Vestas’ operating profit fell to €106m in the fourth quarter of 2021, down 70% on the €358m recorded in the same period of 2020.
Operating profit for the whole of 2021 was also down on 2020 at €461m, compared with €750m, the company said in its preliminary results for last year.
The Danish manufacturer said the wind industry is being challenged by supply chain instability, which is causing significant cost inflation and delay in execution of projects.
It said that the current business environment “severely impacts both visibility and profitability and Vestas is therefore today announcing preliminary figures for 2021 and financial outlook for 2022”.
Vestas added that the market “remains volatile in the short term” but “prosperous in the long term”.
The company said it expects the near future and at least 2022 to be “heavily impacted by cost inflation, while the emergence of an energy crisis caused by geopolitics and fossil fuel volatility has also resulted in dramatic increases in energy prices”.
This year will continue to see supply chain instability caused by the pandemic and leading to increasing transportation and logistics costs, Vestas said.
The company also expects to experience increased impact from cost inflation within raw materials, wind turbine components and energy prices in 2022.
It added that increasing prices on wind turbines are a “necessity to address the external cost inflation and ensure the industry’s long-term value creation”.
Vestas forecasts revenue for the year to be in the €15.0bn to €16.5bn range, but said that there is “greater uncertainty than usual around forecasts related to execution in 2022, and the outlook seeks to take into account the current situation and challenges”.
Revenue in the fourth quarter of 2021 was almost €4.6bn, up from just under €4.3bn in 2020.
Revenue for the whole of 2021 was just short of €15.59bn, compared with €14.82bn in the previous year.
The order intake in Q4 2021 was €2.5bn, down from €4bn in 2020, while in MW terms it fell to 2863MW from 5558MW over the period.
For 2021 as a whole, the order intake stood at €11.6bn (13,896MW), compared with €12.7bn (17,249MW).
The order backlog for turbines was €18.1bn (21,984MW) in 2021, down from €19.0bn (24,630) in 2020.
Vestas president and chief executive Henrik Andersen said: “Everyone at Vestas did an outstanding job in 2021 to ensure record-high revenue despite a global business environment that became more challenging as the year progressed.
“Supply chain instability and rising energy prices as well as accelerated cost inflation from raw materials, transport, and turbine components, however, continued to amplify costs throughout the year, which severely impacted visibility and profitability.
“We remain focused on executing our strategy and driving the energy transition forward with our customers but expect the current challenging business environment to continue throughout 2022, which hampers our outlook for 2022.
“To mitigate these short-term challenges, the industry must show the discipline needed to protect profitability and improve value creation in the long term, and Vestas will continue to pave the way towards higher discipline.
“Partnerships remain fundamental for Vestas, and I want to extend a huge thank you to our colleagues, customers, and other partners across the full value chain.”
The company also gave an update on the cyberattack that took place on 19 November 2021.
It said: “This has not caused significant direct impact on Vestas’ operations or added significant additional costs as wind turbines remained unaffected, but did keep certain internal IT systems down for some time and required significant internal resources to be re-allocated to handle the attack and mitigate the impact.
“As a consequence, the attack temporarily impacted our efficiency and the organisation’s ability to be fully focused on end of year execution.
“Although the immediate incident can be considered as over and the company’s cyber security setup helped contain the incident, Vestas’ work to further strengthen both our own and the energy system’s cyber security and resilience continues.”