Vestas Wind Systems A/S surged the most in two years after the wind turbine maker announced a $227 million share buyback and said its orders rose.
“Order intake was very strong, and profitability was clearly above market expectations,” said James Evans, an analyst at Bloomberg Intelligence. It was “aided by Vestas’ new push into co-developing projects, with two US wins and a large Swedish order signed as a result.”
Its order intake rose to 3,807 megawatts in the second quarter of 2018, compared with 2,667 megawatts in the same period last year.
The total backlog was 23 billion euros, an increase of 2.8 billion euros.
“In the first half of 2018, the wind industry strengthened its position as the cheapest form of energy generation in many markets, which drove strong global demand,” Chief Executive Officer Anders Runevad said. “This development saw Vestas’ second quarter order intake increase 43 percent year over year, contributing to the continued growth of our order backlog to an all-time high.”
The company narrowed its guidance for revenue and margins, noting that a trade war is unsettling the outlook for wind turbine manufacturers. Vestas hedges the steel price and pre-buys the primary material for its towers, so it’s not expected to be affected this year but it could be in 2019, according to Chief Financial Officer Marika Fredriksson.
“For this year 2018, we are not expecting any impact from higher raw material prices, steel primarily,” Fredriksson said. “For the coming years that is another thing but that’s also something we’ll have to come back to when we guide for ’19.”