Vestas cuts guidance on margins; local site could be OK

WINDSOR — Vestas Wind Systems A/S cut its guidance and now expects margins to come in at about 4%. This is down from a previous level of 5% to 7% and a long-term goal of 10%.

Denmark-based Vestas’ North American operations in Portland, Oregon, includes Vestas Blades America, which makes wind turbine blades in Windsor. The company also operates facilities in Brighton.

Vestas’ factory in Windsor totals nearly 700,000 square feet on 161 acres of land, its U.S. website said.

Articles in Reuters and Bloomberg News said the cut was the second this year. The Wall Street Journal this fall attributed wind-turbine industry woes to pandemic delays, higher commodity pricing and lower orders after a jump in 2020.

Moody’s Investor Service in a note Friday said, “material increases for raw material, turbine components and transportation adversely affected third-quarter results.” It didn’t adjust Vestas’ credit rating of “Baa1 stable” despite negative free cash flow of about $334 million in the third quarter. Moody’s said revenues increased 5% to $6.4 billion in the period. Vestas’ 1.2x debt-to-earnings ratio was “a solid capital structure.”

Moody’s described the current situation as “extraordinary” and said the lead time for building turbines, one year or more, depending on the market, along with Vestas fully integrating operations from a joint venture it ended with Mitsubishi last year, had affected current results.

A spokesperson for Windsor said the blade manufacturing unit during a site visit a few weeks ago hinted about a possible expansion of the manufacturing facilities in Windsor. It has expanded four times since the plant opened there in 2008.

Its website said it spent $1 billion to establish a Colorado presence and employs 1,500 in the state.

Some 700 are in Windsor. In February, it consolidated Colorado operations, laying off 450 in Brighton and Pueblo and offering about a third of those jobs to workers willing to relocate north.

It was unclear how many accepted those jobs, and the total is down from a peak of 2,000 at the facility. Its production levels can be affected by changing levels of U.S. government subsidies for wind power buying, the spokesperson said.

The company then added 50 new slots in Brighton, changing its focus to a different type of manufacturing and sold the Pueblo plant to a South Korean company.

Vestas makes and services onshore and offshore wind turbine generators, installing them in 85 countries. It had trailing 12 months’ revenue of about $17.8 billion and 29,000 workers worldwide.

It has a market cap of about $35 billion. Its shares in the U.S. trade over-the-counter under the ticker symbol “VWDRY.”

Calls to Vestas weren’t immediately returned.

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