Danske Bank: Vestas (OW) – Q1 21 first impression

Vestas (OW) is out with a Q1 21 result that lands behind market expectations. Vestas’ revenues declined 12% y/y due to lower deliveries (down 14% y/y). Order intake was also muted at only 2MW (down 39% y/y). Vestas explains the lower top line with supply chain issues and lower activity on the back of the covid-19 situation. Vestas’ reported clean EBITDA improved EUR39m (40%) y/y due to the inclusion of the offshore business. When cleaning for this, we estimate a like-for-like drop in earnings. The lower deliveries filtered through to inventory build-ups, leaving working capital somewhat higher and causing Vestas’ net cash position to drop to EUR445m from EUR1.9bn q/q. Following this, we see adj. debt to EBITDA 1.4x up from 1.3x q/q. This remains nicely aligned with Moody’s requirement for the current ‘Baa1’ rating, where the agency sees this metric between 1-2x to be suitable. Vestas maintains its FY outlook. Overall, we see close to zero risk of Vestas not redeeming its outstanding VWSDC 22’s with 1^st call date in December this year. We will be looking for clues on the conference call at 10CET on whether it looks to refinance this bond in the credit markets. Overall we see this as a slightly credit negative result.