COPENHAGEN: Denmark’s Vestas Wind Systems AS, one of the world’s largest makers of wind turbines, posted a strong rise in second-quarter net profit thanks to higher deliveries in the U.S. and Germany.
The company said net profit more than doubled to €278 million euros ($313.4 million) in the three months to June 30, from €125 million in the same period a year earlier. Revenue grew 46% to €2.56 billion from €1.75 billion.
Vestas’s strong earnings highlight how wind-turbine makers have recovered from a difficult period at the start of the decade, when many governments questioned their support for renewable energy and big projects were put on hold. Crippled by losses, Vestas had to cut jobs and sell a number of factories in 2012 and 2013.
Vestas is now expanding again, with U.S. deliveries growing 45% on the year to 779 megawatts, partly due to the country’s extension last year of a key tax credit until 2023, with a gradual reduction as of next year. Competitors have caught a similar tail wind. Spain’s Gamesa Corporacion Tecnologica SA and Germany’s Nordex SE both increased revenues by more than a third on the year in the quarter. Gamesa, which is set to merge with Siemens Wind Power, reported a 16% on-year growth in orders.
Global wind power capacity is expected to continue growing in coming years on the back of ambitious national renewable energy targets set ahead of the Paris climate agreement last year, and as wind power becomes cheaper and more competitive with fossil-fueled power plants.
“Activity has been high for quite some time now,” said Vestas Chief Financial Officer Marika Fredriksson. Vestas shares soared 9.9% to 535.50 Danish kroner ($81.24) on Nasdaq Copenhagen Thursday on word of the strong second-quarter earnings and the launch of a share buyback plan.
The company said it intended to spend 2.98 billion Danish kroner ($452 million) to buy its own shares thanks to a recent jump in cash flow. Vestas last year started paying dividends for the first time since 2002 after returning to a net profit in 2014 from three loss-making years.
Vestas has about a third of its activity in the U.S., and order intake in coming quarters depends on whether U.S. customers will rush to make new orders by the end of the year, before a reduction of the tax credit to 80% in 2017 and 60% in 2018.
