July 31 (Bloomberg) -- Vestas Wind Systems A/S surged the most in 15 weeks after the turbine maker said it reached an agreement with banks allowing it to draw on credit lines and second quarter shipments more than doubled.
Shipments rose to 2,160 megawatts from 931 megawatts in the first quarter, the world’s biggest wind turbine maker said in a statement today to the Copenhagen Stock Exchange. Even so, “disappointing results” in the nine months through March affect the company’s ability to meet its financial convenants, the company said.
“We do expect to meet our covenants in the near-term future,” Chief Executive Officer Ditlev Engel said in a phone interview. “We’re making progress in the right direction, but obviously there are a lot of things to do.”
Vestas shares lost three quarters of their value in the past year as losses increased following production delays at factories and higher-than-expected development costs. That led to newspaper reports in Denmark that Vestas is considering selling new shares, and in the U.K. that its banks demanded a financial restructuring plan.
Vestas shares rose as much as 21 percent, the biggest intraday gain since April 16. They were up 9.6 percent to 28.44 Danish kroner at 4:05 p.m. in Copenhagen trading.
“The reason we have pushed these preliminary numbers out there is due to the speculation that has been around the operational performance and the credit facilities,” Engel said from the company’s headquarters in Aarhus, Denmark.
The executive declined to say whether Vestas is already in breach of its debt covenants, saying only “you can assume whatever you want -- I will tell you that we have deferred the half year testing” of the covenants by the banks. He declined to say how long the banks will defer the tests.
“The lenders have allowed drawings, which in the opinion of Vestas are sufficient for the continued operation of Vestas,” the company said in the statement. “The company expects to test on normal terms in the future.”
Free cash flow declined 43 million euros to minus 338 million euros, according to the statement. Sales rose to 1.6 billion euros ($2 billion) from 1.1 billion euros, and the earnings before income and taxes, or Ebit, margin before special items rose to 2.5 percent from a loss of 18.5.
Today’s report reflected preliminary figures that are due to be confirmed in Vestas’s final second-quarter earnings report on Aug. 22.
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