Cost inflation on raw materials without precedent prompts credit rating firm Moody’s to lower the outlook for turbine manufacturer Vestas’ credit rating to ”negative” from ”stable”.

The long-term issuer rating remains Baa1, however, but with the now negative outlook, Moody’s is setting the stage for a possible downgrade of the credit rating.

”The change in outlook to negative reflects the continuation of unprecedented raw material cost increases seen since February, which puts a strain on Vestas’ profitability and led management to a downward revision of their margin guidance for 2022, since a majority of price increases can only be gradually passed on to customers in the context of new orders,” writes Moody’s analyst Oliver Giani in connection with the change, according to Bloomberg News.

He adds that maintaining the rating ”balances the current challenges to defend profitability in an environment of cost inflation against the further strengthened mid- to longer-term market outlook.”

Increased demand for wind turbines would benefit a market leader like Vestas, Moody’s estimates.

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