Vestas warns of further turbulence for wind turbine makers
Vestas has warned that supply chain and profitability woes in the wind turbine industry would continue for at least the rest of the year as the green energy industry faces challenging times.
The Danish wind turbine manufacturer reported an underlying operating profit margin of 3 per cent for 2021 on Wednesday, below its previous forecast of 4 per cent and initial guidance of 6-8 per cent. It said its margin would be 0-4 per cent in 2022 as it released its preliminary results two weeks early.
“[We] expect the current challenging business environment to continue throughout 2022, which hampers our outlook for 2022. To mitigate these short-term challenges, the industry must show the discipline needed to protect profitability and improve value creation in the long term,” said chief executive Henrik Andersen.
The renewable energy industry has had a difficult 12 months hit by sharp cost increases because of supply chain problems, and low wind speeds that have affected power generation.
Vestas’s rival Siemens Gamesa last week cut its financial outlook for the third time in nine months, leading to steep falls in share prices across the sector. Vestas’s shares have fallen 40 per cent since November.
Vestas warned that its 2022 forecast was subject to considerable uncertainty due to a lack of visibility on cost increases for raw materials and components as well as energy prices.
The Danish group’s revenues for last year were a record €15.6bn, just squeezing into its revised guidance of €15.5bn-€16.5bn from November, versus its original guidance of €16bn-€17bn. Revenues this year are expected to be between €15bn and €16.5bn.
Vestas and rival groups have lifted their prices to try to temper cost inflation, but the Danish group said the increases had “prolonged negotiations” with customers. It added that higher power prices in general could lead to an acceleration in renewable energy investments in the long term as it increased its order intake to 13.9GW in 2021, up from 12.7GW the year before.
“We expect the near future and at least 2022 to be heavily impacted by cost inflation, while the emergence of an energy crisis caused by geopolitics and fossil fuel volatility has also resulted in dramatic increases in energy prices,” Vestas said.
The Danish group also blamed a cyber attack in November, which had no direct impact on its manufacturing but did affect some IT systems, for hitting its “ability to be fully focused on end-of-year execution”.
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