Vestas Contracts Point to Strong 2016

Denmark's Vestas beat forecasts with record orders for new wind turbines last year, signalling continued strong demand for renewable energy despite a plunge in fossil fuel prices.

Hit by overcapacity and the withdrawal of some government subsidies during the global economic downturn, big wind turbine makers are now benefiting from a new focus on renewable energy generation, encouraged by the Paris global climate summit in December, as well as the extension of a key U.S. tax credit.

Vestas, the world's biggest wind turbine maker, said on Tuesday it received orders to build turbines with a total capacity of 8,943 megawatts (MW) last year, beating its previous record of 8,673 MW in 2010 and more than the 8,639 MW expected by analysts in a Reuters poll.

The strong order intake prompted the company to announce higher-than-expected financial guidance for 2016.

Vestas said it expected sales to rise to at least 9 billion euros ($10.1 billion) from 8.42 billion last year, and its operating profit margin before special items to grow to at least 11 percent from 10.2 percent. Analysts had expected 2016 revenues of about 8.65 billion euros.

"We have a fairly good insight into the order situation and the order backlog that we need to execute during 2016," chief executive Anders Runevad told Reuters.

Vestas shares jumped by more than 10 percent in early trade. At 0913 GMT, they were up 7.8 percent at 405.20 Danish crowns, the biggest rise by a European blue-chip stock.

"Guidance showed what we had hoped for, but did not dare to believe in. 2016 will be a very strong year," analyst Michael Friis Jorgensen from Alm. Brand Bank said.

Fourth-quarter operating profit before special items rose to 404 million euros from 252 million a year earlier and well above the 374 million expected by analysts.

Reporting by Teis Jensen