Bloomberg News

Vestas Plans Restructuring, Cuts Sales Forecast by $1.3 Billion

January 04, 2012

Jan. 4 (Bloomberg) -- Vestas Wind Systems A/S, the world’s biggest wind-turbine maker, will announce a significant change to its corporate structure on Jan. 12 after cutting its revenue forecast for the second time since October.

A total of 1 billion euros ($1.3 billion) of revenue expected in 2011 will be booked this year because of delays in connecting renewable energy projects to the electric grid and bad weather that stalled construction of several projects, the Aarhus, Denmark-based company said in a statement.

The announcement adds to a series of earnings misses that have depressed Vestas shares 90 percent from their peak in 2008. Vestas and its rival General Electric Co. are suffering from slower demand growth and narrowing margins caused by rising competition from Asian companies and subsidy cuts across Europe.

Vestas now expects sales of about 6 billion euros for 2011, down from the 6.4 billion euros it forecast on Oct. 30, which itself was a reduction from 7 billion euros. During a conference call with investors, Chief Executive Officer Ditlev Engel said problems starting up a factory in Germany were under control, though revenue would be delayed.

“We are looking at very carefully how come we have experienced these kind of challenges when taking new technologies to the market,” Engel said on a conference call.

No New Equity

The company gave no details of the program being announced on Jan. 12, saying only that it wouldn’t involve tapping equity markets for more cash and that it has no plans to seek any kind of strategic investor.

Delays relating to weather, connecting wind plants to the grid “and other disruptions” meant some projects would not be counted as revenue until the first quarter of this year.

That means the company expects to reduce its earnings before interest and tax for last year by about 130 million euros, according to the statement.

About 100 million euros of the shortfall is due to development costs for the company’s V112-3.0 MW turbine and GridStreamer technology for its 2-megawatt design.

As a result, the company’s EBIT margin will be “approximately zero percent,” with cash flow remaining positive in 2011.

Vestas also said it had orders of for turbines with 7.4 gigawatts of capacity last year worth 7.3 billion euros, in step with its forecast of between 7 gigawatts and 8 gigawatts. Some customers postponed signing contracts for a “number of major orders from 2011 to 2012,” according to the statement.

Delays in Europe

The delayed turbine orders mostly were from customers in Europe, the company said during the call, and most fourth- quarter sales originated in Europe.

The company said the commissioning problems at its generator factory in Travemuende, Germany, were “under control” and not expected to hurt operations in 2012.

The company will present “a significant change of the whole organization” on Jan. 12, it said in the statement. Vestas is due to announce full-year orders data in its annual report on Feb. 8.

--Editors: Reed Landberg, Will Wade

To contact the reporters on this story: Sally Bakewell in London at; Justin Doom in New York at

To contact the editor responsible for this story: Reed Landberg at

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