Vestas Returns to Profit, Shares Surge

Third quarter results beat consensus forecasts at Danish wind turbine maker

Johanna Englundh 8 November, 2023 | 11:53AM
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Danish wind turbine maker Vestas (VWS) surprised the market by reporting higher than expected revenue and turning from loss to profit in the third quarter. The shares surged over 8% as trading commenced on the Copenhagen stock exchange on Wednesday.

In the third quarter Vestas generated revenue of €4.353 billion, an increase of 11.2% compared to the year-earlier period. EBIT before special items amounted to €70 million, resulting in an EBIT margin before special items of 1.6%. This was achieved through higher gross margin and increased pricing on deliveries, Group President and CEO Henrik Andersen said in the earnings statement. 

The wind turbine order intake more than doubled year-on-year, driven by Offshore and higher activity in North America and Europe.

Vestas decided to narrow its full-year-guidance and now expect revenue to range between €14.6bn-15.5bn (previously €14.0bn-15.5bn), including its Service division, which is still expected to grow around 10%.

Morningstar equity analyst Matthew Donen says: “Vestas third quarter results comfortably beat company compiled-consensus, which has led management to upgrade its full year guidance. The biggest takeaway was the return to profitability for the group during the third quarter, for the first time this year. Third quarter operating profit of €70 million benefitted from the delivery of higher-priced turbines which had been part of its backlog, helping to boost revenues and profitability.”

Vestas earnings report beat estimates on most fronts, with the quarterly revenue of€4.353 million exceeding the analysts' average estimate of €4.088 million. EBIT before special items amounted to totaled €70 million, compared to the average expectations of €31 million, and the adjusted operating margin was 1.6 %, surpassing the expected 0.8%.

“The group are on track to return to profitability for the full-year, having raised its operating profit margin guidance to between 0% and 2%, from between -3% and 2%. Shares are up 8% following the strong results and upgraded guidance, but remain slightly below our DKK 197 fair value estimate which we maintain”, Matthew Donen adds.

 

 

 

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
Vestas Wind Systems A/S194.10 DKK-4.15Rating

About Author

Johanna Englundh  Johanna Englundh is an editor for Morningstar in Sweden 

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