Vestas: Interim Financial Report, Third Quarter 2022

In the third quarter of 2022, Vestas generated revenue of EUR 3,913m – a decrease of 29 percent compared to the year-earlier period. EBIT before special items amounted to EUR (127)m, resulting in an EBIT margin before special items of (3.2) percent, compared to 5.7 percent in the third quarter of 2021.

Free cash flow^*) amounted to EUR (752)m compared to EUR 300m in the third quarter of 2021.

The quarterly intake of firm and unconditional wind turbine orders amounted to 1,895 MW, and the value of the wind turbine order backlog was EUR 18.1bn as at 30 September 2022.

In addition to the wind turbine order backlog, at the end of the quarter, Vestas had service agreements with expected contractual future revenue of EUR 32.8bn. Thus, the value of the combined backlog of wind turbine orders and service agreements stood at EUR 50.9bn – an increase of EUR 3.6bn compared to the year-earlier period.

Vestas adjusts the full-year guidance on revenue to EUR 14.5bn-15.5bn (previously EUR 14.5bn-16.0bn), and on EBIT margin before special items to approx. (5) percent (previously (5)-0 percent). Revenue in Service specifically, on the other hand, is now expected to grow min. 20 percent (previously min. 10 percent). 

Total investments^*) are now expected to amount to approx. EUR 850m in 2022 (previously approx. EUR 1,000m).

Group President & CEO Henrik Andersen said: “In the third quarter of 2022, Vestas continued to increase the average selling price of our wind energy solutions and build further momentum within offshore wind, although geo-political uncertainty and high inflation impacted execution cost and activity levels in the wind industry. In this environment, we achieved revenue of EUR 3.9bn despite project delays, while our Service business grew more than 30 percent with a solid EBIT margin of 24.5 percent, providing stability during a very challenging period. In the third quarter, our profitability improved along the lines of our expectations but remained heavily impacted by cost inflation and supply chain disruption, which resulted in an EBIT margin of minus 3.2 percent and an adjustment of our guidance. Our growing offshore momentum was highlighted through preferred supplier agreements totaling 3.8 GW across USA, United Kingdom, and Poland, while onshore order intake landed at 1.9 GW and an average selling price of EUR 1.06m/MW, ensuring a high order backlog of EUR 18.1bn. The energy crisis incentivises a faster transition to an energy system built on renewables and ambitious political agreements such as the Inflation Reduction Act in USA strengthen the underlying demand for wind energy solutions, but project development and order intake remain impeded by energy market uncertainties and red tape. Everyone at Vestas remains focused on executing on our strategy and safely delivering on our customer commitments in a very busy fourth quarter, and Executive Management thanks our 28,000 colleagues for their great contribution in a highly uncertain environment.”

Key highlights

Average Selling Price continues upward trend
Increased prices secure continued high order backlog of EUR 18.1bn despite lower order intake of 1.9 GW.

Offshore momentum building
Preferred supplier agreements of 3.8 GW announced over the last quarter.

Revenue of EUR 3.9bn
Revenue decreased by 29 percent year-on-year driven by project delays.

Profitability negative but improving
EBIT margin of (3.2) percent driven by supply chain disruptions and cost inflation as well as project delays.

Strong performance in Service
Revenue increased 32 percent with a 24.5 percent EBIT margin.

Outlook for 2022 adjusted
Revenue and EBIT margin negatively impacted by project delays while Service momentum has accelerated.

*) Excl. acquisitions of subsidiaries, joint ventures, associates, and financial investments.