Vestas Wind Systems AS late Sunday cut its full-year guidance after announcing hefty write-downs on its Russia and Ukraine business, higher warranty provisions and impairment losses on legacy offshore activities.
“The business environment worsened significantly during the first quarter of 2022 due to Russia’s invasion of Ukraine, and the associated ripple effects on global trade and cost inflation,” Vestas said.
“At the same time, we have seen lockdowns in China that will continue to impact the wind-power industry throughout 2022, together with increased cost inflation for raw materials, wind-turbine components and energy prices.”
In total, Vestas
booked 565 million euros ($595.5 million) of one-off costs in the quarter, in addition to EUR195 million of warranty provisions caused by increasing repair and upgrade costs of offshore wind turbines.
The Danish wind-turbine maker said it recognized EUR401 million of costs following its decision to withdraw from the Russian market while stopping all service and construction activities in Ukraine.
The costs relate to inventory located in Russia and Ukraine that isn’t expected to be sold, as well as assets such as buildings and equipment in Russia that have been written down to zero as they aren’t expected to be used or sold, the company said.
Further costs of EUR183 million were booked in relation to an adjustment of its manufacturing footprint by ceasing production at certain factories in China and India, the company said.
Vestas posted a first-quarter net loss of EUR765 million, compared with a loss of EUR68 million a year earlier, as revenue rose 27% to EUR2.49 billion.
Analysts in a FactSet poll had expected a net loss of EUR89 million on revenue of EUR2.37 billion.
Order intake rose to EUR3.0 billion from EUR1.6 billion, while the total turbine and service order backlog reached EUR48.9 billion, compared with EUR44.7 billion, the company said.
For 2022, the company said it now expects revenue of between EUR14.5 billion and EUR16.0 billion, compared with previous guidance of between EUR15.0 billion and EUR16.5 billion, and a pre-items earnings before interest and taxes margin of -5% to 0%, compared with 0% to 4% previously.
Service revenue is expected to grow by at least 10%, compared with previous guidance of around 5%, with a pre-items service Ebit margin of around 23%, compared with 25% previously, the company said.
It said it still anticipates total investments of around EUR1 billion for the year.
Write to Dominic Chopping at [email protected]