Vestas posts disappointing results
In 2011, the Danish market leader among the turbine manufacturers posted one of the worst fiscal years in its 30-year history – a loss of 166 million euros. The company even fell short of its guidance, which had been lowered several times already.
In 2010, Vestas still managed to post 156 million euros in profits. And although the firm managed to manufacture and ship more turbines in 2011, sales revenue nonetheless dropped by 16 percent to 5.84 billion euros – 200 million euros below the most recent forecast from the beginning of January, when the Danes were still hoping to break even. The EBIT margin is reported at -0.7 percent.
The result led to changes at the top of the company. As Renewables International reported, the firm's CFO Henrik Nørremark has already left the company. Supervisory board chairman Bent Erik Carlsen and his deputy Torsten Erik Rasmussen have also announced that they will not be running for reelection in March, and another supervisory board member is also stepping down next month.
When the financial figures were published, the firm's share price dropped by 12 percent to around 7.80 euros within two days. The firm says that price pressure, high development costs, an end to subsidies in the US and Europe, and problems setting up a generator plant in the German town of Travemünde all contributed to the poor result. In addition, turbine shipments also fell clearly short of expectations. At the same time, production costs were much higher than planned at 125 million euros. Vestas points out that a lot of projects that were to be completed in 2011 have run on into the current year, and the firm's backlog of orders has also reached a record high of 7.397 gigawatts or 7.3 billion euros.
At the beginning of January, the Danes implemented a comprehensive streamlining program after having to reduce guidance twice; roughly one out of 10 jobs worldwide is to be cut. For 2012, the firm has also issued a profit warning. This fiscal year, sales are to come in at between 6.5 and 8 billion euros.
But stock analyst Holger Fechner of Germany's NordLB says the financial statements reveal a bit of uncertainty. "While the Danes have a positive outlook for Europe and the US, they have also withdrawn their Triple 15 target of 15 billion euros in sales and EBIT margin of 15 percent by 2015." Fechner also points out a change in the way financials were reported; in accordance with the International Financial Reporting Standards, invoices for material assets are only issued after shipment. "Unlike in previous years, a lot of projects were therefore not taken into consideration by the end of the year," he explains. Fechner does not, however, believe that Nørremark can be held responsible for Vestas' cost problem. "That sounds like they are looking for a fall guy," he says. Since 1993, Nørremark had held various positions within the firm and had been an executive since 2004. (Regine Krüger / Craig Morris)
