Vestas second quarter better as lenders agree covenant delay

Wind turbine group Vestas says it saw a “strong improvement” in its second quarter after a dismal start to the year – and reveals its lenders have agreed to defer key tests of its financial performance.

In a surprise move, the Danish manufacturer revealed preliminary financial figures for the first half of 2012 several weeks early.

They show that Vestas produced and shipped 2.16GW in the second quarter of 2012 compared to 931MW in the first three months of the year.

Revenue is expected to come in at €1.6bn against Q1’s €1.1bn, while preliminary earnings before interest and tax (Ebit), before special items, were €40m – turning around a first-quarter negative figure of €204m.

Shares in the world's biggest maker of wind turbines surged by 15% in trading following the news, which was accompanied by an update on its credit arrangements.

While Vestas hails the “strong improvement in earnings and activity level in the second quarter of 2012” it says its “disappointing” first quarter and second half of 2011 affected its ability to meet the tests of its financial covenants.

It says its lenders have agreed “to defer the half-year 2012 testing of the financial covenants contained in Vestas’ banking facilities”.

They have “allowed drawings, which in the opinion of Vestas are sufficient for the continued operation of Vestas on usual terms since the company expects to test on normal terms in the future”.

The Danish group adds: “Vestas considers this to be a temporary issue, and in the light of the company’s positive results in the second quarter of 2012, combined with the large backlog of firm and unconditional orders, Vestas expects to meet the financial covenants contained in its current banking facilities in the near-term future.”

The financial figures – which Vestas stresses are subject to review and revision – show that despite the increased revenues, the wind group still expects to make an overall loss of €8m in the second quarter.

For the first half of 2012, Vestas expects to ship 3.1GW compared to 2.05GW in the same period last year.

It released a preliminary negative Ebit after special items of €227m for the half, against a year-earlier positive €8m.