Vestas Raises 2007 Profit, Sales Guidance

Top world wind power plant producer Vestas on Monday raised its 2007 sales and profit outlooks on the back of smoother production and a strong fourth quarter, sending it shares 7.9 percent higher.

Peter Dejong / AP

Denmark's Vestas and its wind turbines are riding a surge in demand for renewable energy sources as oil prices rise and global concerns about the effects of greenhouse gas emissions increase.

Vestas said it saw revenue of about 4.85 billion euros ($7.2 billion) with an operating margin of about 9 percent. It is scheduled to report 2007 results on Feb. 27.

In November the company said it saw sales of 4.5 billion euros and a margin of about 8 percent compared to 2006 sales of 3.85 billion and a margin then of 5.2 percent.

"This could mean that the worst of their problems with suppliers have passed. This is what we've heard from competitors as well," said Sydbank analyst Jakob Pedersen.

"Things are good for the sector and the future prospects are very bright," he said.

Vestas shares were 8.3 percent higher at 539 crowns, outperforming the Copenhagen bourse's top-20 OMX index, which was up 2.5 percent.

Vestas spokesman Peter Wenzel Kruse said a "better flow" in production and a build-up of its safety inventories formed the basis of the raised outlook. The company has been dogged by shortages in the supply of key components for years.

"Things have just run better in the end of 2007," he told Reuters.

Kruse said getting supplies in time was still troublesome but the situation had generally improved recently.

"We are building our safety inventory and sometime we've done the wrong thing but recently it's run better than expected and has been an important factor in our outlook upgrade," he said.

The group produces land-based or offshore wind turbines that generate up to 3.0 megawatts of power and compete with global giants Siemens and General Electric (GE is the parent company of CNBC) as well as smaller companies like Gamesa and Suzlon.

In November, Vestas lowered its market share expectations for 2008 from at least 35 percent to 30 to 32 percent, saying profitability was its first priority.

The Jutland-based company kept its 2008 outlook unchanged. For 2008, the company forecast a 25 percent rise in sales to about 5.7 billion euros and an EBIT margin increase to 10 to 12 percent.

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