Vestas is on course to record losses of almost €1.2 billion for 2022 after revealing fourth quarter figures that include over €300m of additional costs to cover warranty provisions and an impairment on its V174 offshore unit.
The Danish company said its EBIT margin for the year was -8%, compared to its -5% target, according to preliminary full-year 2022 figures, implying it is set to book the full-year loss of €1.16 billion. Full results are due next month.
The company said it missed its financial guidance for the year due primarily to “isolated events in the fourth quarter” as well as “delays in a confined number of projects”.
“In the fourth quarter, additional warranty provisions of €210m have been made. The higher warranties primarily relate to increased repair and upgrade costs and a few select cases,” the company said.
Vestas added that it has booked an impairment of €95m on its V174 turbine as a result of an “expected challenged profitability” and lower order intake for offshore projects utilising the unit.
The EBIT margin for the Service business is expected to amount to 21.4% compared to an outlook of approx. 22%.
Total revenue for the year was €14.5bn, below its initial €15bn-€16.5bn initial guidance and its revised outlook of €14.5bn-€15.5bn.
For 2022, Vestas took 11,189MW of turbine orders – 4,568MW from the EMEA region, 4,547MW from the Americas and 2,074MW from Asia.
Its order intake for the fourth quarter was 4.2 GW, marking an average selling price of €1.15m per MW, a sequential increase of 8%, and above the full year 2022 average selling price of €1.07m per MW.
The company added that unexpected geopolitical uncertainty, the ongoing energy crisis and high inflation created challenges for the wind industry.
Vestas predicted that activity levels in 2023 are likely to be lower than in 2022 followed by a step up in 2024 where installations in key markets are projected to increase.
It expects its revenue for full year 2023 to range between €14bn and €15.5bn.