Denmark’s struggling wind turbine maker also reduces sales forecast for 2012 with warning that 2013 will be worse still
Terry Macalister,guardian.co.uk, August 22, 2012
Vestas chief executive Ditlev Engel warned that 2013 was likely to be a grim year the wind power industry. Vestas is to shed another 1,400 jobs, bringing total redundancies for the year to more than 3,700, after the world’s biggest wind turbine maker slumped to a quarterly pre-tax loss. The Danish-based company, which recently ditched plans to build a plant in Kent, also reduced its forecast for current-year sales on Wednesday from seven gigawatts’ worth of turbines to 6.3. Next year is expected to be even worse at 5GW.
Chief executive Ditlev Engels said: “2013, as it looks today, is probably going to be the toughest year that the wind industry has seen for a number of years.” Vestas plans to employ fewer than 19,000 staff by December to save an extra €100m (£79m). It blamed the sales slump on delays to projects in China and an expected slowdown in the US.
The company, which operates a large research and development base on the Isle of Wight, declined to say where the redundancies would come, except that more than half would be in Europe and Africa.
The cuts were announced as Vestas reported a €5m pre-tax loss in the second quarter compared with a €76m profit for the same period of 2011.
As reported in a preliminary announcement of financial figures on 31 July, revenues rose from €1.4bn to €1.6bn.
Vestas produced and shipped 2.16GW of equipment, an increase of 52%, and has contracted future business worth €4.8bn – a 14% increase during the second quarter. But its cash burn increased to €338m compared with €63m a year earlier.
Shares fell a further 6.4% to 31.77 Danish krone on the Copenhagen stock exchange after a long period during which they have only been bolstered by speculation of a Chinese takeover that has yet failed to materialise.
Vestas has been through two profit warnings in the past 10 months while seeing major departures from the board and executive management positions.
A narrowly focused business compared with rivals such as Siemens and GE, Vestas has expanded just as demand has been hit by the 2008 banking problems and then the ongoing sovereign debt crisis as well as increasing supply.
Plans to expand in Britain were axed in June. Vestas had been intending to construct a plant at Sheerness docks in Kent to supply turbines for expected new deep-water North Sea windfarms. Siemens and Gamesa of Spain are still considering whether to invest in their own UK factories.
Problems at Vestas will bolster critics of renewable energy who say companies are failing to perform despite the subsidies pumped into the sector. The debate over green energy is particularly polarised in America and has surfaced as a major topic in the runup to the presidential elections in November.
Cuts in state subsidies for wind power have put a strain on the entire sector.