COPENHAGEN (Reuters) - Vestas, in the midst of its busiest period on record, said on Wednesday sales would continue to rise this year driven by healthy demand for its wind turbines.
Demand for renewable power has been growing in tandem with global efforts to combat climate change, and annual investments in global wind power are expected to roughly double between 2018 and 2035 to more than $200 billion.
That is boosting both Vestas’ order book and its service business, where it maintains thousands of turbines.
Fourth-quarter operating profit before special items rose 36% from a year earlier to 404 million euros while sales jumped 38% to 4.65 billion euros, beating the 4.21 billion expected by analysts in a Refinitiv Eikon poll.
But the Danish firm did not manage to squeeze as much profit out of the sales as expected by analysts, with its quarterly operating profit margin of 8.4% below consensus forecasts for 9.4% and its own long-term ambition for a margin above 10%.
Vestas’ chief executive, however, told Reuters he was very satisfied with the EBIT margin in the quarter.
“We had the busiest quarter ever and we have done very well,” Henrik Andersen said, adding that the booking of some low-margin revenue had an impact in the quarter.
Vestas’ main rival Siemens Gamesa last month cut its profit target for the 2020 financial year for the second time in three months and posted a net loss for the three months to December due to a number of delayed projects, among other things.
Vestas’ shares fell 2.5% in early trade but later reversed losses and were trading 3.8% higher by 1000 GMT.
Higher prices for steel, imported components and transportation amid global trade tensions increased the company’s execution costs last year, Andersen said, adding the trend would continue this year.
He said it was still too early to say if there would be an impact from the coronavirus outbreak on the supply chain in China.
Many Chinese factories remain shut in an extended Lunar New Year holiday, cities are cut off and travel links constricted.
“What is being indicated to us is that we will see a restart of the supply chain during February,” Andersen said.
Vestas expects revenue of 14-15 billion euros in 2020 and an earnings before interest and tax (EBIT) margin before special items of 7-9%.
Reporting by Stine Jacobsen; editing by Jason Neely, Kirsten Donovan