen trading after winning its largest order for a single power-generation site.

Vestas will supply 190 turbines of its V90-3.0 megawatt model to Terra-Gen Power LLC’s Alta Wind Energy Center near Tehachapi in California, the Randers, Denmark-based company said yesterday in a stock-exchange statement.

The order is the fifth Vestas signed in the U.S. this year after winning no contracts in 2009 in the biggest wind-turbine market as the credit crunch squeezed financing for projects. Vestas is spending about $1 billion to expand production capacity in the U.S. where it competes with General Electric Co. over a market that Chief Executive Officer Ditlev Engel has described as having the world’s best wind resources.

“This is an important order because it will help the market’s confidence in Vestas management,” Stig Nymann, an analyst with Copenhagen-based Laan & Spar Bank A/S, said in an e-mail. “This order reduces the risk that Vestas will have to lower its full-year forecast in the next earnings report.”

Vestas said it expects to book orders this year with a combined capacity of 8,000 to 9,000 megawatts, which means this deal would comprise up to 7.1 percent of its 2010 order intake. Vestas is due to report second-quarter earnings on Aug. 18.

Analysts had expected that Vestas will fall short of its 2009 sales forecast of 7 billion euros. The company will have revenue this year of 6.73 billion euros, according to the average estimate of 33 analysts surveyed by Bloomberg.

Profit of 437 million euros is forecast for 2010, according to the Bloomberg survey.

$770 Million Value

Nymann, who has Vestas shares on his “focus list,” said the order announced late yesterday is worth more than 600 million euros ($770 million).

The stock rose as much as 5.7 percent, its biggest intraday jump since July 2, and traded 5.2 percent higher at 294.2 kroner at 13:40 p.m. local time. Vestas had lost 12 percent this year before today, 12th-best on the 88-member WilderHill New Energy Global Innovation Index, which fell 22 percent.

“It’s too early in our view to speak of a sustained recovery,” Mario Kristl, an analyst at DZ Bank AG, said in a note today, repeating his “sell” rating on Vestas shares.

The contract includes delivery and commissioning as well as a five-year service and maintenance agreement, Vestas said. The company will deliver 50 turbines by the end of this year and the rest in the first half of 2011.

“When completed, it will be the largest wind farm we will have supplied turbines to in our 31-year history as well as the biggest in California,” Martha Wyrsch, head of Vestas’s U.S. division, said in the statement.

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