Balance Sheet: Vestas Increases Revenue And Profit in Q3 2024 - Share Price Collapses
Aarhus, Denmark - Vestas has published its figures for the third quarter of 2024. Sales, EBIT and net profit improve compared to the same quarter of the previous year. However, the wind turbine giant has slightly revised its forecast for the year as a whole. The share comes under pressure and loses a double-digit percentage.
Revenue climbs by 19 percent in Q3 - strong growth in EBIT and net profit
Vestas generated total revenue of EUR 5.2 billion in the third quarter of 2024. This represents an increase of 19 percent compared to the same period of the previous year (Q3 23: EUR 4.35 billion). EBIT before special items climbed by more than 200% from EUR 70 million to EUR 235 million. This resulted in an EBIT margin before special items of 4.5%, compared to 1.6% in the third quarter of 2023. The bottom line is a net profit of EUR 127 million. Compared to the same quarter of the previous year, this corresponds to an increase of over 300% (Q3 23: EUR 28 million).
At 4,432 MW, quarterly order intake for wind turbines was stable in the third quarter compared to the same period of the previous year (Q3 23: 4,502 MW). Overall, Vestas recorded good market activity in the onshore wind energy segment. In addition, Vestas has been awarded two offshore projects, including Vestas' first ever offshore project in the US. The value of the order backlog for wind turbines climbed to an all-time high of EUR 28.3 billion as at September 30, 2024, which is almost EUR 7 billion more than at the same time last year (30.09.23: EUR 21.6 billion). The average sales price was EUR 1.10 million / MW, which according to Vestas underlines the Group's strong commercial discipline (Q3 23: EUR 1.09 million / MW).
In addition to the order backlog for wind turbines, Vestas had service contracts with expected future contractual revenue of EUR 35.1 billion at the end of the quarter. The value of the combined order backlog for wind turbines and service contracts therefore amounted to EUR 63.4 billion, an increase of EUR 9.4 billion compared to the same period of the previous year.
High service costs and increased warranty provisions are a burden
“Higher activity and higher pricing on deliveries continue to drive significant progress in our underlying business and especially Power Solutions, but the quarter was negatively impacted by a slightly slower-than-expected margin improvement in Service and elevated warranty provisions in the quarter. We maintain our guidance on revenue and EBIT for the year but adjust Service EBIT and total investments,” comments Vestas President and CEO Henrik Andersen on the figures.
According to the Vestas forecast, revenue is therefore expected to be between EUR 16.5 and 17.5 billion. For the Group, Vestas expects an EBIT margin before special items of 4 to 5 percent, which is now more likely to be at the lower end of the range. The outlook for total investments has been adjusted to approx. EUR 1.0 billion (previously approx. EUR 1.2 billion). In addition, Vestas now expects a service EBIT before special items of approx. 450 million euros (previously approx. 500 million euros).
Shares slump by double digits until the afternoon
Investors react with disappointment, especially due to the weak development in service margins and provisions. Vestas shares slump today and are currently down 11.4 percent at a price of EUR 16.175 (13:31, 05.11.2024, Stuttgart Stock Exchange).
Source: IWR Online, Nov 11 2024