Increasing input costs and supply chain disruptions hit Vestas' earnings hard in 2022, but Danish bank Sydbank forecasts that the OEM will be able to raise sales prices on this year's incoming orders, thereby markedly improving profitability in 2023.

The bank restates its 'buy' recommendation after the presentation of the manufacturer's annual financial statement – well in accordance with Vestas' preliminary key figures and 2022 guidance.

Even though the company's prognosis bears witness to the fact that wind turbines for installation this year are markedly more expensive to produce and set up, current supply chain uncertainty is unlikely to last an eternity.

"Vestas doesn't expect present supply chain unpredictability nor production to improve in 2022. In the current situation, where everything is unpredictable, the company's perspective is understandable, but we nonetheless see some probability for the supply chain congestion to slowly abate from the fall of 2022," writes Sydbank Senior Analyst Jakob Pedersen in a note:

"This will not necessarily have noteworthy significance for Vestas' 2022 earnings, but it will be a big advantage for Vestas' cost level and production economy during 2023 – perhaps a little earlier."

Pedersen says evidence of high sales prices on this year's incoming orders combined with a more foreseeable situation in the supply chain will serve as strong indicators of new orders being substantially more profitable.

"That could convince investors to turn a blind eye to a 2022 with weak earnings, instead looking toward subsequent years when Vestas should be able to markedly boost profitability and earnings," the analyst says.

Sydbank repeats its buy recommendation as Vestas' share price trades at the lowest level since summer of 2020. Thursday, Vestas stock depreciates a further 2.1 percent to DKK 164.95 in the wake of the annual report.

Since Jan. 1, Vestas share price has fallen by more than 17 percent.

Vestas maintains 2022 guidance while still eying supply chain disruptions  

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