By Paul Homewood
Following news of job cuts at Siemens, problems for Vestas as well, as GWPF report:
The wind industry has been unsettled by parts of the US House of Representatives’ proposal on tax reform that could make renewable energy projects significantly more expensive.
Marika Fredriksson, Vestas’ chief financial officer, told the Financial Times that uncertainty over the future of the so-called production tax credit led the Danish group to trim its guidance for the year. Its underlying operating profit margin this year should be 12-13 per cent, down from a range of 12-14 per cent.
“We don’t know what the Senate will decide. What is clear is that if it is approved in its current shape and form it will have an impact on the PTC . . . and that is reflected in the guidance,” she added.
Investors, already rattled by the outlook in the US with shares down 10 per cent this month before the guidance change, sent Vestas down 17.3 per cent to DKr436.1 on Thursday morning. It was the biggest fall in its shares since 2012, when there were fears over its financial collapse.
Vestas has recovered strongly from a previous crisis in 2010-13 that also involved worries about the continuation of US government support for the wind industry. Its share price has risen more than 20-fold since the end of 2012.
As a sign of the uncertainty, the Danish group changed its guidance for free cash flow for 2017 from at least €700m to a range of €450m-€900m due to a lack of visibility on US orders in the crucial fourth quarter for turbine manufacturers.
Ms Fredriksson argued that activity level was still high and that wind turbine makers could now compete in most of the world without subsidies.
“The wind industry is participating on its own merits . . . We are competitive in the US without the subsidies. We are on a par with oil and gas. But exactly how the US market will pan out, we can’t say at the moment,” she said.
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November 9, 2017 at 08:39AM