Vestas Wind ((VWDRY)) has held its Q4 earnings call. Read on for the main highlights of the call.
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The recent earnings call for Vestas Wind presents a mixed outlook, highlighting both achievements and challenges faced by the company. On one hand, Vestas reported record revenue and strong order intake, which underscores its growth and shareholder value. However, the company is also grappling with manufacturing ramp-up challenges, rising service business costs, and significant safety concerns. Additionally, the offshore ramp-up is proving to be a substantial cost burden, affecting margins.
Record Revenue and Strong Q4 Performance
Vestas reported a remarkable 12% year-on-year revenue increase for the full year 2024, reaching EUR17.3 billion, alongside an EBIT margin of 4.3%. The fourth quarter was particularly impressive, marking the best performance since 2017 with a 29% revenue increase compared to the previous year.
Service Business Expansion
The service business continues to expand, with the order backlog growing to nearly EUR37 billion from EUR34 billion in 2023. The service capacity reached 155 gigawatts, up from 149 gigawatts in the previous year, reflecting the company’s commitment to enhancing its service operations.
Strong Order Intake and Backlog
Vestas experienced a robust order intake of 17 gigawatts, adding EUR19 billion in value with a high average selling price (ASP). The Power Solutions order backlog soared to a record high of EUR31.6 billion, a significant increase of EUR5.6 billion from the previous year.
Shareholder Returns
Demonstrating its commitment to shareholder value, Vestas proposed a dividend of DKK0.55 per share and announced the initiation of a EUR100 million share buyback, effective immediately.
Sustainability Achievements
In terms of sustainability, Vestas made notable progress by increasing lifetime emissions avoided by 59 million tonnes compared to the previous year, showcasing its dedication to environmental responsibility.
Manufacturing Ramp-Up Challenges
Despite the strong order backlog, Vestas faces manufacturing ramp-up challenges, particularly in the U.S. onshore and offshore sectors, which are driving additional costs as the company works to meet high demand.
Service Business Challenges
The service business encountered rising costs, leading to a challenging year in 2024. Vestas has implemented a recovery plan to address these issues and stabilize the service segment.
Fatalities and Safety Concerns
The year 2024 was marked by profound safety challenges, including five fatalities, one of which involved a Vestas employee. The company acknowledges the need for improved safety performance across its value chain.
Offshore Ramp-Up Costs
The offshore ramp-up is resulting in significant investment and costs, negatively impacting margins. This has led to an increase in amortization and depreciation by EUR200 million.
Forward-Looking Guidance
Vestas provided comprehensive guidance for 2025, projecting a revenue range of EUR18 billion to EUR20 billion and an EBIT margin before special items between 4% and 7%. The company emphasized its strong 2024 performance while acknowledging challenges such as geopolitical and market volatility, particularly in the U.S. and Europe. Vestas remains focused on improving service operations and continued investment in manufacturing.
In summary, the earnings call for Vestas Wind highlighted a mixed sentiment, balancing record financial achievements and forward momentum with significant operational challenges. Key takeaways include robust revenue growth, strong order intake, shareholder returns, and critical safety and manufacturing hurdles. The company’s forward-looking guidance reflects a cautious yet optimistic outlook for 2025.
