Vestas Upgrades Margin Forecast as Profit Rises Again

Vestas Wind Systems A/S upgraded its margin forecast and reported a stronger-than-expected quarterly profit, reinforcing a turnaround at the world’s largest wind turbine maker.

The manufacturer expects its margin on earnings before interest, taxes and special items to reach at least 6 percent this year, up a percentage point from its previous guidance. Net income was 94 million euros ($125 million) in the three months through June, more than the 73 million-euro average forecast of 10 analysts surveyed by Bloomberg.

The results leave Vestas halfway to its first annual profit since 2010 after it snapped a run of nine quarterly losses in the last quarter of 2013. Anders Runevad, who took over as chief executive officer on Sept. 1, is benefiting from a two-year program that closed 12 factories and slashed the workforce by almost a third.

“We see improvements in all areas, both on revenue growth and especially on the earnings side and cash flow,” Runevad said today in a Bloomberg Television interview from Vestas’s headquarters in Aarhus, Denmark. “We’re a financially much more stable company and a company that is growing again and a company that is back to profitability.”

Shares Rise

Vestas shares have surged more than 170 percent in the past year as it returned to profit, reduced costs and improved margins. The stock rose as much as 5 percent today and was up 1 percent to 278 kroner at 10:28 a.m. in Copenhagen trading.

Vestas expects stronger orders in the second half. It reiterated forecasts made in February for revenue of at least 6 billion euros in 2014 and a minimum of 300 million euros of free cash flow.

Free cash flow for the quarter was minus 21 million euros, a decrease of 218 million euros on last year. That was anticipated because of a payment to the offshore wind business it divested, an inventory buildup, and the positive effects a year ago of the sale of projects in Romania, Chief Financial Officer Marika Fredriksson said in a telephone interview.

“The cash flow from operating activities is up considerably compared to last year,” Fredriksson said. “We have built up more inventory. That’s as anticipated as we knew that the second half of the year will be much more busy than the first half. So there’s no surprises.”


Earnings before interest, taxes and special items rose to 104 million euros from 12 million euros a year ago. The operating margin before special items increased to 7.8 percent from 1 percent a year earlier.

Sales rose 13 percent to 1.34 billion euros, compared with the average analyst forecast of 1.41 billion euros. Orders in the quarter advanced 18 percent to 1,932 megawatts. Shipments increased 27 percent to 1,457 megawatts.

Vestas last year regained the leading share in the wind turbine market that it lost to General Electric Co. in 2012, according to Navigant Consulting Inc. It put China’s Xinjiang Goldwind Science & Technology Co. and Germany’s Enercon GmbH at second and third, with GE fifth behind Siemens AG.

Fredriksson said the company is “evaluating” what to do with two loans totaling 275 million euros and a 600 million-euro bond that mature next year.

“As you can see we are net debt positive, so we’re in a good position,” she said.

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