Vestas Wind Raises Dividend, Predicts Record Sales in 2016

  • Danish turbine maker says it had record revenue in 2015
  • Vestas sees 9 billion euros of sales in 2016, 11% margin

Vestas Wind Systems A/S boosted its dividend and predicted revenue this year will top the record it set in 2015 as the market for wind turbines boomed.

Net profit for the full year rose to 685 million euros ($766 million), also the highest ever, from 392 million euros in 2014, the Danish manufacturer said Tuesday in a statement to the Copenhagen Stock Exchange. That beat the mean forecast of 17 analysts on Bloomberg for a 637 million-euro profit.

Vestas and its listed European competitors all doubled in value last year, buoyed by a market with surging installations worldwide. With the manufacturer taking in record new orders that have yet to be delivered, the company indicated it’s well-placed to deliver another surge in earnings in 2016.

“If you look at what Vestas has secured already in terms of announced orders, the visibility for 2016 is very good, so we’re quite sure that the activity level will increase,” Janne Vincent Kjaer, an analyst at Jyske Bank A/S, said in a phone interview. “2016 looks like it would be another record-high year.”

Shares Surge

Vestas shares on Tuesday rose as much as 10 percent, the biggest intraday gain since November 2014, after declining by a similar percentage yesterday. The board will recommend a dividend of 6.82 Danish kroner ($1.02) per share, up from 3.9 kroner last year, Vestas said.

The company had an unprecedented 8.4 billion euros of sales over the year and posted a margin before interest and tax of 10.2 percent. Sales results were at the high end of guidance given in November. The operating margin beat the company’s prediction. Free cash flow totaled more than 1 billion euros, again beating the guidance.

For 2016, it said it expects sales to reach at least 9 billion euros and predicted an operating margin of at least 11 percent. 

“We have a record order book last year -- close to 9 gigawatts -- and a very solid order backlog,” Chief Executive Officer Anders Runevad said Tuesday in a phone interview from Aarhus. “We have a fairly good view of what we think will translate into sales for 2016.”

Runevad has overseen a turnaround in Vestas’s fortunes, and the manufacturer’s run of nine profitable quarters now matches the losing streak that preceded it.

Vestas predicted free cash flow of at least 600 million euros and net investment to total about 500 million euros, including the 88 million-euro purchase of servicing company Availon that it announced last month.

The investment will be split mainly between research and development and on molds to manufacture blades, Runevad said. He ruled out placing a bid for Spanish rival Gamesa Corp. Tecnologica SA, which said last month it’s in talks over a possible merger with Siemens AG’s wind business. The manufacturer will “look at” potential further acquisitions like the Availon deal, though its strategy is for “organic growth,” he said.

Vestas has been on a spending spree, snapping up two wind-farm service providers as it aims to beef up its maintenance division, which is more profitable than manufacturing turbines. It also used up some of its cash pile on a share buyback, after paying a dividend in 2015 for the first time in 12 years.

Runevad said the lifting of sanctions on Iran represents a “good opportunity” for Vestas, which is trying to develop a business there. He’s “encouraged” by progress in orders in China and Brazil and that Vestas’s position in India is “a little bit behind” the other two large developing nations. He is targeting expansion in all three.

The executive also as “extremely positive” a five-year extension in the U.S. of the Production Tax Credit, an incentive for wind power that in the past has repeatedly been allowed to expire, leading to a stop-start industry. 

“Not knowing creates both artificial highs and then artificial lows,” he said. Now “we know the U.S. market will be there for the long mid-term and that gives us the ability to plan.”

Before it's here, it's on the Bloomberg Terminal. LEARN MORE