Vestas Wind Systems A/S (VWS) is cutting an additional 1,400 jobs to lower costs by more than 250 million euros ($311 million) in preparation for a decline in wind turbines installations it expects next year.
The world’s biggest maker of the machines said it expects to have 19,000 employees at the end of the year, down 16 percent from the end of last year. It’s still considering whether to eliminate 1,600 jobs in the U.S., which depend on a tax credit that expires this year.
“We are now intensifying this which means we will get to about 3,700 job cuts before year-end,” Vestas Chief Executive Officer Ditlev Engel said today in an interview on Bloomberg Television’s “On the Move” show with Francine Lacqua. “That’s preparing for what we expect to be quite a tough 2013.” Engel said he could “never rule out” more reductions.
Vestas is suffering from increased competition from rivals such as Nordex SE (NDX1) in Germany and Xinjiang Goldwind Science & Technology Co. Ltd. (2208) in China at the same time governments from the U.S. to Europe are slashing subsidies.
Losses for the first half widened to 170 million euros from 30 million euros a year ago as margins narrowed. Vestas shares rose as much as 7 percent to the highest since June 1. They were up 2 percent at 34.58 Danish kroner at 9:43 a.m. in Copenhagen.
The earnings were in step with guidance the company released three weeks ago. Vestas in January said it would cut 2,335 jobs this year, bringing overall headcount to 20,400.
With a total of 3,735 posts to be eliminated in 2012, Vestas said about 1,000 employees have already departed, and another 1,100 will lose their jobs next month. The rest will leave before the end of this year. The company said it will “evaluate” its U.S. manufacturing footprint as it waits to see if lawmakers extend a tax credit to the industry.
Of the 2,700 job cuts that remain this year, 55 percent will be in Europe and Africa, 25 percent in the Asia-Pacific region, and 20 percent in the Americas, according to Vestas. Those proportions work out to roughly 1,485 posts in Europe and Africa, 675 in Asia-Pacific and 540 in the Americas.
Engel said in January that as many as 1,600 U.S. jobs are at risk if lawmakers don’t extend the production tax credit beyond year-end. The credit gives an incentive of 2.2 cents a kilowatt-hour of wind power.
Vestas also reiterated full-year targets for revenue of 6.5 billion euros to 8 billion euros and a margin before interest and tax of zero to 4 percent, while cutting predicted shipments to 6.3 gigawatts from 7 gigawatts.
Vestas said it expects shipments to decline further to 5 gigawatts in 2013, hastening the need for job cuts. Lower shipments “will result in a significantly lower activity level in 2013 to which the company will naturally have to adapt,” Vestas said.
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