The credit squeeze tipped to alleviate the demand pressure
Vestas has stated that the extension of the PTC scheme in the USA until the end of 2009 will create transparency in the near-term, but a long-term plan is necessary in order to exploit the potential of wind power in the USA.
"The prices for a number of key components have peaked. Potentially higher input prices are, however, expected to be offset by higher prices on Vestas' products, as their value to the customers is determined by factors such as the long-term price of the fossil fuels being replaced by wind power," shared Vestas, while providing an insight into assumption and risks in its third quarter results.
The Danish company said its third-quarter earnings rose from €102m (£130m) to €160m. It was on track for sales of €5.7bn for 2008 and €7.2bn for 2009.
The company added that the most important risk factors include additional warranty provisions, transport costs, disruptions in production and in relation to wind turbine installation as well as potential patent disputes.
Vestas' current organisation and cost base is geared to a level of activity more than 15 percent higher than the revenue guidance of EUR 7.2bn.
The company has decided not to reduce its number of employees since the long-term growth prospects for Vestas remain strong. Due to the lower-than-planned rate of utilisation of the organisation in 2009, a number of new employments have for the time being been postponed, but these are expected to resume as soon as the present credit squeeze decreases.
As a result, the EBIT margin is expected to rise to just 11-13 percent in 2009 of which service revenue is expected to amount to approximately EUR 550m with an EBIT margin of 15 percent. Net working capital is expected to represent a maximum of 10 percent of annual revenue by the end of 2009. Total investments are expected to amount to EUR 1.2bn, of which EUR 1bn will be invested in property, plant and equipment, primarily in the previously announced factories in the USA, Spain and China and the R&D centres in Denmark and the UK.
For 2008, supply-only orders, in which Vestas only supplies the wind turbines, are expected to account for nearly 40 percent of revenue and even more in 2009.