Vestas Shares Surge on Wind Power Orders
Date: 18-Aug-08
Country: DENMARK
Author: Kim McLaughlin
Vestas is riding a surge in demand for renewable energy sources amid soaring oil prices and increasing concerns about the effects of greenhouse gas emissions.
Vestas, which competes with Spain's Gamesa, India's Suzlon Energy and units of global power generation giants Siemens and General Electric, had an order backlog on June 30 of 7.2 billion euros (US$10.73 billion). This compared with 4.8 billion at the end of the first quarter and was 67 percent up on the figure at end-June last year.
"I think there are some very strong growth signals in these results, stronger than I can ever remember seeing in Vestas," said Sydbank analyst Jacob Pedersen.
"In particular I want to highlight the order book of 7.2 billion, I might have bid 5.5 billion if I had been optimistic," he said.
Jyske Bank said in a research note the order book was surprisingly strong, outweighing lacklustre quarterly profits.
Earnings before interest and taxes rose to 92 million euros from 90 million in the year-ago period but slightly undershot the average in a Reuters poll of 96 million.
Vestas Chief executive Ditlev Engel told Reuters the company's order book was proof of strong underlying growth in the business.
The company announced plans to invest 75 million euros in a new factory in Colorado, adding to a 125 million euro investment in a blade plant it had already unveiled, despite uncertainty over the extension of the US production tax credit set to expire at the end of the year.
"Somebody has to be first on the dance floor and so we started," Engel told a conference call.
However, Engel said Vestas would start consultations with its 91 employees at a plant in Campbeltown, Scotland, because the factory did not generate satisfactory earnings.
OUTLOOK MAINTAINED
By 1355 GMT, Vestas shares were 6.8 percent higher at 626 crowns, outperforming the Copenhagen top-20 OMX index, which was 1.2 percent up. Vestas shares closed up almost 5 percent on Thursday and are up 15 percent this year.
Shares in Gamesa rose as much as 4.8 percent in Madrid on the back of Vestas' orders inflow.
Vestas' sales grew 3 percent to 1.1 billion euros in the quarter, with Europe accounting for 64 percent.
The company retained its full-year outlook, predicting sales of 5.7 billion euros and an EBIT margin of 10-12 percent. It said about 69 percent of sales would come in the second half of the year.
The Randers-based group said it sees its market share at 25 percent in 2008 and plans to invest 620 million euros this year, of which 500 million will be in property, plants and equipment.
It said it expects that it will take some years before supply matches demand.
(Editing by Louise Ireland/Victoria Bryan/Tony Austin)