Vestas has reported a 369% drop in operating profit in 2022 due to “unforeseen geo-political uncertainty, high inflation, and supply chain constraints”.
The turbine manufacturer recorded a EBIT loss of almost €1.2bn in 2022, compared to a €428m gain the previous year.
Vestas group president and chief executive Henrik Andersen (pictured) said: “Vestas and the wind industry remained challenged in 2022 as external headwinds and industry immaturity hampered profitability and resulted in unsatisfying financial results for the full year.
“In a business environment characterised by unforeseen geo-political uncertainty, high inflation, and supply chain constraints, Vestas’ more than 28,000 employees helped achieve €14.5bn in revenue, 13.3GW of deliveries and a firm order intake of 11.2GW.
“Through strong commercial discipline, we managed to raise the average selling price with 29% to €1.07m/MW and finished the year with an all-time high order intake in terms of value in the fourth quarter.
“Our service business progressed well and grew 27% year-over-year, continuing to increase its positive contribution to our revenue and earnings.”
He added that in 2022, Vestas made strategic progress within its offfshore division by securing more than 5GW of preferred supplier agreements for the V236-15.0MW turbine, while a technological milestone was reached when the V236-15.0MW prototype produced its first kWh in late December.
Its development business also progressed well by securing 13GW of new pipeline.
Andersen said: “Throughout 2022, increasing costs, product impairments and increased warranty provisions heavily impacted our profitability and resulted in an EBIT margin of minus 8%.
“Everyone at Vestas is therefore fully focused on returning to profitability in 2023 to reaffirm that we are on the right strategic path.
“Building a sustainable, scalable, and profitable wind industry also requires we continue to build industry maturity and commercial discipline, and we want to say a special thanks to our shareholders for their continuous support during these challenging times.”
Vestas said in 2023, it expects high inflation levels throughout the supply chain and reduced wind power installations to impact revenue and profitability negatively.
The lower level of installations is caused by slow permitting processes in Europe as well as dampened activity levels in the USA due to a steep ramp-up ahead of a busy 2024 driven by the Inflation Reduction Act.
The directors said increasing prices on its order intake is an offsetting factor, but still leaves Vestas challenged on profitability in 2023.
Meanwhile, Vestas is using its presence in the Hatay and Gaziantep regions of Turkey affected by an earthquake to set up a crisis management team to monitor the situation.
Vestas said its primary focus is to guarantee employees’ and their families’ safety and it is working to provide support to local communities through initiatives organising essential goods and shelter on the ground.
In addition, Vestas said it aims to secure the technical integrity of our fleet to maintain electricity production for the wider region.