Vestas Wind Systems A/S (CPH:VWS) today reported higher revenues but decreased operating profits for the second quarter of 2020 and re-introduced its full-year guidance.
Citing disruptions to manufacturing, supply chain and installations caused by the COVID-19 pandemic, the Danish wind turbine maker pulled its full-year revenue and profit forecast in April. In its second-quarter financial report released on Tuesday, it said its performance was “strong” in view of the revenue uptake, and re-introduced its outlook for 2020, confirming the previous guidance for revenues of between EUR 14 billion (USD 16.4bn) and EUR 15 billion. The forecast for the earnings before interest and tax (EBIT) margin before special items, however, was cut to between 5% and 7% from 7%-9% previously due to the overall economic uncertainty created by the virus crisis. Total investments for the year are still expected to be below the EUR-700-million mark.
“The global pandemic and economic downturn will continue to create uncertainty in 2020, but we remain confident in our ability to ensure business continuity across our value chain [..],” said president and CEO Henrik Andersen. He went on to say that the achieved underlying EBIT margin indicates “good execution” and gives the company confidence in posting improved results through the rest of the year.
Vestas closed the second quarter with a loss of EUR 5 million, against a profit of EUR 90 million a year before, and an EBIT before special items of EUR 34 million, falling from EUR 128 million. The EBIT margin was lower, contracting to 1% from 6%, hit by extraordinary warranty provisions related to repair and upgrade activities. When these are excluded, the underlying EBIT margin is 5.9%.
Revenues, meanwhile, improved to EUR 3.54 billion from EUR 2.12 billion.
More details about Vestas’ performance in the second quarter (Q2) and first half (H1) of 2020 are given in the table.
| Figures in EUR million, except percentages |
Q2 2020 |
Q2 2019 |
H1 2020 |
H1 2019 |
| Revenue |
3,541 |
2,121 |
5,776 |
3,851 |
| Gross profit |
228 |
301 |
387 |
536 |
| EBITDA |
183 |
255 |
270 |
424 |
| EBIT (loss) |
34 |
128 |
(78) |
171 |
| EBIT before special items |
34 |
128 |
(20) |
171 |
| EBIT margin before special items (%) |
1 |
6 |
(0.3) |
4.4 |
| Profit (loss) |
(5) |
90 |
(85) |
115 |
| Cash flow from investing activities before acquisitions of subsidiaries and financial investments |
(129) |
(175) |
(288) |
(351) |
| Free cash flow |
96 |
120 |
(823) |
(775) |
The company’s combined order backlog reached the all-time-high of EUR 35.1 billion, including a wind turbine order backlog of EUR 16.2 billion, up from EUR 15.9 billion, and service agreements with expected contractual future revenue totalling EUR 18.9 billion. In terms of capacity, the wind turbine order backlog stood at 22,183 MW, rising from 20,753 MW.
The intake of firm and unconditional turbine orders in the reporting period was 4,148 MW with a value of EUR 3.2 billion.
Free cash flow, excluding investments in marketable securities, and short-term financial investments, in the three months was a negative EUR 78 million, as compared to a negative EUR 75 million a year ago.
(EUR 1.0 = USD 1.175)
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Vestas blades for the Ventus wind project arrive in the port of Acajutla, El Salvador. Image source: CEPA on Twitter @CEPASV
