Operator Series: Argentina, Mexico 'reignite' Vestas' LatAm growth

By
Thursday, February 8, 2018

Wind turbine manufacturer Vestas is sharpening its focus on Latin America as it capitalizes on burgeoning demand for renewable energy in Mexico and Argentina, according to a company report.

The pledge comes despite a year-on-year decline in Latin American deliveries in 2017. Vestas said growth in the region is being driven by efforts in Mexico and Argentina to diversify electricity supply.    

Start your 15 day free trial now!

cta-arrow

Already a subscriber? Please, login

"Following the introduction of auctions in several countries, the potential for the Latin American markets remains strong," Vestas said in its 2017 annual report.

"Countries such as Mexico and Argentina carried out their first power auctions in 2016, and a substantial part of the new electricity contracts were allocated to wind power."

Vestas said the two countries accounted for around 9% of its 11.176GW global order intake in 2017.

"With more than 1.3GW of orders in 2017 from these two markets alone, Vestas showcased its reignited efforts in Latin America in accordance with its local strategic plan," the Danish company said.

It added that Brazil continued to drive installations in Latin America last year, despite lower volumes due to the country's ongoing economic malaise.

The firm's 2017 Latin America order book totaled 644MW, down from 873MW a year earlier.  

SEE Vestas' top LatAm projects here

OUTLOOK

Vestas has set aside 500mn euros (US$614mn) for investments in 2018, up from 407mn euros last year. Revenue is expected to range from 10bn to 11bn euros, while free cash flow is forecast to exceed 400mn euros.

For the long term, the company projects revenue in the service segment to grow by at least 10% annually with stable EBIT margins.

"Vestas envisions market conditions, which in the long term will reflect wind power having achieved merchant levels in the vast majority of markets," the report said.

"The wind power industry is undergoing a transition towards a more mature, unsubsidized renewable energy industry. This transition leads to a highly competitive market, and will likely drive a further consolidation in the industry."

BACKLOG

The company's end-2017 backlog stood at 11.492GW with a contract value of 8.8bn euros. In capacity terms, the figure represented a 21% year-on-year increase, the report said.

Meanwhile, expected contractual revenue from its service order backlog reached 12.1bn euros, up 1.4bn euros on 2016.

Vestas boasted service agreements for some 76GW of capacity across 64 countries at the end of December 2017.

ALSO READ: Argentina, Mexico boost Vestas Q2 order intake