# Wind turbine maker Vestas cuts 2021 outlook on supply constraints and costs
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2021-08-11
Category: BUSINESS
Category URL: https://financedigest.com/category/business
Meta Title: Vestas Cuts 2021 Outlook After Missed Q2 Profit Forecast
Meta Description: Vestas, the world's largest wind turbine maker, lowers revenue and profit margin expectations due to supply chain disruptions and higher costs.
URL: https://financedigest.com/wind-turbine-maker-vestas-cuts-2021-outlook-on-supply-constraints-and-costshtml

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COPENHAGEN (Reuters) – Vestas cut its 2021 outlook on Wednesday after missing second-quarter operating [profit](https://www.financedigest.com/electrolux-swings-to-operating-profit-in-q2.html) forecasts as the world’s largest maker of wind turbines was hurt by supply chain disruptions and higher costs.

Demand for its wind turbines, seen as crucial to curb global warming, remains healthy but took a hit by constraints in the freight market where several events in the wake of COVID-19 have conspired to drive global supply chains towards a breaking point.

The Danish company reported an operating profit before special items of 101 million euros ($118.32 million), while analysts on average had expected a profit of 170 million euros, a poll of analysts supplied by Vestas showed.

It now expects full-year revenue of 15.5 [billion to 16.5 billion euros](https://www.financedigest.com/mercedes-benz-to-buy-back-up-to-4-billion-euros-in-shares-by-2025.html "Mercedes-Benz to buy back up to 4 billion euros in shares by 2025"), down from a previous forecast of 16-17 billion euros. It also lowered [expectations to its operating profit](https://www.financedigest.com/portuguese-airline-tap-swings-to-profit-earlier-than-expected.html "Portuguese airline TAP swings to profit earlier than expected") margin to 5-7% from previously 6% to 8% – a far cry from its long-term target of a 10% [margin.](https://www.financedigest.com/jewellery-maker-pandora-lifts-2021-outlook.html)

To reflect the challenges from [cost inflation and the global](https://www.financedigest.com/september-tropical-cyclones-cost-global-economy-more-than-4bn-according-to-aon-catastrophe-report.html "September tropical cyclones cost global economy more than bn, according to Aon catastrophe report") environment we operate in, we have revised our guidance for 2021,” said chief executive Henrik Andersen in a statement.

Its margin, however, still remains well above that of its main rival Siemens Gamesa, which reported a negative margin of 5.6% in the same period and last month cut its profit margin [outlook for the year](https://www.financedigest.com/2017-cfo-outlook-top-priorities-as-new-year-gets-underway.html "2017 CFO Outlook: Top Priorities as New Year Gets Underway") to between -1% and 0%.

Vestas’ downgrade is a consequence of the general [challenges that Siemens Gamesa has also faced](https://www.financedigest.com/overcoming-challenges-faced-by-women-in-business.html "Overcoming challenges faced by women in business") and had to cut twice. It’s no sensation and no disaster but it should cause a [drop in share](https://www.financedigest.com/ford-posts-lower-profit-issues-downbeat-outlook-shares-drop.html "Ford posts lower profit, issues downbeat outlook; shares drop") price,” analysts at online brokerage Nordnet in a note.

(Reporting by Stine Jacobsen; editing by Jason Neely and Louise Heavens)


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