Vestas Wind Systems Turns To Profit In Q2, Orders Down; Backs FY25 Outlook

Vestas Wind Systems A/S reported a return to profitability in Q2, posting a €32 million profit compared to a €158 million loss a year prior, driven by a 13.6% revenue increase to €3.75 billion and significant improvements in adjusted EBIT and EBITDA margins to 1.5% and 8.4% respectively. Despite this strong operational turnaround and an increased backlog of €67.3 billion, the company experienced a notable 44% decline in wind turbine order intake to €2.2 billion. Vestas maintained its fiscal 2025 outlook, projecting an adjusted EBIT margin of 4-7% and revenue between €18-20 billion, signaling confidence in future performance despite current order intake challenges.

Analysis

Vestas Wind Systems A/S demonstrated a significant operational turnaround in its second quarter, returning to a net profit of €32 million from a €158 million loss in the prior-year period. This recovery was underpinned by a 13.6% increase in revenue to €3.75 billion and a substantial improvement in profitability metrics, with the adjusted EBIT margin recovering to 1.5% from negative 5.6% and the adjusted EBITDA margin surging to 8.4% from 1.2%. However, this strong performance is contrasted by a considerable slowdown in demand, as new order intake fell to €2.2 billion from €4.4 billion a year ago, and firm wind turbine orders declined by 44% in megawatt terms. While the growing total backlog, which now stands at €67.3 billion, provides some revenue visibility, the sharp drop in new orders presents a notable headwind. Despite this, management maintained its full-year 2025 guidance, projecting revenues between €18 billion and €20 billion and an adjusted EBIT margin of 4% to 7%, signaling confidence in executing on its existing order book.

Key Decisions for Investors

• Investors should weigh the impressive return to profitability and strong margin expansion against the significant 44% decline in new wind turbine orders, which poses a risk to long-term growth.
• The €67.3 billion combined backlog provides a substantial cushion, but it is critical to monitor the order intake trend in subsequent quarters to assess the sustainability of future revenue.
• Management's decision to maintain its 2025 guidance despite the order slowdown is a key confidence signal; failure to meet these targets would be a significant bearish indicator.