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Strong demand drives record order intake for Vestas but profits fall

Vestas wind turbines. Author: Siebe Schootstra.

February 7 (Renewables Now) - Danish wind turbine maker Vestas Wind Systems A/S (CPH:VWS) today said its earnings in 2018 have declined compared to a year ago but its order intake improved, exceeding 14 GW.

The company said in a press release that in spite of the drop, the results are within its guidance for the year, which was marked by further international expansion and manufacturing ramp-up. The crossing of the 100-GW threshold of installed wind turbine capacity was also a highlight for 2018.

Vestas saw its profit for the past year drop to EUR 683 million (USD 775m) from EUR 894 million a year back, while revenues increased to EUR 10.13 billion from EUR 9.95 billion event hough it registered a negative foreign exchange translation impact of EUR 300 million. Earnings before interest and tax (EBIT) were down to EUR 921 million, while EBIT margin slipped by 2.9 percentage points to 9.5%, mainly as a result of the lower gross profit.

Order intake, meanwhile, reached the record-high level 14,214 MW, against 11,176 MW in 2017, pushing order backlog to 15,646 MW, in what was a year with a rapidly changing market and continuing strong demand, Vestas said. The value of the combined backlog of wind turbine orders and service agreements was EUR 26.2 billion, up from EUR 20.9 million at end-2017. This includes wind turbine order backlog of EUR 11.9 billion and service agreements with expected contractual revenue of EUR 14.3 billion.

The following table shows more details about Vestas’ 2018 performance.

In EUR millions 2018 2017
Revenue 10,134 9,953
EBITDA 1,394 1,651
EBIT before special margin 959 1,230
EBIT margin (%) before special items 9.5 12.4
Profit for the period 683 894
Free cash flow before acquisitions of subsidiaries and financial investments 418 1,218

The Danish firm has proposed to distribute an annual dividend of DKK 7.44 (USD 1.13/EUR 1) per share for 2018, representing a decrease from DKK 9.23 per share allocated in the previous year.

“Together with the continued underlying stabilisation in pricing and our strong focus on efficiency and cost management, we sustained and strengthened the foundation that enables us to execute a very busy 2019 as well as develop the sustainable energy solutions of the future,” said Anders Runevad, Vestas’ president and CEO.

Looking ahead, Vestas guided for revenues of between EUR 10.75 billion and EUR 12.25 billion, including service revenues, and an EBIT margin before special items of 8%-10%. Total investments for the year are seen at about EUR 700 million, while in 2018 they stood at EUR 603 million.

(EUR 1.0 = USD 1.135)

(DKK 1.0 = USD 0.152/EUR 0.134)

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Veselina Petrova is one of SeeNews Renewables most experienced green energy writers. For several years she has been keeping track of game-changing events both large and small projects and across the globe.

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