Vestas operating profit for the third quarter is below forecast

Vestas is the largest wind turbine manufacturer in the world. On Tuesday, it reported lower-than expected third-quarter profits and stated that its operating profit margin for this year will be at the lower end.

In a press release, CEO Henrik Andersen stated that "the quarter was negatively affected by a slightly slower than expected margin improvement in Service as well as elevated warranty provisions during the quarter."

In its earnings report, the company said that the higher costs in Europe, Middle East, and Africa (EMEA), and the United States were the main reasons for the lower margin.

Operating profit before special item rose from 70 million euros a year ago to 235 millions euros, falling short of the 352million euros predicted by 25 analysts who took part in a survey compiled by the firm.

The company expects to achieve its operating profit margin for the full year at a lower end of the guided range of 4-5%. The company still expects revenues between 16.5 billion euros and 17.5 billion euro.

Vestas service business, which is usually a bright point, will now generate an operating profit of around 450 millions euros before special items this year. This is down from the previous estimate of 500million euros.

Vestas stated that "the service profitability reflects the ongoing scrutiny of improving operational efficiency." (Reporting and editing by Terje Solsvik, Stine Jacobsen)

(source: Reuters)