* Vestas says revenue could decline this year
* Market seen moving into more mature phase
* Merger challenges position as market leader
(Adds CEO comments)
By Jacob Gronholt-Pedersen
COPENHAGEN, Feb 8 Wind turbine maker Vestas
warned on Wednesday that rapid growth in demand in the
industry could be coming to an end after the market leader
enjoyed a strong end to last year.
Vestas posted record revenue and order intake for 2016 as
the Danish company extended its global reach and saw rising
demand in the key U.S. market.
Vestas and its rivals have been benefiting from a new focus
on renewables, encouraged by the Paris Agreement on climate
change in Dec. 2015 and a five-year extension of a U.S.
Production Tax Credit, a key driver for that market.
But the company said softer demand for wind turbines means
revenue could fall this year to between 9.25 billion euros and
10.25 billion from 2016's record level of 10.24 billion.
"We see a potential softening in the overall market in
2017," Chief Executive Anders Runevad told Reuters.
"We see signs of increased maturity of the wind market. From
a very strong growth, we now see more stable high volumes."
Installations in China fell in 2016 because of changes to
the subsidy regime, Vestas said, while business in the United
States had been boosted by developers seeking to maximise tax
credits for new projects.
Vestas said its board would recommend a dividend of 9.71
Danish crowns per share, compared with 6.82 crowns last year. It
also plans a share-buy back programme of up to 705 million
Danish crowns ($101 million).
The measures helped to push Vestas shares 1.75 percent
higher by 1210 GMT.
Vestas is set to lose its status as the world's biggest
wind turbine maker as Germany's Siemens and Spain's
Gamesa have agreed to combine their assets in the
Vestas' share price also came under pressure after it warned
in November of a slowdown in the U.S. market in 2017, coupled
with the election win by Donald Trump, who had expressed support
for conventional fossil fuels.
Runevad said he had no indications that support for the
production tax credit had weakened under the new administration.
The five-year extension of the tax credit would likely mean that
wind project developers will be in less of a rush to buy
turbines in 2017, but that activity will pick up towards 2020,
"In the U.S., we're in the first year of a four-year cycle.
So if you look at the U.S. in the four year period, it's a very
good and stable market, more positive than we've ever seen
before," he said.
The wind industry tax credit was the largest for projects
that broke ground in 2016. Vestas, General Electric and
Siemens account for more than three quarters of the U.S. turbine
"Overall in the United States there are still quite a lot of
unknowns," Runevad said on a conference call. "How (the U.S.
market) will pan out over the years is still very hard to
Operating profit before special items rose 25 percent in the
fourth quarter from a year earlier to 504 million euros, bang in
line with the figure forecast in a Reuters poll of analysts.
($1 = 6.9832 Danish crowns)
($1 = 0.9393 euros)
(Reporting by Jacob Gronholt-Pedersen; Editing by Keith Weir)