Bad news continues for Vestas

The windmill giant could be headed towards the abyss and must restructure, analyst said

May 2nd, 2012 1:03 pm| by admin
facebooktwittergoogle_pluspinterestmail

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.

First Siemens invested in the Humber, and now DONG (photo: iStock)
Trading Kingdoms: Continued investment bodes well for UK wind energy sector
Danish energy giant DONG will invest £6bn (60 billion kroner) in the UK of...
This cosy café is perfect for those that want their coffee first
Always first for chocolaty mixes at the cutting edge of coffee
As I entered this little cafe on Gammel Kongevej, there was only one rule: ...
Sometimes drones present danger to public security, for instance, when they get too close to airports (photo: iStock)
Falcon centre on Samsø to train birds of prey to destroy hostile drones
A falcon centre on the Danish island of Samsø is considering training bir...
Pegida was founded in the eastern German city of Dresden in 2014 as a protest against Muslim migrants in Germany (photo: Kalispera Dell)
Five men arrrested in anti-Islam demonstration
Five men were arrested at an anti-Islam demonstration that took place on Ax...
The donations will be divided among 12 Danish non-profit organisations, including CARE Denmark, Mellemfolkeligt Samvirke, Red Barnet, Danish Red Cross and UNICEF Denmark (photo: iStock)
Danes donate almost 100 million kroner to charity campaign
Danes have donated 97 million kroner to a national fundraising campaign org...
People are encouraged to report their observations and any possible findings of a meteorite to ildkugle.dk or stjerneskud.info (photo: H. Raab)
Meteorite hits Denmark
On Saturday night, hundreds of Danes witnessed a spectacular phenomenon as ...