Bloomberg News

Vestas Abandons 2015 Sales, Profit Goals; Seen Unachievable

November 09, 2011

(Updates with CFO comment in final two paragraphs.)

Nov. 9 (Bloomberg) -- Vestas Wind Systems A/S, the biggest wind-turbine maker, abandoned its profit margin and sales targets for 2015 as weakness in developed markets pushed them out of reach.

The goal of 15 billion euros ($21 billion) in revenue and a margin on earnings before interest and tax of 15 percent, under its so-called Triple15 program, aren’t expected to be attained, the Aarhus, Denmark-based company said today in a statement.

“Vestas does not expect to be able to reach the earlier announced Triple15 ambition,” it said. “In the medium term, Vestas aims to realize a high single-digit Ebit margin.”

The company published third-quarter earnings early on Oct. 30, cutting its full-year revenue and margin forecasts for the third time in 21 months. Vestas will lower fixed costs and raise market share, it said today. The Triple15 plan was announced in 2009, ahead of Europe’s debt crisis.

Vestas fell 2.7 percent to 80.05 kroner at 2:27 p.m. in Copenhagen, bringing the decline the past year to 55 percent.

The producer was “light on specific details to reassure the market and give confidence to achieve these goals,” Rupesh Madlani, an analyst at Barclays Capital in London, wrote in a note today. He rates the stock “equalweight/positive.”

Sales totaled 3.8 billion euros in the first nine months and Vestas had an operating loss before interest and tax of 84 million euros, with a negative Ebit margin of 2.2 percent.

Capacity Delays

The intake of firm and unconditional orders for the first nine months was for 4,211 megawatts of turbines, giving the company a total backlog of 8 billion euros of orders, it said. Vestas reiterated full-year forecasts announced Oct. 30 of 6.4 billion euros in sales and an Ebit margin of 4 percent.

“Although lowered, these new targets should be taken as a positive as it is part of the management attempt to regain the market’s confidence,” Julien Desmaretz, an analyst in Paris with Bryan, Garnier & Co., said today in a note to investors. The Triple15 plan “was never judged credible by investors.”

Delays in ramping up a generator factory in Travemuende, Germany, to full capacity led to postponed deliveries, causing Vestas’s profit warning on Oct. 30. In a conference call with investors today, Chief Financial Officer Henrik Norremark said Vestas will announce when the factory is up to speed, which he said is expected at the beginning of 2012.

“It is making generators and making them successfully, but it’s not making enough,” Norremark said. “It is going better, and we see absolutely no issues for our 2012 deliveries.”

--With assistance from Todd White in Madrid. Editors: Randall Hackley, Tony Barrett

To contact the reporters on this story: Alex Morales in London at amorales2@bloomberg.net; Christian Wienberg in Copenhagen at cwienberg@bloomberg.net

To contact the editor responsible for this story: Reed Landberg at landberg@bloomberg.net


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