Vestas posts surprise loss

World No 1 wind turbine maker Vestas posted a surprise second-quarter loss and unexpectedly cut its 2010 earnings outlook as customers delayed orders in the wake of the credit crisis. Vestas shares slid 21 percent by 1341 GMT on Wednesday, against a 2.1 percent decline for the FTSE cleantech energy index.
Turnover in the stock exceeded 3 billion Danish crowns ($518.9 million) - a fair day's trade for the whole Copenhagen bourse. Vestas said it downgraded its forecast because the inking of expected orders in the United States, Spain and Germany had been delayed and could thus not be booked as income this year. Chief Executive Ditlev Engel told Reuters he was "pretty confident, as much as one can be in this world" that the firm would get the orders, and the delays were partly due to permission and regulatory issues in the three countries. In Spain, notably, clients held back, awaiting signals from the government on future regulation for visibility on pricing structures, he said.
Vestas sank to an operating loss of 148 million euros ($190 million) from a profit of 78 million a year earlier and against a mean forecast in a Reuters poll for an 8.1 million profit. Turnover shrank 17 percent to 1.01 billion. "The decline in revenue and earnings reflects the very low level of activity in the wake of the credit crisis and Vestas' decision not to adjust its capacity further," Vestas said.
The credit crisis knocked energy infrastructure projects around the globe in 2009, as financing dried up, also hitting the wind turbine industry. Analysts said the earnings report indicated a much bigger fall in price per megawatt in the quarter than expected.
"Some analysts interpret this as Vestas trying to undercut rivals but this is also due to larger framework orders with better profitability (which usually have lower prices per MW)," said Alm. Brand analyst Michael Friis Jorgensen. He expected Vestas, which had a 12 percent market share last year, to be overtaken this year by rivals GE, Siemens and Chinese Goldwind, but to regain the top spot in 2011.