Vestas, as well as its rivals, can expect improved margins because steel prices have fallen sharply from their peak in 2022 and because turbine manufacturers have succeeded in raising their prices.

According to Bloomberg Intelligence analysts, turbine prices have increased by more than 20% in recent years, while steel prices have more than halved since their peak in 2022.

Therefore, the equity analysts consensus may be too conservative.

”Vestas’ EBIT margin is expected by consensus to be 1-2% in 2023, but an improvement in supply chains and falling steel prices - down by around 55% from the 2022 peak - set the stage for significant increases in 2023-2024 earnings,” it says.

Bloomberg Intelligence analysts suggest that operating margins, which averaged 15% from 2015-2019, will rise to 8-9% in 2023 and 12-13% in 2024.

However, it may take several quarters for lower prices to work their way through the supply chain, they warn, and there are also potential headwinds in the second half of 2023.

In terms of turbine prices, it is highlighted that they have risen by more than a fifth since the low point in 2019, and with many contracts already signed, the higher levels may hold throughout 2023-2025.

”But in the longer term, prices could return to their sustained downward trend, as broad technological improvements and increased production efficiency will drive continued cost deflation.”

The positive trends are expected to benefit not only Vestas, but also competitors such as Siemens Gamesa, Nordex and China’s Goldwind.