Updates from Vestas Wind Systems AS
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Vestas has lowered its full-year profit and revenue forecast, the latest group of wind turbines to downgrade its outlook as the industry is rocked by rising commodity prices.
The group, one of the world’s leading turbine manufacturers, said on Wednesday annual revenue would be € 15.5 billion to € 16.5 billion, down from previous forecast of € 16 billion to € 17 billion. euros, with underlying profit margins of 5-7%. against 6 to 8% previously.
Henrik Andersen, chief executive of the Danish group, said pandemic-related restrictions and supply chain constraints also caused a “slower than expected” first half.
The downgrade adds to a picture of mounting pressure on turbine makers after rival Siemens Gamesa last month issued its second profit warning this year, citing soaring commodity prices as well as costs over high associated with a new product.
Vestas had already disappointed its first quarter results, pointing to transport issues including the blockade of the Suez Canal in March and the effects of the pandemic in India, one of its key markets.
Steel is one of the most important input costs for turbine manufacturers. Steel prices in the United States have risen 76% this year as the global economy recovers from the pandemic crisis and steel mills have struggled to increase supply.
China, which produces half of the world’s steel, has also said it wants to cut steel production in the second half of the year.
Andersen, however, insisted on Wednesday that demand for Vestas turbines remained strong. The value of its wind turbine order book and service agreements stood at 48.1 billion euros at the end of the first half, up 13 billion euros from the same point in 2020. environment in which we operate ”.
Some wind power leaders have warned that wind turbine makers could face price pressure after a number of oil majors made record bids this year at a UK auction for rights to the seabed in order to develop offshore wind projects in English and Welsh waters. This would likely lead developers to squeeze vendors to protect their own margins, they said.
Shares of clean energy companies have struggled this year after many hit all-time highs in January as investors worried about the pace of growth in the sector.
Vestas shares fell nearly 5% after Wednesday morning’s downgrade, bringing their total losses this calendar year to over 20%. Siemens Gamesa shares have fallen more than 27% since early 2021.