Vestas expects slower year ahead after 2022 sales disappoint
COPENHAGEN : Vestas on Friday warned of a slower year ahead after the wind turbine maker posted disappointing 2022 sales hurt by project delays and impairments.
The company said slow permitting processes in Europe and dampened U.S. activity before the impact of the Inflation Reduction Act kicks in will mean fewer wind turbine installations this year.
“In 2023, we expect high inflation levels throughout the supply chain and reduced wind power installations to impact revenue and profitability negatively,” it said in a statement.
Despite rising demand for renewable energy, the wind power industry has come under pressure from soaring metals prices and heightened competition, while being unable to pass higher costs on to customers who placed their orders two or three years ago.
To mitigate the impact of higher inflation and pressure on profit margins, turbine makers last year raised prices.
“It is difficult to convince customers that they should pay more,” said Nordnet analyst Per Hansen. “You would expect the green transition to speed up as a result of soaring demand and efforts to become independent of Russian gas. But these things take time.”
Vestas’ 2022 revenue stood at 14.49 billion euros ($15.75 billion), according to preliminary results, slightly below the range it had projected.
It expects revenue this year of between 14.0 billion and 15.5 billion euros, with a margin on earnings before interest and tax (EBIT) before special items between minus 2% and plus 3%. Its EBIT margin stood at minus 8% last year.
Vestas shares were down more than 5% at opening, but were trading 0.7% higher at 0922 GMT. The shares are down about 40% after peaking in January 2021.
“It could have been much worse,” said Hansen, referring to the share movement. “It indicates that investors still have hope.”
Vestas is due to present full financial results on Feb. 8.