That’s the prognosis of Henrik Andersen, chief executive officer of Vestas Wind Systems A/S, one of the world’s biggest manufacturers of wind turbines. The costly logistical bottlenecks triggered by the unprecedented measures introduced to control the spread of Covid-19 are dissipating, but it will take several more months before backlogs are eliminated.
“The interruptions are getting smaller and some of the shortages and the bottlenecks are getting dealt with,” Andersen said in an interview Wednesday. “We’ll take most of 2023 until we’re on the other end of those sorts of bottlenecks.”
Wind turbine makers were among the businesses that bore the brunt of the chaos that followed the start of the pandemic in 2020. Vestas’s giant wind turbines depend on far-flung suppliers for thousands of individual components that are assembled in manufacturing hubs before being delivered to customers. Any hiccup in the process means costly delays, which were mostly absorbed by the manufacturer.
At the same time as supply chains were strained, the cost of key items like steel — the main material used in wind turbines — soared during the pandemic. So did the cost of moving materials and machines.
As a result, Vestas saw profits from its wind turbine business roughly halve in 2021, compared with 2020. Then in 2022 the unit recorded a loss of €1.5 billion ($1.65 billion).
Now there are signs of a turnaround. On Wednesday, Vestas reported its first quarterly profit since the end of 2021 and maintained its full-year earnings guidance. While that outlook means the company may end up being unprofitable this year, it’s moving in the right direction. To get fully back on track will require continued easing of global supply chains, particularly in China, which only relaxed its Covid Zero policy in December. It takes time to normalize, the CEO warned.
“When somebody declares they’re open, then the world doesn’t become open the following Monday,” Andersen said. “You will have a backlog until it gets through the supply chain. It’s easing, but it’s not gone.”
