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Vestas V90 crisis takes new twist after ZF gearbox failures

WORLDWIDE: Lead manufacturer seeks compensation from suppliers ZF and Schaeffler after 15% of V90-3MW turbines are hit by bearings failure.

Vestas is set to seek compensation from its suppliers over a gearbox bearings fault affecting its V90-3MW turbines in what is the latest in a series of crises to engulf the firm.

The Danish manufacturer revealed in its results for the first financial quarter of 2012 that it was setting aside an additional €40 million in warranty provisions to cover a gearbox bearings malfunction affecting 376 of the machines, which represent 15% of all V90-3MW turbines installed.

All of the affected turbines contain gearboxes using an integrated bearings solution. The gearboxes were supplied to Vestas between June 2009 and September 2011 by Hansen Transmissions, now known as ZF Windpower Antwerpen following its acquisition by German firm ZF Friedrichshafen in November 2011.

A Vestas spokesman said the company would look at seeking compensation from both ZF and Schaeffler, ZF's supplier of the bearings. "Vestas has allocated EUR40 million to cover the potential additional maintenance, repair or replacement costs of our customer's gearboxes," said the spokesman.

"Vestas will pursue all relevant actions with regards to potential compensation from ZF and the bearing manufacturer."

A ZF Windpower spokesman said the firm was working with Vestas and Schaeffler to remedy this situation as soon as possible.

The affected bearings are the rotor main bearings that are fitted in the gearbox input shaft, a spokesman for Schaeffler explained.

"We are aware of individual cases of damage to rolling bearings of this type in the named turbines," he said. "We are currently investigating this issue to find the cause of the damage and are holding constructive talks with our customer on this matter."

Vestas declined to name which projects are affected, but of the 376 turbines in question, 36 are offshore machines.

The affected turbines' combined capacity of 1,128MW is the equivalent of all multi-megawatt turbines supplied to wind farms by Vestas in 2011. However, despite the substantial scale of the problem, Vestas declined to comment on whether any funds - in addition to the EUR40 million - would be required to tackle the problem, as this was part of the ongoing negotiations with ZF.

Ongoing woes

It is the latest in a series of crises to engulf the world's largest turbine manufacturer over the past eight months. The issues started in November 2011 when Vestas announced a profit warning and revealed operational issues following a failure to bring its generator factory online for its latest Gridstreamer and V112 turbines. This was followed by a further profit warning in January, again prompted by higher-than-expected development costs for the V112. One week later Vestas announced it was restructuring and cutting 2,335 jobs.

February then marked a month of boardroom upheaval for Vestas, with the firm's offshore chief Hans Jorn Rieks being axed only three weeks after being appointed to the position and the resignation of its deputy chief executive and chief financial officer Henrik Norremark just one month after he was appointed to the position by chief executive Ditlev Engel. Chairman Bent Carlsen and deputy chairman Torsten Rasmussen meanwhile informed the board that they would not be seeking re-election.

Also in February, Vestas published its preliminary annual results for 2011, revealing a EUR60 million operating loss and that it missed its revenue targets by 16%. The firm's revenues for 2011 were EUR5.8 billion, compared to a forecast of EUR7 billion.

Last month's publication of results for the first quarter of 2012 continued the bad news, with the firm revealing it had made a pre-tax loss of EUR225 million, an even worse showing than the EUR118 million loss recorded in the first three months of 2011. The one ray of hope was that its first quarter revenues were EUR1,105 million, up 4% on the EUR960 million revenues recorded for the same period last year.

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