Danish wind energy giant Vestas makes loss for first time in a decade

Danish wind turbine producer Vestas has registered a loss for the first time since 2013, the company said as it published annual results.

Danish wind energy giant Vestas makes loss for first time in a decade
Vestas registered a loss last year for the first time since 2013. File photo: Henning Bagger/Ritzau Scanpix

The company said that increasing costs of energy and raw materials had contributed to the operating loss, as had high inflation.

“Vestas and the wind industry were ready to provide solutions to address the energy crisis, but were constrained by cost increases, logistical challenges, outdated market designs and permitting processes”, the company said in its annual report.

The annual results show a deficit of just under 12 billion kroner for the year.

Preliminary figures released at the end of last month showed that Vestas had turned over around 108 billion kroner in 2022. As such, costs have dragged the company into an overall loss for the year.

Vestas has been forced to raise the price of its wind turbines to adapt to market conditions, it said.

“The increasing price of wind turbines has been and remains a necessity to account for inflation on operating costs and secure the long-term value creation of the industry,” the company said when it announced its 2022 turnover.

“Our focus to protect the value of our products and solutions needs strict discipline to address the raised costs of raw materials and components in dialogue with customers,” it said.

A reduced level of activity is expected at the company in 2023, while pressure from inflation will still be high. That could have an additional negative impact on profit.

Turnover is predicted to be between 104 and 115 billion kroner in 2023.

A degree of uncertainty must however be attached to that prognosis, Vestas stressed.

“The announced expectations try to take account of the situation and challenges as they appear at this point in time,” it said in the results released on Wednesday.

Vestas’ share price was up 2.7 percent on the Copenhagen stock exchange in mid-morning trading, in a market up by 0.8 percent overall.

The wind turbine maker employs around 29,000 people globally including 5,900 in Denmark.

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Danish central bank raises interest rate by 0.5 percent 

Denmark’s central bank Nationalbanken raised its interest rate by 0.5 percent on Thursday in response to a similar move by the European Central Bank (ECB).

Danish central bank raises interest rate by 0.5 percent 

The Danish central bank confirmed the decision in a statement after the ECB earlier on Thursday increased its rate by the same amount, bringing it up to 3 percent.

The latest raise is the sixth time within the last year that the ECB has put its interest rate up.

The new rate is the highest set by the ECB since the Global Financial Crisis in 2008.

The Danish National Bank’s interest rates are slightly lower than the ECB’s — 2.6 percent for deposits and 2.75 percent for loans following Thursday’s increases. That is because Nationalbanken increased its interest rates by 0.15 percent less than the ECB the last time the rates were raised, at the start of February. Similarly, it raised its rate by slightly less than the ECB in December.

There is nothing unusual about the Danish central bank’s decision to follow the ECB in raising the interest rate, however.

Earlier this week, Nationalbanken called for political measures to keep a rein on inflation as it said wage increases given to people under the Danish labour system in 2023 and 2024 could help to keep inflation levels up.

It also predicted house prices are set to fall by almost 10 percent this year.

One effect of raised interest rates is that people who have variable rate mortgages could find themselves paying more for their loans.