Danish Vestas Wind Systems A/S (VWS.KO) Wednesday announced its 2015 targets will be abandoned as the wind turbines maker posted a third quarter net loss, and said it will cut costs and downsize its work force to counter difficult market conditions.
Danish Vestas Wind Systems A/S (VWS.KO) Wednesday announced its 2015
targets will be abandoned as the wind turbines maker posted a third quarter net
loss, and said it will cut costs and downsize its work force to counter
difficult market conditions.
Renewable energy is still heavily dependent on state-backed subsidies and as
European leaders are busy tackling their mounting debts, the industry faces a
tough future and Vestas is not the only player struggling.
Norway
's
solar power equipment maker Renewable Energy Corp. (REC.OS) is now also
loss-making.
Anticipating weak growth in the Organization for Economic Cooperation and
Development area, Vestas said it won't reach its 'Triple 15' target of EUR15 billion
in revenue and an EBIT margin of 15% in 2015.
"We have satisfied customers, all of our production units are extremely
busy, and we recorded a strong order intake in October. However, we believe
that at least the Western economies are heading for even more economic
difficulties in the years ahead," Chief Executive Ditlev Engel said in a
statement.
Vestas also said it aims to reduce its fixed costs globally by at least EUR150
million annually by the end of 2012, which will lead to redundancies across the
firm next year. The firm said it will implement a new organization on
8 Feb., 2012
.
Furthermore, the company flagged that 2013 could prove a very challenging year
due to the potential expiry of a production tax credit scheme in the
US
. Should
the
US
scheme not be extended beyond 2012, the firm will have to make further
adjustments to its work force.
At 0929 GMT shares traded 1.6% lower at DKK81.00, compared with a 0.4% increase
in the wider
Copenhagen
market.
"It's important that Vestas management see reality and the challenging
future they face," said analyst Michael Friis Jorgensen at Alm. Brand
Markets. "This is something that the investor community has really asked
for."
In the medium term, Vestas now aims to realize a high single-digit margin on
earnings before interest and taxes and at the same time increase its market
share. Service revenues are seen growing faster than sales of wind power
plants.
With troubles commissioning a factory in
Germany
,
Vestas October warned on its full year earnings and posted preliminary third
quarter figures. The company said Wednesday that the 2011 guidance it then gave
is still valid and sees full year sales at EUR6.4 billion with a margin on
earnings before interest and taxes of 4%.
The German plant is expected to be fully commissioned in the beginning of 2012.
For the period July to September, the firm posted a net loss of EUR60 million,
compared with a profit of EUR187 million a year earlier, while revenue amounted
to EUR1.34 billion, down from EUR1.92 million.
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