Wind turbine maker warns of volatile business environment as inflation and supply chain issues bite
Vestas wind turbines photographed in North Rhine-Westphalia, Germany, on 19 September, 2021.
Horst Galuschka | picture alliance | Getty Images
The wind energy sector faces a rocky road ahead due to a multitude of factors, according to wind turbine manufacturer Vestas.
“The global business environment for wind energy remains volatile in the short term and prosperous in the long term,” the Danish firm said Wednesday, before adding it was expecting “the near future and at least 2022 to be heavily impacted by cost inflation.”
In addition, “the emergence of an energy crisis caused by geopolitics and fossil fuel volatility has also resulted in dramatic increases in energy prices,” Vestas said.
Citing preliminary numbers, Vestas said its revenue in 2021 hit 15.6 billion euros ($17.59 billion), a record high. Its earnings before interest and taxes margin before special items had been expected to come in at 3% against updated guidance of approximately 4%. Initial guidance was 6% to 8%.
Increasing prices on wind turbines were “a necessity to address the external cost inflation and ensure the industry’s long-term value creation,” Vestas said.
Looking ahead, the company acknowledged wind energy was set to be buffeted by a range of interconnected issues.
“The supply chain instability caused by the pandemic and leading to increasing transportation and logistics costs, is expected to continue to impact the wind power industry throughout 2022,” it said.
“In addition, Vestas will experience increased impact from cost inflation within raw materials, wind turbine components and energy prices.”
On its outlook for 2022, the company said it was expecting revenue for full-year 2022 to come in at between 15 billion euros and 16.5 billion euros, with an EBIT margin before special items ranging from 0% to 4%.
Referencing a cyber attack in 2021, Vestas said that while it had not “caused significant direct impact” on its operations it had “temporarily impacted our efficiency and the organisation’s ability to be fully focused on end of year execution.”
Vestas is not alone in highlighting the difficulties facing the wind energy industry. Last week Siemens Gamesa Renewable Energy said “supply chain tensions” had “resulted in higher than expected cost inflation, mainly affecting our Wind Turbine … segment.”
The company also cited what it called “volatile market conditions” as having “impacted some of our customers’ investment decisions.” This had led to delays in some of SGRE’s projects.
