4C Offshore Empowering Intelligence

Vestas reports earnings drop

4C Offshore | Tom Russell
By: Tom Russell 11/08/2020 Vestas
Danish wind turbine manufacturer Vestas has issued its interim financial report, second quarter 2020 results.

In the second quarter of 2020, Vestas generated revenue of EUR 3,541m – an increase of 67 percent compared to the same period one year earlier. EBIT before special items decreased by EUR 94m to EUR 34m.

The decrease was primarily a result of extraordinary warranty provisions made in the quarter of EUR 175m, covering a specific repair and upgrade of a confined number of blades already installed; excluding these provisions, the underlying margin was 5.9 percent.

Gross profit amounted to EUR 228m in the second quarter of 2020, a 7.8 percentage point decrease compared to the second quarter of 2019. The decrease was attributed to increased cost levels derived from warranty provisions as well as logistical challenges and supply-chain bottlenecks, amplified by the COVID-19 situation.


The quarterly intake of firm and unconditional wind turbine orders amounted to 4,148 MW. The value of the wind turbine order backlog was EUR 16.2bn as at 30 June 2020. In addition to the wind turbine order backlog, at the end of June 2020, Vestas had service agreements with expected contractual future revenue of EUR 18.9bn.


For the first half of the year, revenue amounted to EUR 5,776m, an increase of 50 percent from the reported revenue for the first half of 2019, primarily driven by US wind turbine deliveries according to Vestas. Gross profit in the first half of 2020 amounted to EUR 387m, equal to a margin of 6.7 percent of revenue, a decrease from last year of 7.2 percentage points, impacted by the same factors as the quarter.

Group President & CEO Henrik Andersen said: “The COVID-19 pandemic continued to impact the renewable energy industry and the global economy in the second quarter of 2020. In these challenging circumstances and without state aid, Vestas’ almost 26,000 employees have performed strongly, growing our revenue by 67 percent compared to the same quarter last year and achieving an order intake of 4.1 GW as well as a record high total order backlog of more than EUR 35bn. Service continued to grow with high margins in the quarter and played a key role in ensuring stable and renewable energy supply during lockdowns across the globe. Extraordinary warranty provisions impacted our EBIT margin negatively in the quarter, but our underlying EBIT margin of 5.9 percent showcases good execution that gives us confidence to deliver improving results throughout the remainder of the year.”

Based on the results for first half of 2020, Vestas' has reinstated its full year guidance at EUR 14-15bn which was suspended earlier this year as a result of the corona virus pandemic. The EBIT margin before special items is updated to range between 5 and 7 percent (initially 7-9 percent), including extraordinary warranty provisions of EUR 175m. Vestas’ total investments*) are expected to be below EUR 700m in 2020 (initially approx. EUR 700m). The company stated that this guidance is based on assumptions that are subject to greater uncertainty than under normal circumstances, due to COVID-19.


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