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Wind Giant Vestas Slumps as Earnings Slide on Surging Costs

Bloomberg
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February 10, 2022

By William Mathis (Bloomberg) —

Vestas Wind Systems A/S tumbled in Copenhagen trading after a drop in profit prompted the company to slash its dividend.

The world’s top supplier of wind turbines cut its payout by 78% as surging raw-material and shipping costs eroded earnings. It’s a blow to a stock that jumped to a record last year amid the clean-tech rally, and shows how rising inflation and supply-chain snarls are hammering the industry even as demand climbs.

Vestas shares sank as much as 5.6%, the biggest intraday decline since Jan. 24. The stock traded down 4% at 161.70 kroner as of 1:16 p.m. local time. 

Turbine makers have seen costs for steel, copper and other key materials soar, while long delivery delays for some components have added to expenses. 

“With supply-chain disruptions expected to continue throughout the year, 2022 will be challenging for the industry,” Vestas Chief Executive Officer Henrik Andersen said Thursday in a statement.

The Danish company cut its total annual dividend to 50 million euros ($57 million), or 5 euro cents a share, reflecting last year’s drop in profit even as it maintained the payout at 30% of net income.

Most of Vestas’s 2021 financial results and outlook were published in a preliminary statement two weeks ago. The company saw profit margins shrink, despite raising prices for customers. It said margins will remain under pressure this year, but revenue may recover.

Vestas sees its 2022 profit margin around 4% at best and potentially zero, compared with a 3% margin achieved in 2021. That’s not bad, by industry standards. One of its main competitors, Siemens Gamesa Renewable Energy SA, expects its margin to be as low as -4% in its current fiscal year. 

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