Vestas adjusts 2024 outlook on service segment challenges

Danish wind turbine manufacturer Vestas Wind Systems A/S (CPH:VWS) is narrowing its 2024 outlook on group revenue and EBIT margin due to lower-than-expected profitability in the Service segment.

Ahead of reporting second-quarter results on Wednesday, the company said today it now expects 2024 revenue of between EUR 16.5 billion (USD 18bn) and EUR 17.5 billion, compared to its initial guidance of EUR 16 billion-18 billion. Margin on earnings before interest and tax (EBIT) before special items is seen at 4%-5%, compared to 4%-6% previously.

The forecast for EBIT before special items at the Service segment was reduced to around EUR 500 million from a range of EUR 800 million-880 million.

The revisions are due to adjustments to planned costs in the Service segment, reflecting a combination of sustained inflation within specific inflation components, indirect impacts of increased repairs and upgrades, as well as operational inefficiencies, partly offset by expected future efficiency gains and cost-out initiatives, the announcement says.

As a result of these negative adjustments, Vestas’ EBIT margin before special items in the second quarter will be negative 5.6%, while revenue will amount to EUR 3.3 billion, based on preliminary figures. Service EBIT before special items will be negative EUR 107 million.

The company said that momentum and results in Power Solutions are ahead of schedule. The turnaround in this segment is on track with EBIT margin improving by almost 8 percentage points year-on-year and quarterly orders amounting to 3.6 GW.

In the first quarter of 2024, the manufacturer recorded a net loss of EUR 75 million.

(EUR 1 = USD 1.092)

Choose your newsletter by Renewables Now. Join for free!