In an interview with MarketWire, Vestas Chief Executive Henrik Andersen speaks about a dilemma and mounting frustration.

Vestas’ Power Solutions unit, entailing wind turbine sales, production and installations, booked revenue of EUR 3.096bn for this year’s third quarter, however, despite the company’s best efforts, divisional earnings before interest and taxes and before special items summed to EUR -252m during the period.

That equates to a negative operating margin of 8.1% against a positive margin of 5.3% from the same period last year – a development the group attributes to persisting external cost inflation and supply chain disruptions.

”When I sit and look at ourselves and the whole industry, there’s something of dilemma and also mounting frustration that, once again this quarter, we have supplied our wind turbines with a negative operating margin, while we also see that the kilowatt hours generated by the turbines have never been more valuable,” Andersen reflects:

”So, there’s something of a paradox here that needs solving. Regarding the current price of electricity and energy, one can only say that the wind turbine, comparatively speaking, is still too cheap.”

During the third quarter, Vestas achieved an average sales price per MW for onshore order intake totaling EUR 1.06m compared to EUR 0.81 from Q3’21 – an increase of 31%.

”Now we are at EUR 1.06m per MW, and we are pleased with that for this quarter, but it also clearly illustrates that there might be customers this quarter who essentially can see that the paypack period for an entire wind turbine is a very, very small number of years,” the CEO comments:

”I think this is perhaps not a fair distribution within the value chain, considering that, for every [DKK 1] we make in revenue, [DKK 0.08] is lost on the turbine,” Anderesen says, with the latter referring to the negative operating margin of roughly 8% in the Power Solutions unit.

Development of the service business is a positive element of Vestas’ financial statement, and the Development division is also going according to plan, the CEO notes, thereby possibly helping to cinch various problems, especially within Power Solutions.

”It’s clear what must be solved because the service business is running well, Development is performing well, our offshore wind business has fine traction, but our onshore wind businesses profitability is not functioning – and we must rectify that,” Andersen notes.

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