Vestas swings to unexpected first-quarter profit

 (Reuters) – Danish wind turbine maker Vestas (VWS.CO) on Wednesday reported an unexpected first-quarter profit and maintained its full-year guidance despite a tough backdrop for the industry.

Despite booming demand for renewable energy, increased competition and soaring metal prices meant that Vestas did not manage to turn a profit last year.

“The wind industry remains challenged by political uncertainty, slow permitting processes and high inflation, which we expect to continue throughout 2023,” CEO Henrik Andersen said after reporting first-quarter earnings.

Vestas is “on track” to achieve its 2023 financial guidance, he added.

The company expects to generate a profit this year as price increases for its turbines starts to kick in and material costs level out.

Profitability in the first three months of this year were helped by the servicing division, the sale of its converter business to KK Wind Solutions and lower warranty provisions.

The company’s average selling price of 0.89 million euros per megawatt in the quarter was below analyst expectations of about 1.07 million per megawatt.

“Investors knew that the order intake in the first quarter would be at lower prices; among other things due to a large order in Brazil, where selling prices are low,” Nordnet analyst Per Hansen said in a note.

Despite the lower average selling price, “underlying pricing and project profitability are not diluted”, Vestas said.

Earnings before interest, tax and special items stood at 40 million euros ($44.03 million) against a 329 million euro loss a year earlier and an average analyst forecast of a 70 million loss in a poll compiled by the company.

($1 = 0.9084 euros)

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