Vestas Wind surges as Q2 beats views, lifts revenue guidance

Vetas Wind Systems surged on Thursday as its second-quarter results beat expectations and the Danish wind turbine manufacturer lifted its revenue guidance for the year.

Revenue in the second quarter rose 46% to €2.56bn, while earnings before interest and tax before special items were up €254m to €399m.

Vestas upgraded its guidance for 2016 revenue from a minimum of €9bn to a minimum of €9.5bn. It also upped its EBIT margin before special items from 11% to a minimum of 12.5% and free cash flow from €600m to €800m. The upgrade was based on a better-than-expected performance in the first half of 2016 and visibility for the remainder of the year.

The company also said it would launch a share buyback program of up to 2.98 billion Danish kroner between August and December.

Group president and chief executive officer Anders Runevad said: “I am very pleased with Vestas’ strong second quarter performance. Our colleagues have executed well on a high activity level, which along with a favourable mix of projects contributed to Vestas achieving extremely solid results on revenue, EBIT margin, net profit, and free cash flow and with an order intake in line with expectations.

"We are upgrading the full-year guidance on revenue, EBIT margin, and free cash flow, and as a result of the strong performance we also continue delivering tangible shareholder value through the 2016 share buy-back programme that we are launching now.”

Societe Generale, which had been expecting the group to announce revenue of €2.2bn and adjusted EBITA of €229m, said the results were a solid beat.

The bank said: “This is a solid performance from Vestas though we would seek clarifications on the sustainability of the margins and magnitude of the mix benefit. We would also watch for comments on the demand environment given softness in Europe (shift to auctions in 2017) and the relatively sluggish orders in the US.”

At 0930 BST, Vestas shares were up 8.8% to DKK530.50.