The Danish windmill producer Vestas is still suffering from dire quarterly figures and may be on the verge of a major round of layoffs.
Despite posting revenues of over 7 billion kroner, high costs and an increase of staff have sent Vestas tumbling to a pre-tax deficit of 1.7 billion kroner, a considerable deterioration compared to last year's first quarter. At the same time, debts have increased dramatically by 2.275 billion kroner.
However, annual expectations at the windmill giant remain the same, between 48 and 60 billion kroner, but one of Denmark’s leading Vestas analysts, Peter Falk-Sørensen from Dansk Aktie Analyse, said that the quarterly figures were disturbing.
“It doesn’t look so good. It’s a significant deficit,” Falk-Sørensen told Jyllands-Posten newspaper. “Expenses are too steep in Vestas and there is no doubt that the new board of directors needs to revamp the organization. New orders don’t matter if the cost of operation is too high.”
The quarterly report also indicates that Vestas has 22,576 employees, a two percent staff increase from the previous year, surprisingly enough after last years negative figures. But Vestas has set a goal of reducing their staff by 10 percent by the end of the year, which will save them 1.1 billion kroner.
And things could get even worse for the Vestas employees. If the PTC subsidy agreement in the US is not approved, the windmill company may have to layoff even more than the projected 10 percent.
Yet, Falk-Sørensen also maintains that there is also some encouraging news coming from Vestas.
”The positive thing is that the volume of orders that Vestas is getting in is higher than ever,” Falk-Sørensen told Jyllands-Posten newspaper. “But money needs to be made on those orders, and in that regard there is work to be done. But they say themselves that their expenditure figures are too high. The whole organization needs a work-over.”
Vestas's troubles have been well-documented. In 2008, before the financial crisis started to grip, Vestas’s share price almost topped 700 kroner, but has since dropped to 46 kroner.
It was only a few weeks ago that rumours surfaced that two Chinese competitors, Goldwind and Sinovel, were considering buying Vestas, a move that could possibly spell the end of windmill production in Denmark.