Vestas Sees Higher 2009 Margins, Shares Rise

By Kim McLaughlin

COPENHAGEN, Nov 6 (Reuters) - Denmark's Vestas, the world's No. 1 wind turbine maker, on Thursday kept its 2008 outlook and said it saw higher 2009 margins and sales, lifting its shares despite lower-than-expected third-quarter earnings.

Vestas is riding a surge in demand for renewable energy sources due to greenhouse gas emissions concerns but its shares have lost 57 percent since the end of August on fears the financial crisis and lower oil prices will crimp growth.

Earnings before interest and tax (EBIT) rose to 160 million euros ($206 million), compared with the average estimate in a Reuters poll of 173 million euros and 102 million in the corresponding period of 2007.

The group said it still expected an EBIT margin of 10 to 12 percent on sales of 5.7 billion euros this year and expects its market share to rise to 25 percent.

For 2009, it expects sales of 7.2 billion euros and an EBIT margin of 11 to 13 percent.

'Looking at the third quarter in isolation the results don't look particularly overwhelming,' said Sydbank analyst Jacob Pedersen.

'But the share price has halved over the last few months because of worry that people will simply stop buying turbines because of the crisis, and those are worries, I think, the results have put to shame,' he said.

By 1008 GMT, Vestas shares were 1.2 percent higher at 300.50 crowns, outperforming the Copenhagen top-20 OMX index , which was 2.3 percent down.

Vestas shares have recovered sharply over the last week from intra-day lows of 180 crowns at the end of October, partly on assumptions that Barak Obama would win the U.S. presidential elections, analysts say.

In a statement, Vestas called for a long-term U.S. renewable energy plan in order to exploit the potential of wind power.

The Randers-based group said the current credit squeeze would alleviate demand pressure in its industry and that prices for a number of key components had peaked.

Vestas, which competes with Spain's Gamesa, India's Suzlon Energy and units of global power generation giants Siemens (nyse: SI - news - people ) and General Electric (nyse: GE - news - people ), had an order backlog at the end of the quarter of 6.5 billion euros. This compared with 7.2 billion three months earlier, but was 59 percent up on the figure at end-September last year.

'The outlook for 2009 is pretty good, with 26 percent (sales) growth and a margin improvement that will come from lower warranty writedowns,' said Gudme Raaschou analyst Stig Nymann.

'With the backlog they have, they can get far into 2009 before they have to live from new orders,' he said.

Vestas said its current organisation and cost base was geared to a level of activity more than 15 percent higher than its projected 2009 sales.

Next year it plans to invest 1.2 billion euros of which 1 billion will be invested in property, plant and equipment, primarily in the United States, Spain and China and in development centres in Denmark and Britain.

Pedersen said the expansion plans were an extremely strong signal of growth for Vestas.

(Editing by Will Waterman and Jon Loades-Carter)