This week: Vestas shares jump as cost cuts help reduce losses

Vestas maintains its full-year guidance and the focus on cost reductions, low investments and increased capacity utilisation continues. In the first quarter of 2013, Vestas generated revenue of EUR 1,096m – a decrease of 1 per cent to the year-earlier period. EBIT before special items increased by EUR 96m to EUR (108)m. The EBIT margin before special items was (9.9) per cent – an improvement of 8.6 percentage points compared to the first quarter of 2012. The free cash flow increased by EUR 235m to EUR (60)m.

The intake of firm and unconditional wind turbine orders was 644 MW in the first quarter of 2013 and the value of the wind turbine backlog amounted to EUR 7.0bn at 31 March 2013. In addition to the wind turbine order backlog, Vestas had service agreements with contractual future revenue of EUR 5.4bn at the end of March 2013, and thus the value of the combined backlog of wind turbine orders and service agreements stood at EUR 12.4bn which equals the level at the end of 2012.

Over the last 12 months, warranty consumption as a percentage of revenue was less than 1.5 per cent. The very low level is a result of the continued quality focus and the improved performance of the wind turbines.

The safety level at Vestas’ workplaces improved substantially as the Industrial injuries per one million working hours declined by 36 per cent to 1.8 compared to the first quarter of 2012. The share of renewable energy increased by 14 percentage points to 58 per cent.

“It is satisfying to see that the Vestas turnaround continues according to plan and that results are becoming increasingly visible. Compared to the first quarter of 2012, we have improved earnings and free cash flow substantially,” says Ditlev Engel, Group President & CEO and continues: “Furthermore, the fact that we have been able to accelerate the prototype installation of the V164 turbine and release new variants of our 2 and 3 MW platforms while at the same time, keeping investments low stands as evidence of our efforts paying off.”

“Finally, I would like to emphasise the importance of our increased focus on improving the management of our working capital. For the first time in five years, we were able to free up liquidity by reducing the net working capital during the first quarter. This development was the major contributor to our substantial free cash flow improvement,” Ditlev Engel concludes.