Vestas launches new accounting policy, ups 2010 guidance
(ADPnews) - Nov 23, 2010 - Danish wind-turbine maker Vestas Wind Systems A/S (CPH:VWS) announced on Monday a new accounting policy for supply-and-installation projects effective January 1, 2010 and upgraded its full-year forecast.
According to the new policy, supply-and-installation projects will be recognised in the income statement only after delivery has been completed and the risk has been transferred to the customer. This will lead to reduced revenues but increased backlog.
The change, plans for which were initially announced last month, will be implemented in Vestas's report for 2010 and comparative figures for 2006-2009 will also be adjusted.
As a result of the policy change, Vestas has deferred some EUR 2.9 billion (USD 3.986bn) in revenues from supply-and-installation contracts up to September 30, 2010. However, this amount will be recognised in coming periods. Related production and shipments have already taken place, and pre-payments and down payments of a total EUR 2.2 billion have been received.
Vestas's equity as at September 30 has been reduced by EUR 739 million. Cash flow will not be affected by the change.
Based on the new accounting policy and unchanged activity level from October 26, when Vestas published its nine-month financial report, the company forecast it would book revenue of EUR 6.8 billion and an operating margin of some 7% before one-off costs in the full 2010. This is an upgrade from the previous guidance for revenue of EUR 6 billion and an operating margin of 5-6%. Order intake in 2010 is still expected to be 8,000-9,000 MW versus 3,072 MW in 2009.
For 2011, revenue and earnings are seen to be in line with this year's results before one-offs.