Thursday, March 10, 2022

An International Equity holding: Vestas Wind Systems (VWDRY, $8.35): “A Blow Over” By: Hannah Cehaic, AIM Student at Marquette University


Vestas Wind Systems (VWDRY, $8.35): “A Blow Over”

By: Hannah Cehaic, AIM Student at Marquette University

Disclosure: The AIM International Equity Fund currently holds this position. This article was written by myself, and it expresses my own opinions. I am not receiving compensation for it, and I have no business relationship with any company whose stock is mentioned in this article.


  • Vestas Wind Systems, AS ADR. (OTCMKTS:)VWDRY is the market leader of renewable energy which install, manufacture, and service onshore and offshore wind turbines.
  • Vestas 2021 outlook has decreased again for the second time this year, making their shares decrease as much as 14%.
  • Vestas’ business and manufacturing has not responded well to the current supply and shipping constraints.
  • There is a pending management change of CFO’s.
  • New wind farm contract in Estonia.

Key points:

Vestas Wind Systems has undergone a lot of stress since mid 2021 up until now. With supply chain issues and lack of resources, Vestas has been under attack. The stock price has taken a hit since then and has yet to increase from their high price of $17.23.

Recently, current CFO of Vestas, Marika Fredriksson has handed over the financial reigns to new upcoming CFO Hans Martin Smith. Hans Martin has many years of experiences as CFO of Vestas Northern & Central Europe. This change will be implemented on March 1st, 2022.

Even though new management seems promising, Vestas is still under water in terms of the industry. Costs of steel and other materials are skyrocketing. Additionally, supply chain issues and COVID have still led to slow delivery scheduled which has delayed many operations. This has halted the completion of wind farms which has resulted in firms not wanted to purchase these wind turbines due to volatile pricing and unreliable shipping.

Though there a few setbacks with the company, Vestas has recently won an Estonia turbine contract. This allows Vestas to contract and supply turbines for Enefit Green’s Purtse wind project in Estonia. This will allow the creation of electricity in Purtse using renewable turbines. The construction of these new wind farms in Estonia will begin early next year.

Recent Performance:

Vestas’s stock has been decreasing since middle of last year after the rise of material costs and supply chain issues. From January of 2022 to February of 2022, the stock alone has plummeted a whopping -17.55%. Additionally, Vestas has had a negative average one month return of -6.87%. The new Estonia contract and new management are needed to help pick up the stock’s pace.

Past Year Performance:

Vestas has decreased -47.50% in value over the past year. Vesta’s YTD returns are -18.68 compared to the benchmark of -8.57. It is evident that geopolitics have impacted Vestas in a very negative way.

Source: FactSet

My Takeaway:

The new contract in Estonia shows very promising returns of creating more wind farms, specifically green wind farms. However, the building contract does not start until early next year which still leaves almost a full year of Vestas to keep up with changing geopolitical risks such as supply chain issues and increase material costs. Vestas will need to complete another contract this year to keep up with lost revenue despite changing geopolitical risks.

Source: FactSet