In This Article:
-
Revenue: EUR5.2 billion, a 19% increase year-on-year.
-
EBIT Margin: 4.5%, improved by almost 3 percentage points year-on-year.
-
Service EBIT Margin: 16%.
-
Order Intake: 4.4 gigawatts, flat year-on-year.
-
Turbine Backlog: More than EUR28 billion.
-
Gross Margin: 10.5%, up from 8.1% last year.
-
EBIT Before Special Items: EUR235 million, tripled from last year.
-
Power Solutions Revenue: Increased by 24% year-on-year.
-
Service Revenue: Declined 1% year-on-year.
-
Operating Cash Flow: EUR89 million, improved from last year.
-
Adjusted Free Cash Flow: Minus EUR224 million, an improvement from last year.
-
Investments: EUR272 million in Q3.
-
Warranty Costs: EUR313 million, 6% of revenue.
-
Net Debt to EBITDA: 0.9%, improved from 3.6% last year.
-
Service Order Backlog: EUR35.1 billion, up from EUR32.4 billion a year ago.
Release Date: November 05, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
-
Vestas Wind Systems AS (VWDRY) reported a 19% year-on-year increase in revenue for Q3 2024, reaching EUR 5.2 billion, driven by higher prices and volumes.
-
The company's EBIT margin improved to 4.5%, marking an increase of almost 3 percentage points year-on-year.
-
The Service EBIT margin ended at 16%, reflecting ongoing efforts to improve operational efficiency.
-
Vestas achieved an all-time high turbine backlog of more than EUR 28 billion, indicating strong demand and future revenue potential.
-
The order backlog in Power Solutions increased to EUR 28.3 billion, showing good traction with customers across core markets.
Negative Points
-
The Service business faced challenges with a lower-than-expected EBIT margin of 16%, attributed to ongoing cost scrutiny and inflationary pressures.
-
Vestas experienced regional disruptions in the supply chain, including a threat of a strike in US harbors, affecting project execution.
-
The company is still completing low-margin projects from mid-2022, which continue to impact profitability.
-
Warranty costs remained high, with a specific provision for an offshore-related component issue, leading to elevated warranty expenses.
-
The ramp-up in manufacturing, particularly in the US and Europe, presents challenges and additional costs, impacting operational efficiency.
Q & A Highlights
Q: Can you explain the factors behind the weaker Service margin in Q3 and the expected rebound in Q4? A: Hans Smith, CFO, explained that the 16% margin in Q3 was due to ongoing scrutiny and cost pressures similar to Q2. The Q4 margin is expected to improve as these issues are addressed, although it will take time to fully resolve them.