Shares in Vestas Wind Systems A/S yesterday fell the most in three months after the wind giant cut its outlook for the year, citing surging commodity costs and supply chain disruptions.
The Danish company, one of the top makers of wind turbines, said it expects full-year revenue to be about 3 percent lower this year.
The revised outlook comes as renewable energy developers continue to face rising costs for raw materials like copper and steel, which are essential for the industry.
Photo: Reuters
Commodities have rallied this year as global economies rebound from the COVID-19 pandemic, boosting the price of everything from oil to natural gas and steel.
Higher costs earlier this year forced Spanish turbine rival Siemens Gamesa Renewable Energy SA to report a loss.
“Inflation is here,” Vestas chief executive officer Henrik Andersen said in an interview on Bloomberg TV.
Vestas shares, down almost 18 percent this year, plunged as much as 7.7 percent, the most since May.
The company now expects full-year revenue of 15.5 billion euros to 16.5 billion euros (US$18.2 billion to US$19.3 billion), down from an earlier forecast of 16 billion euros to 17 billion euros, it said in an earnings statement.
The company also cut expected margin on earnings before interest and taxes to 5 to 7 percent. That compares with a previous forecast of 6 to 8 percent.
Reduced returns for renewable energy companies come just as the world needs wind and solar farms the most.
The industry needs to invest at least US$92 trillion by 2050 to cut emissions fast enough to prevent the worst effects of climate change, BloombergNEF reported.
Surging prices for key metals and higher shipping rates in the first quarter spurred a loss for Vestas.
Steel prices in the US surged more than 80 percent this year. The metal is the single biggest input for manufacturers like Vestas, making up about 84 percent of a turbine’s weight.
The revised guidance shows that the situation is more challenging than executives first thought. Vestas earlier this year said that despite a slow start, it would be able to recover for the full year and maintained its guidance after the first quarter.
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