By Amara Osei

Vestas Wind Systems shares fell 7.7% in early European trading on Wednesday after third-quarter profit and revenue missed expectations and the company narrowed its full-year guidance. The stock dropped by as much as 9.4% at the session low, its steepest decline since 5 February, according to Bloomberg.

How did the market react?

Janne Vincent Kjær, an analyst at Jyske Bank, wrote in a note cited by Bloomberg: “Vestas has delivered a weak result.” His assessment contrasted with Vestas’s 8.5% EBIT (earnings before interest and tax) margin, 13% service revenue growth and €42 billion contracted service backlog.

CEO Henrik Andersen told Bloomberg Television that he was taken aback by the share-price drop and believed the company was progressing well. Vestas had raised its profit forecast in August; the quarterly miss and narrowed outlook followed that increase.

What did Vestas report in the third quarter?

Vestas reported third-quarter EBIT before special items of €483 million, while sales reached €5.68 billion. A company-compiled consensus had expected €526 million of earnings and €6 billion of revenue, according to The Wall Street Journal.

The EBIT margin excluding special items rose to 8.5% from 7.8% a year earlier. Group order intake fell to €4.1 billion from €4.6 billion in the corresponding quarter.

Revenue in the main wind turbine business increased 4.9%, supported by more offshore turbine deliveries and a higher price per megawatt. Fewer onshore deliveries dampened that gain. The average turbine selling price rose to €1.22 million per megawatt from €1.01 million previously.

Service revenue grew 13%, while the contracted service backlog stood at €42 billion in anticipated future revenue under contract. The €42 billion service base strengthened forward revenue visibility beyond the current quarter.

How did full-year guidance change?

• Full-year revenue: €20.5 billion to €21.5 billion, narrowed from €20 billion to €22 billion.
• EBIT margin before special items: 7.5% to 8.5%, narrowed from 7% to 9%.
• Expected full-year investments: around €1 billion, reduced from around €1.2 billion.

Vestas said it was narrowing the outlook around the previous midpoint. The revision therefore retained the central revenue and margin assumptions while reducing the width of both forecast ranges.

Planned investments declined from around €1.2 billion to around €1 billion, even as the revenue and margin midpoints were retained. The company therefore paired tighter forecasting with lower planned investment.

What drove the additional costs?

Vestas reported higher expenses at the He Dreiht project, located in German waters of the North Sea, after a turbine blade broke. Chief Financial Officer Jakob Wegge Larsen said the hit “would not extend beyond a single quarter.”

The statement confines the disclosed duration of the project impact to one quarter. It does not alter the third-quarter cost increase, and the company still recorded an 8.5% EBIT margin, up from 7.8% a year earlier.

What operating signals matter next?

The quarter produced mixed signals rather than uniform deterioration. Turbine revenue grew 4.9%, average turbine selling price rose to €1.22 million per megawatt from €1.01 million, and service revenue rose 13%.

Against those advances, group order intake fell to €4.1 billion from €4.6 billion, and quarterly revenue of €5.68 billion remained below the €6 billion consensus. The margin gain to 8.5% from 7.8% therefore coexisted with below-consensus sales and lower intake.

Three disclosed measures will frame the next assessment: order intake against €4.1 billion, turbine pricing against €1.22 million per megawatt, and service growth against 13%. Management’s statement that the He Dreiht impact lasts one quarter provides a further test through subsequent expense reporting.