Power Technology

Daily Newsletter

10 August 2023

Daily Newsletter

Vestas loss narrows in Q2 2023 while revenues grow

Revenues for the three months to June 2023 were €3.42bn, up 3.75% from €3.30bn in Q2 2022.

Danish wind turbine maker Vestas posted a net loss of €115m ($126.74m) for the quarter ending 30 June 2023, an improvement from €119m in the same quarter a year ago.

The company’s operating EBIT (earnings before interest and taxes) loss stood at €68m in Q2 2023, versus €147m in the previous year, while loss before interest, tax, and special items narrowed to €70m from €182m.

Gross profit increased 127.8% year-on-year to €221m. Production costs of the company remained flat at €3.2bn.

Revenues for the three months to June 2023 were €3.42bn, up 3.75% from €3.30bn in Q2 2022.

Vestas said that its firm and conditional wind turbine orders for the quarter were 2.3GW, an 8% growth from the same period a year ago. As of 30 June 2023, its order backlog stood at €20bn, increasing from €18.9bn in the prior year.

The number of turbines produced and shipped dropped from 947 to 782, while the number of gigawatts stands at 3.65GW compared with last year’s 3.75GW.

Vestas group president and CEO Henrik Andersen said: “Vestas continued to improve underlying performance in the second quarter of 2023, and based on the first half of the year, we remain on track to achieve our financial outlook for 2023.

“In the second quarter, our revenue was €3.4bn, a 4% increase year-on-year, which was secured by higher value of turbine deliveries and strong growth in our service business. In line with expectations and the continued execution of older projects with lower margins in our backlog, we achieved an EBIT margin of minus 2%.”

The company noted that uncertainty in permitting and regulatory terms, along with disruptions in the supply chain, have been the underlining factors affecting the wind industry.

It continued that although supply chain disruptions are easing off, they could continue throughout the second half of this year.

For the full year, it projects €14bn–€15.5bn in revenues and an EBIT margin before special items of between -2% and 3%.

ESG 2.0 marks a shift towards stricter environmental rules

ESG is moving into a different era, which we call ESG 2.0. While ESG 1.0 was driven by voluntary corporate action, spurred by pressure from activist consumers and investors, ESG 2.0 is being driven by a new wave of government policies. The EU has taken the regulatory lead, with rules introduced or in the pipeline that will price emissions, regulate the use of the terms ‘ESG’ and ‘sustainability’ in marketing materials, and make ESG reporting mandatory. The US has taken a different approach, favoring less regulation and more financial support in the form of tax breaks for clean industry (renewables plus nuclear and hydrogen). China is planning to expand its emissions trading system to more sectors, decarbonize its heavy industry, and ramp up its use of renewables. The new policy direction is mainly motivated by the ambition to hit net zero emissions targets. But on top of this, governments are now competing for clean industry and trying to challenge China’s leadership on the production of the world’s green technologies such as solar panels and batteries, as well as the production and refinement of materials needed for energy transition such as lithium. These driving forces are leading to policy that will impact every sector, not just heavy industry, and will keep ESG near the top of the regulatory agenda over the longer term.