Wind turbine maker Vestas boosts orders while Dong exits oil and gas

Wind power gives equipment maker a boost as profits top estimates while its domestic oil and gas peer decides its future lies in offshore windfarms.

The Danish turbine maker Vestas has posted profits that beat estimates. Courtesy Vestas Wind Systems

The Danish wind turbine maker Vestas posted third-quarter results on Tuesday that exceeded expectations, while lifting its forecasts for the year on the back of a 17 per cent increase in orders between July and September.

Vestas said it expected 2016 revenue of €10 billion (Dh40.64bn) to €10.5bn compared with a minimum of €9.5bn previously.

The announcement came at the same time Vestas’ Danish energy peer Dong said it would exit the hydrocarbon sector to focus just on wind energy.

Vestas also lifted its guidance for the margin on earnings before interest and tax before special items to 13 to 14 per cent from a minimum of 12.5 per cent before, and said it expected free cash flow of at least €1bn compared with a minimum of €800 million previously.

“The upgrades are based mainly on improved delivery visibility for the remainder of the year,” the company said.

Third-quarter operating profit before special items rose 87 per cent to €433m, beating the €312m expected by analysts in a Reuters poll.

Revenue for the quarter came in at €2.9bn, also beating expectations of €2.48bn.

Also today, Dong Energy said it plans to exit the oil and gas business to focus solely on offshore wind power, as it stuck by its forecasts for the full year. The company has built more than a quarter of the world’s offshore wind farms, including the London Array in partnership with Abu Dhabi’s green energy company Masdar and Germany’s EON.

“We have decided to initiate a process with the aim of ultimately exiting from our oil and gas business,” said Dong’s chief executive Henrik Poulsen.

Dong Energy reported earnings before interest, depreciation and amortization (ebitda) for the third quarter of 4.8bn Danish kroner (Dh2.61bn), below the 4.92bn kroner forcast in a Reuters poll.

Net profit for the period came in at 3.3bn kroner, higher than the 2.99bn kroner expected by analysts.

The company maintained its full year ebitda forecast for 20bn to 23bn kroner, it said.

* Agencies

Follow The National's Business section on Twitter