• Revenue: EUR17.3 billion for the full year 2024, a 12% increase year on year.
• EBIT Margin: 4.3% for the full year 2024.
• Service EBIT: EUR448 million for the full year 2024.
• Order Intake: 17 gigawatts, valued at EUR19 billion.
• Dividend Proposal: EUR0.55 per share.
• Share Buyback: EUR100 million initiated.
• Q4 Revenue Growth: 29% year on year.
• Q4 Gross Margin: 18.1%, an improvement of over 7 percentage points.
• Q4 EBIT Margin: 12.4%.
• Power Solutions Q4 EBIT Margin: 12.9%.
• Service Revenue Growth: 30% year on year in Q4.
• Operating Cash Flow: EUR2.2 billion in Q4.
• Adjusted Free Cash Flow: EUR1.1 billion for the full year 2024.
• Net Cash Position: Over EUR800 million at year-end 2024.
• Order Backlog: EUR31.6 billion for Power Solutions; EUR37 billion for Service.
• 2025 Revenue Outlook: EUR18 billion to EUR20 billion.
• 2025 EBIT Margin Outlook: 4% to 7%.
• 2025 Service EBIT Outlook: Around EUR700 million.
• 2025 Investment Level: EUR1.2 billion.

• Warning! GuruFocus has detected 9 Warning Signs with VWDRY.

Release Date: February 05, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Vestas Wind Systems AS (VWDRY) achieved a record order intake of 17 gigawatts, valued at EUR19 billion, marking a high ASP and strong momentum in both onshore and offshore sectors.
• The company ended 2024 with a revenue of EUR17.3 billion and an EBIT margin of 4.3%, meeting its outlook for the year.
• Vestas proposed a dividend of EUR0.55 per share and announced a share buyback of EUR100 million, reflecting confidence in its financial position.
• The service order backlog grew to nearly EUR37 billion, solidifying Vestas' position as the largest service business in the industry.
• Vestas reported a strong Q4 with a 29% year-on-year revenue increase, driven by higher revenue in both Power Solutions and Service segments, and achieved a 12.4% EBIT margin in Q4.

Negative Points

• Rising costs posed challenges for the service segment in 2024, necessitating a recovery plan to address operational inefficiencies and quality-related effects.
• The offshore ramp-up is expected to be margin dilutive in 2025, with significant investments required for manufacturing and amortization.
• The geopolitical and trade volatility, along with ongoing inflation, presents uncertainties that could impact future operations and profitability.
• The company faced five fatalities in 2024, highlighting ongoing safety challenges that need to be addressed.
• Vestas' long-term ambition of achieving a 25% EBIT margin in the service segment remains unmet, with current margins at 18%.

Q & A Highlights

Q: Could you help us understand the 2025 EBIT margin guidance and how offshore impacts it? A: Offshore is a significant investment affecting the margin due to depreciation and amortization. The onshore and service segments are strong, and you can estimate the offshore investment based on the onshore and service performance.

Q: Given the political situation in the US, should we expect any US orders soon? A: The US market is dynamic, with onshore and offshore segments behaving differently. Offshore has slowed, but onshore has a strong backlog for 2025 and 2026. We expect continued orders, possibly even in Q1.

Q: Why resume dividends and share buybacks amid offshore ramp-up and US uncertainties? A: We are confident in our 2025 and 2026 outlooks and backlog. The decision reflects our strong cash position and commitment to shareholders, despite the challenges of ramping up offshore production.

Q: How does the levelized cost of electricity (LCOE) impact your pricing and customer expectations? A: LCOE varies globally, but wind remains competitive. While prices have stabilized, we focus on optimizing projects to maintain viability for customers, acknowledging that LCOE can't decrease indefinitely.

Q: Can you elaborate on the service business recovery plan and net contract assets? A: The recovery plan addresses cost challenges and operational inefficiencies. While net contract assets may fluctuate, we are confident in the business's health after a thorough review.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.