Saturday, 16 August 2008
Vestas cites huge order book in wind turbines
Bloomberg News, Reuters
Published: August 15, 2008
COPENHAGEN: Vestas of Denmark, the world's No.1 wind turbine maker, said Friday that its order backlog had ballooned, sending its shares up nearly 8 percent despite profit coming in slightly below expectations.
Vestas is riding a surge in demand for renewable energy amid soaring oil prices and increasing concerns about the effects of greenhouse gas emissions.
Vestas, which competes with Gamesa of Spain, India's Suzlon Energy and units of global power generation giants Siemens and General Electric, had an order backlog on June 30 of €7.2 billion, or $10.73 billion. This compared with €4.8 billion at the end of the first quarter and was 67 percent up on the figure at end-June last year.
Net income climbed to €65 million from €51 million a year earlier, the Randers, Denmark-based company said. Profit missed the €69 million median estimate of six analysts surveyed by Bloomberg News.
"I think there are some very strong growth signals in these results, stronger than I can ever remember seeing in Vestas," said a Sydbank analyst, Jacob Pedersen. "In particular I want to highlight the order book of €7.2 billion, I might have bid €5.5 billion if I had been optimistic."
Government subsidies and incentives for wind-energy generation have spurred demand for turbines and pushed prices 74 percent higher in the past three years, according to BTM Consult APS, a Danish wind power consultant.
Vestas said that it would expand production facilities in China and the U.S. to meet demand and offset the weaker dollar.
Vestas shares were 5.8 percent higher at 620 crowns, outperforming the Copenhagen top-20 OMX index, which was 0.8 percent up.
Vestas shares closed up almost 5 percent on Thursday and are up 15 percent this year.
Sales grew 3 percent to €1.1 billion in the quarter.
The company retained its full-year outlook, predicting sales of €5.7 billion.
"The continuing improvement in profitability is attributable to the higher prices which Vestas initiated in 2005 and the ongoing enhancement of operational efficiency," the company said in a statement.
Shares in Gamesa, Vestas's Spanish rival, gained in Madrid trading after the Vestas announcement.
Gamesa gained as much as 4.8 percent to €30.19, the biggest one-day gain since July 29.