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VESTAS WIND SYSTEMS A S
VESTAS WIND SYSTEMS A S
A record-breaking year
09 Feb 17
The company reported strong results. In Q4 16, the order intake jumped 70% to €4.5bn. The company experienced strong demand from Australia, the USA (mainly PTC orders), Germany and France. Revenues increased 9.2% to €3.3bn and EBIT improved 12% to €504m. The EBIT margin increased from 14.8% to 15.2%. Net income increased 15.1% to €343m. Product revenues grew 8% to €2.94bn and service revenues jumped 19.6% to €372m. The product EBIT margin increased from 13.9% to 16.9% and the service EBIT margin declined from 22.2% to 19.1% before cost allocations. In the financial year 2016 ending in December, revenues increased 21.5% to €10.2bn and EBIT 56.8% to €1.42bn. The EBIT margin jumped from 10.8% to 13.9%. Net income jumped 40.9% to €965m. Order intake grew 15.9% to €9.5bn and the order backlog reached €19.2bn, an increase of €2.1bn. The service order backlog alone increased around €0.8bn to €10.7bn. Due to the strong operating performance, management proposed a dividend increase from €0.91 to €1.31 per share or from DKK6.82 to DKK9.71. The payout ratio will be 30%.
Gear up for changes in US energy policy
12 Dec 16
The recent developments in the USA might have a negative impact on the renewable energy industry, e.g. solar and wind. Donald Trump has nominated Scott Pruitt to head up the environmental agency. Pruitt was against President Obama’s environmental policy. He opposed the law that would have forced coal-fired power plants to reduce CO2 emissions. President Obama planned to reduce CO2 emission from coal-fired power plants by 30% up to 2030 (starting in 2005). In the US, there are around 1,000 power plants installed, of which 38% are coal-fired plants. We expect a dramatic change in the environmental policy of the new President, who is also hoping Exxon’s CEO, Rex Tillerson, will lead the State Department. The new energy policy will definitely support coal-and-gas fired power plants, nuclear power plants (keeping ageing power plants alive) and the oil industry in general. Furthermore, according to Bloomberg, the Trump team is planning a big shake-up of US energy policy. Advisors are seeking to identify staff involved in climate policy. The main objective is to reshape the Energy Department programmes.
Record performance in Q3 16
10 Nov 16
Revenues increased 36.9% to €2.9bn and the operating result jumped 86.6% to €433m. The EBIT margin increased from 10.9% to 14.9%. Turbine revenues grew 40.8% to €2.59bn and service revenues 11.4% to €312m. EBIT of the turbine business jumped 81.7% to €438m and the service business 51.7% to €44m. The order intake rose 17.9% to 1,769MW. The average selling price of the order intake per MW remained very stable at around €0.88m compared to €0.89m in the second quarter 2016. The total order backlog reached €19.1bn, of which €7.2bn or 8,268MW were attributable to wind turbines and €9.9bn to the service business.
Strong performance – guidance increased!
19 Aug 16
In Q2 16, revenues jumped 46.2% to €2.56bn. Order intake dropped 40.7% from 3,018MW to 1,790MW. Order backlog of wind turbines declined by 6.8% to €8.2bn. The service order backlog, however, jumped 22.2% to €9.9bn. The company produced and shipped 2,902MW (+45.8%) and delivered 2,491MW (+55.6%). EBIT skyrocketed 175.2% to €399m and the EBIT margin increased from 8.3% to 15.6%. Net profit rose 122.4% to €278m. In the first half year, revenues increase 23% to €4.02bn and EBIT jumped 116.1% to €484m. The EBIT margin increased from 6.9% in the first half year 2015 to 12%. Order intake declined 12.1% to 4,193MW. Combined (products and services) the order backlog reached €18.1bn compared to €16.9bn.
Order intake and service business are key performance indicators
29 Apr 16
The company reported Q1 16 results. Revenues declined 3.6% to €1.46bn primarily due to lower MW deliveries for the project division. Service revenues increased disproportionately by 17.3% to €299m, whereas product revenues declined 7.8% to €1.17bn. Order intake jumped 37.3% to 2,403MW and 25% from €1.6bn to €2bn. Order intake per MW declined by 9%. Total order backlog increased by 20% or €3bn to €18bn, mainly driven by the service business. The order backlog of the service business increased 25.3% to €9.4bn. The gross margin improved from 14.9% to 16.9%. EBIT improved 7.6% to €85m and the EBIT margin increased from 5.2% to 5.8%.
09 Feb 16
The company reported Q4 15 and final 2015 results ending in December 2015. In Q4 15, order intake increased 18%, or by 414MW to 2,668MW. Revenues increased by 23% to €3.04bn due to higher volumes and a strong service business. Service revenues increased 19.6% to €311m and product revenues went up 23.1% to €2.7bn. The gross margin increased from 16.8% to 18.9%. EBIT jumped 66.1% to €450m and the EBIT margin improved from 11% to 14.8% in Q4 15. The EBIT margin of the product business increased from 10% to 18.5%. The EBIT margin of the service business also improved considerably from 19.2% to 22.2%. The order backlog of wind turbines declined by €300m to €7.9bn in the financial year 2015. The order backlog of the service business increased by €700m to €8.9bn. The ttal order backlog reached €16.8bn. Revenues increased 21.9% to €8.4bn. Product revenues jumped 22.5% to €7.3bn and the EBIT margin improved from 7.3% to 11.4%. Service revenues increased 18% to €1.14bn. The EBIT margin however declined from 18.2% to 15.6%. EBIT after special items (reversal of impairments) increased 49% to €906m. The EBIT margin of the group improved from 8.8% to 10.8%. Net income jumped by 75% to €685m compared to €392m in 2014.
20 Feb 17
Hayward Tyler Group* (HAYT): Trading update and financial position (CORP) | Petra Diamonds (PDL): Interim results (BUY) | Gemfields* (GEM): Interim results (CORP) | Premaitha Health* (NIPT): Middle East momentum (CORP) | Sound Energy (SOU): Acquisition update and TE-8 well spud (HOLD) | Proactis* (PHD): Interim trading on track (CORP) | 7digital* (7DIG): Automotive contract win (CORP)
The Slide Rule
12 Jan 17
What is The Slide Rule? The Slide Rule has been designed to dramatically simplify the identification of the best companies in the UK small/mid-cap sector by making a quantitative assessment of the relative potential of each company. At its core, The Slide Rule aims to identify those companies that create genuine shareholder value through strong returns on capital and solid growth, but also present a value opportunity with the potential tailwind of earnings momentum. Companies are assessed within a Quality, Value, Growth and Momentum (QVGM) framework.
Playing the long term, with short-term risks
16 Feb 17
After the publication of the annual results, we update our view and highlight the key points. Q4 16 key highlights As a reminder, the company reported results 30% below expectations at $400m for Q4 16. By division: 1) In upstream, underlying replacement costs profit came to $400m, vs. a loss a year earlier of $728m and a loss of $224m in Q3 16, reflecting the ongoing lower costs which have benefited from simplifications, efficiencies and lower exploration write-offs. In the US, the loss is still $147m. Production came in at 2.19mbpd, down 5.5% yoy due to disposals and up 1.8% on an underlying basis thanks to ramp-ups. One of the key events during the quarter was the renewal of BP’s onshore concession in the UAE with a 10% interest in the ADCO onshore oil concession. In terms of outlook, production should be higher in 2017 and will depend on the timing of project start-ups, acquisitions, divestments, and OPEC quota. Also the Abu Dhabi concession will be visible as from Q1 17. 2) In downstream, replacement costs profit came to $877m, down from $1.2bn a year ago and $1.4bn in Q3 16. The US division showed a loss of $371m vs a gain of $1.25bn. Non-US Fuel business earnings halved to $417m due to the weaker refining environment as well as the impact from the particularly large turnaround at the Whiting refinery. In lubricants, profit rose to $357m, reflecting the continued strong performance in its growth markets and premium brands as well as simplifications and greater efficiencies. The margin should remain unchanged for Q1 17. 3) Rosneft. Underlying replacement costs profit came to $135m, down from $235m a year ago, affected by the increased government take. Production was at 1.15mbpd, up from 1.03mbpd a year ago. This reflects the completion of the acquisition of Bashneft and Rosneft’s increased stake in the PetroMonagas venture. BP received a dividend of $322m after deduction of the withholding tax, in July 2016. On the Macondo oil spill, the charge taken for the Q4 16 pre-tax was $530m. This reflects BP’s latest estimates for claims including business economic loss. The pre-tax cash outflow on costs related to the oil spill for the full year 2016 was $7.1bn. Cash flow Excluding the Gulf of Mexico payment, the operating cash flow was $4.5bn. Underlying operating cash flow excluding the oil spill-related payment was $17.8bn for the full year. Proceeds during the year and the scrip dividend were not enough to cover capex and the cash dividend. Gearing at the end of the year increased to 27% ($35.5bn debt), in the high range of the group’s target of 20-30%. Organic capital was $16bn, below original guidance of $17bn to $19bn. Capex in 2017 should be close to $16-17bn. Divestment proceeds should be higher in 2017, close to $5bn and then reducing by $2-3bn per year after 2018. The total costs of the Deepwater payment should fall to $2bn in 2018 and then $1bn per year as from 2019. In 2017, this should be close to $5bn. All in all, including the latest acquisitions, cash flow break-even should be close to $60/bbl in 2017.
Share & share alike
14 Feb 17
The rally in the last fortnight, highlighted in the table, reflects a continued flow of positive updates and economic news. The FTSE 250, Small cap and Fledgling indices have reached record highs. We are in the lull ahead of results for those companies with a December year end, a welter of economic data regarding the UK economy, the State of the Union address in the US on 28 February and the UK Budget on Wednesday 8 March. We will learn at that stage the latest forecasts from the Office of Budget Responsibility. As highlighted previously, the reaction to corporate updates will continue to set the tone.
Small Cap Breakfast
16 Feb 17
Saffron Energy—Schedule One update. Raising £2.5m, expected Mkt Cap £7.7m. Admission due 24 Feb. Italian Oil & Gas Play Guinness Oil & Gas Exploration—Publication of prospectus. Seeking to raise £50m and invest in 15 exploration companies at launch, with plans to grow the portfolio to 30 positions during its lifetime. Issue closing 23 Feb. Arix Bioscience — Intention to float on the main market from the global healthcare and life science Company supporting medical innovation. Raised £52m in Feb 16 with investors including Woodford Investment Management
GMP FirstEnergy ― UK Energy morning research package
17 Feb 17
Enquest (ENQ LN): Speculative Buy, £0.65: Kraken FPSO in the field and hooked up in the North Sea | Ithaca Energy (IAE LN/CN)6: BUY, £1.40: Stella First Hydrocarbons in the North Sea | Bowleven (BLVN LN) (not covered): Denies claims made by Crown Ocean Capital