While orders fell by almost a quarter in the period to 1,170 megawatts, the order book for the first nine months of the year has risen by 12 percent, Vestas said.
Wind-turbine makers are waiting to see whether the U.S. will renew a tax credit to the industry that expired at the end of 2013. Runevad said it’s still too early to tell how this week’s congressional elections, which saw the Republicans take control of the Senate, will affect that decision.
The criteria for the benefit, known as the production tax credit, or PTC, meant that any project that started development last year can still claim the benefit so long as it finishes construction by the end of 2015. That’s meant orders have held up, with Vestas taking 1.6 gigawatts of U.S. orders in the first nine months, more than 40 percent of its total.
“The U.S. is a big market and definitely it would have an impact” if the credit isn’t renewed, Runevad said. “I would definitely prefer for it to be renewed.” He said he doesn’t expect a decision until next month at the earliest.
Vestas Wind Systems A/S (VWS) upgraded its forecast for full-year sales and profit margins after earnings beat analyst estimates in the third quarter. The shares jumped.
Profit was 102 million euros ($126 million) in the three months through Sept. 30, rebounding from an 87 million-euro loss a year earlier, the Aarhus, Denmark-based wind-turbine manufacturer said in a statement. The average forecast of nine analysts compiled by Bloomberg was for a 71 million-euro profit.
Vestas now expects sales for the year of as much as 7 billion euros, 1 billion euros more than it previously predicted. The company upgraded its forecast for the operating margin for a second successive quarter, and now expects it to be as much as 8 percent.
Outlook for 2014: Expectations to revenue, EBIT margin before special items and cash flow all upgraded. Third quarter 2014 was characterised by strong operational performance and high activity levels, leading to increases in both EBIT level and cash flow compared to the third quarter of 2014.
In the third quarter of 2014, Vestas generated revenue of EUR 1,813m – an increase of 26 per cent compared to the third quarter of 2013. EBIT before special items increased by EUR 96m to EUR 163m primarily due to higher volume and to a lesser extent also caused by improved average margins. The EBIT margin before special items was 9.0 per cent. The net result increased by EUR 189m to EUR 102m and the free cash flow increased by EUR 49m to EUR 105m compared to the third quarter of 2013.
The intake of firm and unconditional wind turbine orders amounted to 1,170 MW in the third quarter of 2014 – a decrease of 24 per cent compared to the third quarter of 2013. However, year-to-date, order intake is up by 458 MW, or an increase of 12 per cent compared to last year. The value of the wind turbine backlog amounted to EUR 6.7bn at 30 September 2014, which is a decrease of 9 per cent compared to same time last year. In addition to the wind turbine order backlog, Vestas had service agreements with contractual future revenue of EUR 6.7bn at the end of September 2014, compared to EUR 6.1bn at the end of September 2013. Thus, the value of the combined backlog of wind turbine orders and service agreements stood at EUR 13.4bn at 30 September 2014.
Vestas upgrades the 2014 guidance on revenue from minimum EUR 6bn to EUR 6.4bn-7.0bn. EBIT margin guidance before special items is upgraded from minimum 6 per cent to 7-8 per cent and guidance on free cash flow is upgraded from minimum EUR 300m to EUR 400m-700m. The upgrades are based on the expected delivery plan for the remainder of the year and an improved cost base.
Group President & CEO Anders Runevad said: ”The third quarter of 2014 continued the trend with improvements in several operational areas and thus highlights that execution remains on track for our strategy, Profitable Growth for Vestas. Based on the expected delivery plan for the remainder of the year and the improved cost base, we raise our guidance on revenue, EBIT and cash flow.”
Q3 at a glance (compared to Q3 2013)
| - 24% | Vestas had an order intake of 1,170 MW ? a decrease of 24 per cent |
| + 36% | Vestas produced and shipped 2,183 MW ? an increase of 36 per cent |
| + 43% | Vestas delivered wind power systems with an aggregate capacity of 1,682 MW ? an increase of 43 per cent |
| + 26% | Vestas generated revenue of EUR 1,813m ? an increase of 26 per cent |
| + 11 % | Onshore service revenue amounted to EUR 235m ? an increase of 11 per cent |
| + EUR 96m | EBIT before special items amounted to EUR 163m ? an increase of EUR 96m |
| + EUR 189m | Net profit amounted to EUR 102m ? an increase of EUR 189m |
| + EUR 49m | Vestas realised a free cash flow of EUR 105m ? an increase of EUR 49m |
| + 12% | The number of employees at the end of the quarter was 19,324 ? an increase of 12 per cent |
| - 1% points | Renewable energy amounted to 66 per cent of the total energy consumption ? a decrease of 1 percentage points |
| - 22% | Incidence of lost time injuries per one million working hours was 1.4 ? a decrease of 22 per cent |