(Bloomberg) -- Vestas Wind Systems A/S issued a profit warning for its full-year results in a blow to the company’s effort to turn around steep losses in recent years.
The company expects to record an earnings margin of between 4% to 5%, down from a range of 4% to 6%, according to a statement released Monday. It’s the latest unwelcome surprise from Europe’s biggest wind turbine maker that’s working to recover after soaring inflation and supply chain issues led to losses across the green power industry.
Vestas also lowered its 2024 revenue outlook to a range of €16.5 billion to €17.5 billion ($18 billion to $19.1 billion), down from €16 billion to €18 billion. The warning comes as costs increased at the business that services turbines after they’re installed. The company also expects to record an earnings margin of -5.6% for the second quarter.
Shares fell as much as 7.2% and were trading 4.8% lower at 3:52 pm in Copenhagen.
The cut to the company’s profit outlook for the year would still be an improvement on the 1.5% earnings margin it saw in 2023. But the revision may undermine shareholder confidence that Vestas has passed a period of unpredictable bad news. Vestas is set to release second-quarter results on Aug. 14.
Demand for wind turbines is set to boom in the coming years as governments rely on the renewable source to deliver on goals to cut emissions from the power grid. But American and European suppliers such as Vestas saw their businesses upended by steeply rising costs for inputs like steel. In many cases, companies were left selling wind turbines at a loss, having locked in a price that was below the cost of producing and delivering the machines to customers.
Vestas also recorded a loss in the first quarter of the year, but the company’s management assured investors that it wouldn’t imperil earnings guidance. The hit this time is to the firm’s crucial services business, which remained profitable in 2022 when Vestas overall lost more than €1 billion. The company said it’s still a “highly profitable segment.”
There was also positive news. In the company’s core business selling wind turbines, the turnaround is continuing as planned. It recorded an improvement to its earnings margin in that segment by nearly eight percentage points in the second quarter compared with a year earlier.
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