Shares in the world’s largest wind turbine manufacturer, Vestas, have plummeted 20 per cent after it lowered its profit guidance following the proposed cuts in US subsidies.
The wind industry has been unsettled since the introduction of the Republican tax bill earlier this week, which will promote the use of “reliable and resilient” sources of power by rewarding electricity producers that can maintain 90 days’ worth of supplies, such as coal and gas.
Marika Fredriksson, Vestas’ chief financial officer, told the Financial Times that the tax bill led the Danish group to reduce its guidance for the year. This has had a knock-on effect on the operating profit, down from 12-14 per cent to 12-13 per cent.
Furthermore, its shares, that were already down 10 per cent this month, dropped another 20.2 per cent to DKr421.20 during midday trading in Copenhagen – the biggest fall since 2012.
As a result of this Vestas has changed its free flow cash guidance from at least €700 million to between €450 million to €900 million.
The Danish company’s third quarter results show a fall in operating profit of 18 per cent from last year’s to €355 million, well below analyst’s expectations of €419 million.
Fredriksson said: “We don’t know what the Senate will decide. What is clear is that if it is approved in its current shape and form it will have an impact on the PTC . . . and that is reflected in the guidance.”
However, representatives of the US energy sector have backed the bill and the growth it will bring to the economy.
President and CEO of the America Petroleum Institute, Jack Gerard, said: “Today the House Ways and Means Committee took a bold step to modernise the nation’s tax code to sustain U.S. economic growth, spur strong energy investment, and create American jobs.”