Vestas saw profits fall last year as pricing pressure took its toll in a competitive wind market – but claimed record orders and a stabilising price environment bodes well for a “very busy” 2019 ahead.

The Danish onshore wind giant booked a net profit of €683m ($775m), a 24% fall on 2017’s figure despite boosting revenues by 2% to €10.1bn.

Like other turbine OEMs the company has seen its margins squeezed as price pressures feed back through a wind sector increasingly driven by competition rather than subsidies.

But Vestas is expecting revenues to rise this year as it sets about meeting a record backlog helped by a highest-ever intake of 14.2GW in 2017.

It expects revenues this year to come in between €10.75bn and €12.25bn.

Vestas CEO Anders Runevad told financial analysts Vestas had now seen five quarters of consistent pricing, “and there are good arguments why that should continue”, noting that other big players in the industry had also reported similar trends.

The OEM booked 5.5GW of orders in the fourth quarter at an average €0.76m/MW, stable on the previous three months and compared to €0.74m/MW seen in the same quarter a year earlier.

Runevad said: “In 2018, wind energy manifested its position as the cheapest source of electricity in many parts of the world, creating a tremendous long-term growth outlook for the industry and a highly competitive environment short-term.

“Together with the continued underlying stabilisation in pricing and our strong focus on efficiency and cost management, we sustained and strengthened the foundation that enables us to execute a very busy 2019.”

MHI Vestas in the black

One notable milestone was a debut profit from MHI Vestas Offshore Wind, the offshore joint venture set up 50/50 with Mitsubishi Heavy Industries in 2014.

The offshore OEM made a net profit of €26m last year on revenue of €1.1bn, said Vestas. MHI Vestas has an 8.34GW backlog.

Vestas CFO Marika Fredriksson said the JV turbine-maker's journey to profitability and market success reflected the decision made by the Danish group earlier in the decade over the best way forward for its offshore technology.

“We obviously saw at that time we would have the biggest offshore turbine on the planet,” said Fredriksson, but the group's financial strength at that point meant “we needed a partner”.

Wind

Vestas profits fall but OEM sees revenues up in 'busy' 2019