August 15, 2018 / 7:36 AM / 3 months ago

UPDATE 2-Order boost helps to power Vestas shares higher

* Vestas Q2 profit, order intake beat forecasts

* Launches 200 mln euro share buyback

* Says turbine prices have stabilised

* Shares rise 7 pct (Adds CEO, updates share price)

By Stine Jacobsen

COPENHAGEN, Aug 15 (Reuters) - Shares in wind turbine maker Vestas jumped 7 percent on Wednesday after it reported forecast-beating orders and profit and said a steep decline in prices had stabilised.

The wind power industry is entering a new phase with slower growth and higher pressure on prices as subsidies taper off and governments opt for more competitive contract tenders.

Vestas said prices per megawatt had stabilised in the second quarter, albeit at a much lower level than last year, echoing recent statements from rivals such as Siemens Gamesa and General Electric.

“Vestas’ shares have suffered from concerns over what could happen on pricing... If prices have now stabilised, then Vestas’ shares have taken more than enough beatings,” said Sydbank analyst Jacob Pedersen.

Vestas’ order intake in the second quarter came with an average selling price of 0.71 million euros per megawatt, compared with the 0.73 million achieved in the first quarter.

“It’s hard to predict what our competitors will do, but we take this a good trend going forward,” said Chief Executive Anders Runevad, adding that it was the third consecutive quarter with fairly stable prices.

Vestas also launched a 200 million euro ($227 million) share buy-back scheme to run over the next four months.

Its shares traded up 5 percent at 0840 GMT as the positive comments overshadowed Vestas’ warning that tariffs stemming from U.S-China trade tensions would drive up prices of U.S. steel and imported components.

Runevad said, based on current estimates, group production costs could increase by up to 1.5 percent in 2019 due to trade tariffs. However, he underlined it was still hard to predict the exact impact.

Vestas now expects revenue of 10-10.5 billion euros this year from a previous forecast of 10-11 billion and an EBIT margin before special items of 9.5-10.5 percent versus 9-11 percent previously.

Siemens Gamesa said last month that trade tensions would drive up costs while it kept its target for an EBIT margin of 7-8 percent this year.

Vestas’ new turbine orders rose 43 percent to 3,807 megawatt (MW) between April and June, compared to the 3,165 MW expected by analysts in a Reuters poll, sending its order backlog to an all-time high.

Earnings before interest and tax (EBIT) of 259 million euros came in above the 204 million expected by analysts in a Reuters poll.

Reporting by Stine Jacobsen, additional reporting by Jacob Gronholt-Pedersen Editing by Emelia Sithole-Matarise and Keith Weir

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