Vestas Raises Wind Turbine Prices Due to Cost Inflation
COPENHAGEN (Reuters) -Denmark’s Vestas posted preliminary revenue for last year at the lower end of its guidance on Wednesday, and said higher energy and raw material costs would force it to increase prices for its wind turbines.
Despite record demand for wind turbines, profit margins at wind turbine makers such as Vestas and rival Siemens Gamesa have been squeezed by high costs for raw materials such as steel, as well as increasing competition.
“Increasing prices on wind turbines are a necessity to address the external cost inflation and ensure the industry’s long-term value creation,” Vestas said in a trading statement.
However, higher power prices also offered an opportunity to “accelerate investments in renewable energy,” it said.
Still, Vestas said this year will be “heavily impacted by cost inflation” and expects revenue in the range of 15 billion to 16.5 billion euros ($18.63 billion), and an earnings before interest and taxation (EBIT) margin before special items of 0%-4%.
Revenue stood at a record 15.6 billion euros ($17.61 billion) last year, in line with guidance in November of between 15.5 billion and 16.5 billion. Vestas’ 2021 EBIT before special items stood at 461 million euros, indicating an operating profit margin of 3% versus guidance of around 4%.
“The wind power industry continues to be challenged by the current environment characterised by supply chain instability, which is causing significant cost inflation and delay in execution of projects,” Vestas said.
The company is due to publish a full set of earnings on Feb. 10.
($1 = 0.8857 euros)
(Reporting by Nikolaj Skydsgaard and Jacob Gronholt-Pedersen; Editing by Andrew Heavens)
