Wind Giant Vestas Cuts Dividend as Supply-Chain Woes Drag On

(Bloomberg) -- The world’s biggest supplier of wind turbines slashed its dividend as supply-chain snarls and rising costs ate into earnings.

Wind-turbine makers have all been grappling with surging costs as raw-material prices soar. Delays in getting essential supplies have also pushed back income streams since revenue is only booked once projects are complete.

Vestas Wind Systems A/S cut its annual dividend by 78% to 50 million euros ($57 million), the Copenhagen-based company said in a statement on Thursday. It maintained the payout at 30% of net income, but profit fell last year.

Read more: Top Turbine Maker Vestas Sees Profit Hit by Supply Chain Woe

Supply-chain issues have hit turbine makers just as global demand increases, with more countries committing to switch to cleaner energy. The disruption will likely continue throughout the year, making it a “challenging” period for the industry, Vestas Chief Executive Officer Henrik Andersen said in the statement. 

The shares sank as much as 4.2%, and traded down 3.9% at 162 Danish kroner as of 9:58 a.m. in Copenhagen.

Most of Vestas’s 2021 financial results and outlook were published in a preliminary statement two weeks ago. The company saw profit and margins shrink, even as it raised prices for customers. It said margins will remain under pressure this year, but revenue may recover.

Vestas sees its 2022 profit margin around 4% at best and potentially zero, compared with a 3% margin achieved in 2021. That’s not bad, by industry standards. One of its main competitors, Siemens Gamesa Renewable Energy SA, expects its margin to be as low as -4% in its current fiscal year. 

(Updates with earnings forecast in final paragraph.)

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