Vestas and Nordex 'set to benefit from soaring wind power growth'

Global wind installations could sustain a double-digit growth in the coming three years, which eventually will also benefit profit margins at embattled European turbine manufacturers such as Vestas or Nordex, Bloomberg Intelligence (BI) said in a report.

World-wide wind power additions are likely to soar to about 110GW this year, from a ‘lull’ of 87GW in 2022, the report found.

“And we believe there's scope for that figure to soar to nearly 150-190GW by 2027, propelled by the Inflation Reduction Act, REPowerEU and other favourable policies,” said Rob Barnett, senior clean energy analyst at Bloomberg Intelligence.

“Such a scenario would likely drive a significant surge in Vestas, Nordex and peers' orders.”

Nearly half of capacity additions this year are likely to be in China, with the country’s largest OEM, Goldwind, set to boost top-line (revenue) growth 16%, based on consensus, the analysts said.

Growth expectations for European peers are more subdued, with Bloomberg Intelligence only expecting an increase by an average of about 10% a year in 2023-26 at Vestas, Siemens Energy’s renewables unit (Siemens Gamesa) and Nordex, down from a compound annual revenue growth rate of around 16% in the years from 2015 to 2021.

But the analysts believe similar higher gains could again be achieved in 2025-30, assuming net zero goals boost demand.

Vestas' sales grew at a compound annual rate of more than 15% in 2018-21, BI said, and although guidance calls for deliveries to fall in 2023 amid persistent supply-chain bottlenecks, revenue could still rise on the back of higher turbine prices.

The analysts add that most of the wind supply chain, including turbine producers, could benefit from passing high costs through to consumers.

“Profit margins at Vestas, Nordex and peers could improve this year on sustained easing of steel costs, which have fallen more than 50% since running up to a peak in 2022,” Barnett said.

“Though European steel prices are about 40% above their pre-pandemic level, they've declined significantly since Russia invaded Ukraine, which is likely to set the stage for a profit recovery at Europe's main turbine manufacturers Vestas and Nordex.