Vestas Wind Clients Seek Longer, More Complicated Service Deals

Vestas Wind Systems A/S clients are seeking longer and more comprehensive service contracts worth more to the company, Chief Turbines Officer Anders Vedel said.

Vestas, the manufacturer that has sold more wind generation capacity than any other, offers five types of turbine-service plans of varying length and complexity, said Vedel, a member of the Aarhus, Denmark-based manufacturer’s executive management.

“Customers are moving from the less complex contracts to the more complex ones, where they leave more and more to Vestas,” he said today in a telephone interview. “The length of the contract is increasing, and also the value.”

Vestas is seeking to broaden income beyond sales to ensure it has a steadier stream of revenue when purchases of machines are slack. Service income has grown an average of 33 percent a year since 2007. The service unit is also more profitable, with a margin of 17 percent last year compared with a companywide margin before interest, tax and special items of 0.1 percent.

Earnings from services rose 26 percent to 886 million euros ($1.2 billion) last year. Vestas forecasts revenue of 1 billion euros this year, compared with total sales of 5.5 billion euros.

“We have a strategy to have two legs for Vestas to stand on; turbine sales and the service business,” Vedel said.

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