Vestas’ operating profits have dropped with the company reporting EBIT before special items of €750m in 2020 compared to €1004m in 2019.
The fall was attributed to the company being negatively impacted by warranty provisions and increased execution costs.
The turbine manufacturers’ revenue amounted to €14.8bn, with an EBIT margin before special items of 5.1%, and total investments of €659m, all in line with expectations.
Compared to 2019, revenue increased while earnings decreased, and free cash flow stayed at around the same level.
The value of the combined order backlog increased from €34bn to €43bn as the offshore business is now included.
For 2021, Vestas expects revenue to range between €16bn and €17bn, including service revenue, which is expected to grow by 15%.
Vestas expects to achieve an EBIT margin before special items of between 6 and 8%, with a service EBIT margin of around 24%.
Total investments are expected to amount to around €1,000m in 2021.
Vestas expects warranty provisions around 3% of revenue in 2021 and special items to amount to €100m related to the integration of the offshore business into Vestas’ organisation.
As a result of the performance in 2020, the directors will propose to the Annual General Meeting that a dividend of DKK 8.45 per share (€1.14) be distributed to the shareholders, compared to DKK 7.93 (€1.07) last year, and equivalent to 30% of the net profit for the year.
Group President and chief executive Henrik Andersen said: “Renewable energy took another large step forward in 2020 by improving its competitiveness, showing great resilience during a global pandemic, and proving renewables can serve as the backbone of our societies in the future.
“In 2020, Vestas continued to play a key role in the fight against climate crisis, and we met our revised guidance on all parameters, leading the industry on revenue, order intake, and profitability despite COVID-19 affecting all parts of our value chain.
“In this environment, we achieved more than 17GW of deliveries and bolstered our total order backlog to an all-time high of €43bn through strong order intake, service growth, and the re-integration of offshore wind.
“Service performance was once again very strong with a 10% increase in revenue year-over-year and record EBIT margin of 28%.
“Group profitability was negatively impacted by warranty provisions and increased execution costs.
“In addition to acquiring MHI Vestas Offshore Wind, Vestas also made strategic strides to increase our presence across the value chain, including establishing a dedicated development business unit, launching the largest turbine in offshore wind and underlining our leading position within sustainability by reducing our own carbon emissions by 33% and reaching 186m tonnes of CO2avoided on a yearly basis through our installed base.
“To position Vestas strongly for future growth and profitability, our focus in 2021 will be to fully integrate offshore and address executional challenges.”