Denmark's Vestas Pockets $1 Billion

Posted by: Mark Scott on May 01, 2009

What would you do with $1 billion? That’s the question now being asked of Denmark’s Vestas, the world’s largest wind-turbine manufacturer, after the company pocketed $1 billion this week by issuing 18.5 million new shares. The capital raising came a day after Vestas announced a 70% jump in its first quarter net profits and the layoff of roughly 9% of its global workforce.

When I interviewed Vestas Chief Executive Ditlev Engel on Apr. 28, he was characteristically cagey about how the new funds would be spent. Yet with the company pushing aggressively into the U.S. and Chinese markets, analysts reckon the money could be used to snap up undervalued assets, particularly cash-strapped technology companies that could strengthen Vestas’ own wind-turbine machines.

Vestas’ capital raising shows investors still are willing to stump up cash for top-tier green energy companies. But Citigroup analyst Mark Fielding, in an Apr. 29 research note, highlighted an important caveat to the Danish company’s rush to tap the market for more funds. “This is the third capital increase by Vestas in six years,” he wrote. “And [is] a reminder of the group’s poor cash generation history.”

That may cause problems for Vestas’ ambitious — and capital-intensive — expansion plans for new markets, particularly the U.S. and China.

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Reader Comments

monica

May 5, 2009 12:04 PM

One thing many Americans don’t realize is how important domestic energy is to our country’s economic recovery and overall security. Currently, half of our electricity comes from coal—which happens to be our most abundant fuel resource. In fact, we recently kicked off the America’s Power Factuality Tour—a country-wide road trip in search of the people, places and technologies involved in producing cleaner, domestic electricity from coal. We started in Wright, Wyo., at the Powder River Basin, which produces more coal than any other site in the U.S. Take the tour for yourself and see our most abundant domestic fuel at work. http://www.americaspower.org/factuality

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BusinessWeek correspondents John Carey and Mark Scott, cover the green scene, keeping on top of the business aspects of energy, the environment and climate change, as well as the technologies, policies, markets and people that are shaping how the earth's resources will be used in the century ahead.

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