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Vestas: Loss of 231 million euros in the first half of the year, lowering full-year performance expectations

2024-08-17

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Vestas, the global wind power giant, just turned a profit last year, but suffered losses again this year.
On August 14, Vestas released its performance report for the first half of 2024. During the reporting period, the company achieved revenue of 5.977 billion euros, a year-on-year decrease of 4.5%; net loss of 231 million euros; EBIT before special items was negative 253 million euros, and the EBIT margin before special items was negative 4.2%.
Among them, in the second quarter, Vestas' revenue was 3.296 billion euros, a year-on-year decrease of 3.9%; net loss was 156 million euros, compared with a loss of 115 million euros in the same period last year; EBIT before special items was negative 185 million euros, and the EBIT margin before special items was negative 5.6%.
Vestas said the decline in first-half performance was mainly due to increased planned costs in the service division in the second quarter.
However, Vestas President and CEO Henrik Andersen stressed that the services business remains a strong business area.
"Rising costs have put pressure on the company's long-term service contracts," said Vestas Finance Director Hans Martin Smith. "Wage inflation is more problematic than we thought." Wind power operation and maintenance workers' demands for higher wages exceeded expectations.
According to the financial report, the department's revenue in the first half of the year was 1.59 billion euros, of which the revenue in the second quarter was 671 million euros, a year-on-year decrease of 25.8%.
It is worth noting that in the past few years, when cost surges and supply chain problems caused Vestas' wind power business to suffer huge losses, the service department has been the company's mainstay. Last year, Vestas' service business achieved revenue of 3.568 billion euros, a year-on-year increase of 13%.
Source: Vestas financial report
In addition, Vestas' adjusted free cash flow in the second quarter of 2024 was 524 million euros, compared with negative 144 million euros in the same period last year. Adjusted free cash flow in the first half of the year was negative 474 million euros, compared with negative 1.423 billion euros in the same period last year.
The company said that wind turbine orders increased 54% year-on-year in the second quarter, driven by recent major contracts in Poland, Germany and the United States. As of June 30, 2024, the value of the wind turbine order backlog is approximately 28.1 billion euros. In addition to the wind turbine order backlog, at the end of the second quarter, Vestas also signed service agreements with expected future contract revenue of 34.9 billion euros. The total value of the backlog of wind turbine orders and service agreements is 63 billion euros, an increase of 11.4 billion euros compared with the same period last year.
In addition, in the second quarter of this year, the average selling price of Vestas wind turbines rose to 1.21 million euros/MW from 1.04 million euros/MW in the second quarter of 2023.
The second-quarter loss forced Vestas to lower its full-year financial expectations: the company's EBIT margin before special items is expected to reach 4%-5% in 2024, down from 4%-6% previously, and its revenue outlook was reduced from 16 billion euros to 18 billion euros to 16.5 billion euros to 17.5 billion euros.
Vestas is a Danish wind turbine manufacturer that entered China in 1986 and installed China's earliest wind turbines. In the 2023 global wind turbine list of Bloomberg New Energy Finance (BNEF), Vestas ranked third with 13.4GW of new installed capacity, and is the only European wind turbine manufacturer to enter the top five.
In 2023, Vestas achieved revenue of 15.382 billion euros, a year-on-year increase of 6%; profit of 78 million euros, turning losses into profits.
The Paper reporter Wang Jingjing
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