Vestas admits 'disappointing' Q1 as fault hits 376 turbines

Danish wind equipment group Vestas has reported poorer-than-expected first quarter financial figures – partly because of gearbox faults in 376 turbines.

Ben Backwell, London

Vestas pulled in revenues of €1.11bn ($1.46bn) in the first three months of 2012 – just 4% higher than in the first quarter last year and lower than analysts’ consensus forecasts of €1.48bn.

Earnings before interest and tax (Ebit), not counting special items, showed a loss of €204m, compared with a profit of €135m last year.

Including special items the Ebit loss was €245m. Vestas showed a net loss of €162m, compared to €85m during Q1 2011. The Ebit margin before special items was -18.5%, compared to 6.5% last year and an analyst consensus forecast of -4.3%.

The news sent the wind group's shares 12% lower in early trading.

Vestas says the “disappointing” revenues and earnings figures were due to a “low level of deliveries, too high turbine costs and additional unexpected warranty provisions of €40m”.

The latter is because monitoring data has shown that 376 V90-3.0 MW gearboxes delivered to Vestas from June 2009 to September 2011 may potentially need additional maintenance, repair or replacement due to malfunctioning bearings.

Vestas says it “will pursue all relevant actions with regards to potential compensation from the suppliers”.

The company says that though it continues to develop its V164-7.0 MW offshore turbine, “to align the expected serial production date with Vestas’ current offshore market outlook, Vestas has reduced the pace of development".

The first V164 prototype is now expected to be installed in Denmark during 2014, instead of 2013 as originallly planned.

Vestas says it has received inquiries from potential partners on the further development of the V164. The company is currently deciding whether to develop its offshore business in conjunction with a strategic partner or investor.

On the positive side, Vestas says its intake of firm and unconditional orders in the first quarter was 1.27GW, while its order backlog stands at its highest level ever at €10bn. The company also had service agreements representing future revenue of €4.3bn at the end of March.