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Vestas shares tumble on disappointing third quarter as US election looms
Global Banking & Finance Review®
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COPENHAGEN (Reuters) -Shares of Vestas, the world’s largest wind turbine manufacturer, slumped 10% on Tuesday as the company warned its profit margin for the year would likely be at the lower end of its forecast range due to higher costs and warranty provisions.
COPENHAGEN (Reuters) -Shares of Vestas, the world’s largest wind turbine manufacturer, slumped 10% on Tuesday as the company warned its profit margin for the year would likely be at the lower end of its forecast range due to higher costs and warranty provisions.
The Danish company’s share price has fallen by 43% so far this year, reflecting the firm’s ongoing struggle with profitability in the face of inflation, supply chain disruption and stiff competition.
Investors’ concerns have been amplified by uncertainty surrounding the outcome of Tuesday’s U.S. election, with JPMorgan labelling it a more significant catalyst for the stock than the disappointing quarterly results.
Republican candidate Donald Trump has vowed to scrap offshore wind projects through an executive order on his first day in office if he retakes the White House, claiming wind turbines ruin the environment and kill birds and whales.
Vestas Chief Financial Officer Hans Martin Smith said the company is prepared to work with the next president, whether that is Trump or Democrat Kamala Harris.
“Regardless of what the outcome is, we can help support and strengthen the American economy and drive it to a good green state,” he told Reuters.
Operating profit before special items rose to 235 million euros ($255.96 million) in the third quarter from 70 million a year earlier, lagging the 352 million euros forecast by 25 analysts in a poll compiled by the company.
Vestas now expects a full-year operating profit margin at the lower end of its guided 4-5% range. It still expects revenue of between 16.5 billion and 17.5 billion euros.
The service business is now seen generating operating profit before special items of around 450 million euros this year, down from a previous estimate of 500 million euros, it added.
($1 = 0.9181 euros)
(Reporting by Stine Jacobsen, editing by Terje Solsvik, Kirsten Donovan)
A profit margin is a financial metric that indicates the percentage of revenue that exceeds the costs of goods sold. It shows how much profit a company makes for every dollar of sales.
Inflation is the rate at which the general level of prices for goods and services rises, eroding purchasing power. It is typically measured by the Consumer Price Index (CPI).
Operating profit is the profit a company makes from its core business operations, excluding any income derived from non-operational activities like investments or sales of assets.
Warranty provisions are liabilities that a company recognizes for future warranty claims on products sold. They reflect the estimated costs of fulfilling warranty obligations.
Supply chain disruption refers to any event that interrupts the normal flow of goods and services within a supply chain, potentially impacting production and delivery.
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