Vestas boss forced out
Vestas, which has not seen a profit in eight consecutive quarters, said today that it’s replacing its CEO.
Anders Runevad will take over the reins for the Danish wind turbine manufacturer from Ditlev Engel, who has faced a barrage of investor criticism for the company’s underperforming ways during his eight years in the head role.
Chairman Bert Nordberg announced the change in a press release.
“It is now the appropriate time to make this change,” Nordberg said. “The company is now entering a new phase where we want to realise our growth potential, and I am confident that Mr. Runevad has the right experience to lead the company. The restructuring programme has resulted in a more competitive company.”
Like Nordberg, Runevad is a former executive of Swedish telecommunications giant Ericsson, where he most recently was president of the west and central European divisions. His hiring brings yet another Swedish executive into the management ranks of one of Denmark’s largest companies.
“I am delighted to be joining Vestas and look forward to leading the company in the next phase of its development,” Runevad said in a statement.
Since taking over as chairman last year, Nordberg has replaced several key members of Engel’s management staff, including former CFO Dag Andersen, who was replaced earlier this year by Marika Fredriksson, another Swede.
Engel was informed of the change in a board meeting on Tuesday. During a press conference this morning, Nordberg added that the move had been in the planning stages for some time. Nordberg came on with a reputation as a restructuring specialist, so it came to no surprise to outsiders that Vestas would undergo significant changes.
In recent years, Vestas has suffered from cash flow problems and cut a fifth of its work staff. This led the Financial Times to label Vestas as the “poster child” for the troubles of the wind industry.
Business analysts pinned Vestas’ woes on an ill-timed expansion strategy following the 2007 financial crisis. The company expanded rapidly, and according to analysts, without strategy. In 2008 alone, Vestas added 5,500 employees. This expansion was undercut by a global decline in wind industry and pressure from Chinese manufacturers.
Vestas is nearing the conclusion of a two-year cost-trimming programme, which has seen the company reduce 30 percent of its workforce and cut expenses by almost 3 billion kroner over the period. This allowed Vestas to stave off pressure from creditors and regain control over its cash flow problems.
The embattled company feels, however, it is on the rebound to profitability as the focus turns from restructuring to development.
For Engel, the dismissal concludes an eight-year tenure that started with fanfare and ended with a string of questionable decisions that stemmed from the global financial crisis.
Shares of Vestas skyrocketed following the announcement of Engel’s departure. During morning trading on the Copenhagen exchange, the company's stock was up by 9.5 percent, the biggest rise since May 28.
Runevad will assume his new role on September 1. In the meantime, Fredriksson will serve as acting CEO.
NOTE: This story was updated at 11:34am.