Vestas books Q2 loss in challenging environment

V162-6 8 MW. Courtesy of Vestas Wind Systems A/S

August 10 (Renewables Now) - Danish wind turbine maker Vestas Wind Systems A/S (CPH:VWS) made a net loss of EUR 119 million (USD 122m) in the second quarter of 2022, versus a profit of EUR 83 million a year earlier, as it grappled with cost inflation and supply chain disruptions.

Earnings before interest and tax (EBIT) before special items fell to negative EUR 182 million from positive EUR 94 million in the same quarter of 2021, with EBIT margin before special items coming in at negative 5.5% against a positive 2.7% a year ago. Revenue was down about 7% year-over-year to EUR 3.3 billion.

“The first half of 2022 was characterised by geo-political uncertainty and supply chain disruptions that have caused costs to increase and an energy crisis to unfold,” chief executive Henrik Andersen said, adding that while this strengthens the case for the energy transition, it also creates a challenging environment that negatively impacts the company’s financial results.

The CEO noted on a 22% year-on-year increase in the average selling price on onshore wind turbines in the second quarter to EUR 0.96 million per MW. “The sustained price increases show we maintain the discipline to protect value creation and pave the way towards our profitability target,” he said.

The company kept its full-year guidance, which was revised down after the first quarter and includes an EBIT margin before special items of between negative 5% and 0%.

Below are some figures from the second-quarter results:

Figures in EUR million Q2 2022 Q2 2021 H1 2022 H1 2021
Revenue 3,305 3,536 5,790 5,498
Gross profit 97 375 119 564
Operating profit (loss) before special items/EBIT (182) 94 (511) 16
Profit (loss) for the period (119) 83 (884) 19
Free cash flow (381) 166 (1,504) (924)

The decline in second-quarter revenue was mainly attributed to lower offshore deliveries in Northern Europe.

Wind turbine order intake in the quarter was 2,153 MW, a drop from 5,290 MW a year earlier, when there was strong order intake in Northern Europe and Asia Pacific. Wind turbine order backlog was EUR 18.9 billion, while the combined backlog of wind turbine orders and service agreements amounted to EUR 50.2 billion, marking an increase of EUR 2.1 billion from a year earlier.

Also on Wednesday, Vestas unveiled a deal for the sale of its converters and controls business to existing partner KK Wind Solutions.

(EUR 1 = USD 1.023)

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Plamena has been a UK-focused reporter for many years. As part of the Renewables Now team she is taking a keen interest in policy moves.

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