Vestas — Wind Turbine Cycle

Vestas is the world's largest wind turbine manufacturer — having installed more wind capacity than any other company globally with over 185 GW installed across 90 countries. Vestas designs, manufactures, installs and services onshore and offshore wind turbines, with a growing service business that provides multi-decade recurring revenues from the installed turbine fleet.

Wind Turbine Orders: The Revenue Signal

Vestas's revenues are driven by turbine delivery revenues (typically €900k–€1.1M/MW) and service revenues from the installed base. Order intake — the leading indicator — reflects global wind project FIDs and permitting progress 12–24 months ahead of revenue recognition. When Vestas's quarterly order intake exceeds 4 GW, the growth narrative is intact. When it falls below 2 GW, execution concerns emerge.

Service: The Growing Profit Engine

Vestas services approximately 85 GW of installed turbines — generating approximately €2.5B of annual service revenues with 20%+ margins. Service contracts (AOM — Active Output Management) provide decade-long revenue streams from each installed turbine. As the installed base grows, service revenues compound regardless of new turbine order cycles, providing earnings floor stability during FID droughts.

Profitability Recovery: The Key Investment Case

Vestas suffered significant margin compression in 2021–2022 — fixed-price turbine contracts were devastated by supply chain cost inflation (steel, copper, rare earths). As those contracts roll off and new contracts incorporate inflation protection clauses, Vestas's margins are recovering from -10% EBIT (2022) toward 5–8% targets by 2025–2026. This margin recovery story is the primary near-term investment catalyst.

Offshore Wind: The Growth Frontier

Vestas's V236-15.0 offshore turbine — at 15 MW the most powerful serial-production offshore turbine — positions Vestas to capture the growing European offshore wind installation market alongside Siemens Gamesa. Offshore turbines carry higher revenue per unit and superior service margins versus onshore, improving Vestas's long-run business mix quality.

Key Risks

Supply chain cost inflation risk remains — if steel or rare earth prices spike on new contracts, margin recovery could reverse. Competition from Siemens Gamesa (Airbus-backed) and Chinese turbine manufacturers (Goldwind, Envision) gaining market share. Permitting delays — particularly in Germany and the US — reduce near-term FID activity. Vestas's balance sheet deteriorated during the loss years and requires careful monitoring.

Cycle Performance Summary