‘Europe needs to shed its naivety’: Vestas CEO Henrik Andersen on Chinese competition and the energy issue that keeps him up at night

Vestas lifted quarterly operating profit to €446 million from €57 million a year earlier, while new orders rose to 3.35GW from 2GW and its backlog reached €36 billion. The recovery follows a €1.57 billion net loss in 2022, but offshore wind is still not expected to be profitable until 2027 and turbine build costs remain 30%-40% above 2020 levels. Vestas faces intensifying Chinese competition—Goldwind installed nearly 30GW in 2025, about twice Vestas's volume—while EU subsidy investigations, domestic-content proposals, and energy-security concerns could provide European suppliers with protection.

Analysis

VWS’s earnings inflection is more valuable than the headline profit rebound: disciplined bidding, platform standardization, and lower warranty leakage can convert a historically volatile equipment business into a service-and-installed-base annuity story. The key near-term question is whether improved margins reflect durable contract repricing rather than a favorable delivery mix; sustained service margin expansion and stable provisions through the next two reporting periods would justify multiple expansion versus Siemens Energy (ENR) and Nordex (NDX1).

European procurement is increasingly likely to price grid-security, software-control, financing bankability, and local-service capability alongside turbine capex. That favors VWS and ENR even if Chinese suppliers retain a hardware-price advantage, but policy protection is not an immediate earnings catalyst: permitting, tender redesign, and potential subsidy litigation imply a 6-18 month realization window. The second-order beneficiary is European grid equipment—Schneider (SU), ABB (ABBN), and Prysmian (PRY)—because incremental wind build-out requires materially more transmission, interconnection, and control equipment than turbine OEMs capture.

The contrarian risk is that AI-driven power demand is not unambiguously bullish for wind OEMs: the same build cycle tightens copper, aluminum, electrical-equipment, and skilled-labor markets, potentially recreating fixed-price contract margin damage. Offshore remains the principal earnings-tail risk; project cancellations or further developer repricing at Ørsted (ORSTED) would signal that turbine backlog is less economically bankable than its nominal value suggests. Falsify a constructive VWS thesis if warranty provisions re-accelerate, service attachment weakens, or management cuts its medium-term offshore profitability timetable.

Key Decisions for Investors

• Initiate a 3-6 month long VWS / short NDX1 pair, sized modestly: VWS has greater service exposure, lender acceptance, and potential European security premium, while Nordex remains more exposed to price-led onshore competition. Target 15-20% relative upside; stop if VWS’s next results show declining service margins or higher warranty provisions.
• Add ENR on pullbacks for a 6-12 month European electrification basket rather than treating VWS as a pure policy trade. ENR and ABBN have more direct grid bottleneck exposure; risk is delayed EU capex and continued weakness in offshore order conversion.
• Prefer long PRY or ABBN over incremental turbine-OEM exposure for the 12-18 month AI-power-demand theme. Grid connection constraints create a higher-quality volume and pricing setup than turbine manufacturing; reassess if European permitting reform fails to translate into transmission awards.
• Use ORSTED as the offshore stress monitor, not a long recommendation: a renewed guidance cut, asset impairment, or financing delay would likely pressure VWS’s offshore valuation before it materially affects reported revenue. Avoid adding VWS exposure ahead of such an event without evidence that contract protections cover cancellations and inflation.
• No actionable view on FCN or ING from this development alone. For ING, monitor project-finance loan growth and renewable credit-loss provisions as a read-through on whether wind backlog is reaching financial close rather than remaining an announced pipeline.