Wind turbine manufacturers Vestas recorded a 7.2 billion kroner deficit after tax at the end of 2012. The high losses were anticipated, however, and CEO Ditlev Engel insisted that he remains optimistic about the future.
In a financial statement announcing the defecit yesterday, Engel said that the company had “succeeded in many initiatives in 2012, which makes Vestas well prepared for the year ahead.”
The company’s losses are due to decreased income and a negative assessment in future market performance. As a result, Vestas had to write down its assets by 5.2 billion kroner.
To cut future costs, the company is expected to sell some of its production plants within the next year, while freezing other low-capacity plants and development projects. Not surprisingly, this down-sizing strategy is expected to bring a new round of job losses within Vestas.
“I fear that there will be new, unannounced layoffs next year,” Jacob Pedersen, an equity analyst at Sydbank, told Politiken newspaper. “In which countries these expected plant closures will be, I’m not sure. But I am concerned that some may well be in Denmark.”
Engel, however, insisted that no such layoffs have been planned as of yet.
“As I’ve stated, we still expect to have a workforce of 16,000 employees by the end of the year,” Engel wrote in Vestas’ financial statement.
Despite the turbine company’s dismal year, Bert Nordberg, the chairman of the board for Vestas, has come out in full support of Engel and his team. While Nordberg did admit to Ritzau that 2013 is set to be a difficult year, he insisted that Engel is the right man to take the company forward.
“A lot of effort is being put into financially stabilising the company,” Nordberg told Ritzau. “We need to prepare for new realities, in which the market offers greater challenges than ever before.”
And it's apparently not just Nordberg and Engel who continue to believe in the company. Despite yesterday's record losses, Vestas' stock finished Wednesday 8.13 percent higher than it started.
According to Michael Friis Jørgensen, a senior analyst with Alm. Brand Markets, part of the reason for the climb was that the stock was rather low prior to the release of the financial statement. But Jørgensen also said that despite the large losses incurred by the company, things could have been worse.
"Revenues were slightly better than expected, earnings were slightly higher, but most importantly, new orders and cash flow came out better than expected," he told Ritzau.