Vestas Plans Share Buyback as Stronger Orders Boost Guidance

  • Wind turbine manufacturer's repurchase worth 150 million euros
  • Third quarter profit doubles, beating analyst forecasts

Vestas Wind Systems A/S said it will buy back as much as 150 million euros ($163 million) of its shares to meet obligations arising from employee share option programs after a strong advance in profit and orders.

The Danish wind turbine manufacturer, the world’s biggest, also raised 2015 guidance for a second time this year as third-quarter earnings more than doubled, beating analysts’ expectations. In an earnings report on Thursday, the company said it now expects full-year revenue of 8 billion euros to 8.5 billion euros, up from its prior prediction of at least 7.5 billion euros. The shares rose more than 5 percent.

Vestas is benefiting from a booming wind industry in which Bloomberg New Energy Finance forecasts installations will surge more than 30 percent above last year’s record to almost 64 gigawatts. Vestas shares have rocketed more than 80 percent since the beginning of the year, making it one of the best performers in the Stoxx Europe 600 index, alongside its Spanish rival Gamesa Corp. Tecnologica SA.

“If you look at the order intake we’re having and if you look at the order backlog we have, it looks positive” for this year and next, Chief Financial Officer Marika Fredriksson said in a phone interview. “I don’t see any concrete headwinds. The focus is obviously to continue to reduce costs and improve the efficiency of the offering.”

Chief Executive Officer Anders Runevad said last month the company was considering both share buybacks and boosting dividends, and that he wasn’t planning any major acquisitions. Vestas had net cash totaling 1.8 billion euros at the end of September.

Shares Surge

Vestas shares rose as much as 6.6 percent and were up 4.1 percent to 490.8 kroner at 9:52 a.m. in Copenhagen trading.

The buy-back will run from Thursday through Dec. 31, with Nordea Bank AB as lead manager, Vestas said in a separate e-mailed statement. Under the program, it’s allowed to buy no more than 19,268,107 shares, or 8.6 percent of the share capital.

Third-quarter net income more than doubled to 206 million euros from a year ago. That extended its run of profitable quarters to two years and beat the mean forecast of 11 analysts on Bloomberg for a 149 million-euro profit.

Order Books

Orders rose to 1,508 megawatts in the third quarter from 1,170 megawatts a year ago. The manufacturer took 6,276 megawatts of orders in the first nine months of the year, about 300 megawatts short of the record it set for the nine-month period in 2010. 

More than 40 percent of announced orders this year have been in the U.S., a market with a boom-and-bust history due to tax credits that Congress has repeatedly allowed to expire before renewing again. The credit expired at the end of 2014, though projects that broke ground before then can still qualify if they complete within two years, giving the Danish manufacturer scope for orders in its biggest market through next year.

Fredriksson said it looks “very likely” the tax credit will be extended late this year. Runevad emphasized that the strength of Vestas in other markets.

“We have taken orders in 31 countries across 5 continents,” Runevad said in an interview on Bloomberg Television. “We are growing in all our regions globally.”

Sales rose to 2.12 billion euros in the three months through September from 1.81 billion euros a year ago, in line with forecasts. The operating margin before special items rose to 10.9 percent from 9 percent, and free cash flow increased by 53 million euros to 158 million euros.

As well as increasing its revenue guidance for the year, Vestas also boosted its predicted operating margin to 9 percent to 10 percent from a minimum of 8.5 percent. It expects free cash flow of as much as 1 billion euros, higher than the minimum of 600 million euros that was its old forecast. The company had previously raised its predictions in May.

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