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Shareholders take over the reins -- Nordex downsizes

Major shareholders in Nordex have taken over the running of the publicly traded wind turbine company after suspending managing director Dietmar Kestner on February 20. Although the decision means Nordex can now carry out a substantial downsizing, it has shaken confidence in the company on the German stock exchange. Kestner was suspended within days of Nordex reporting a EUR 12 million loss for the fourth quarter of 2002 -- the first quarter of the company's fiscal year. At the same time, while retaining projected revenue for the year at EUR 520 million, Nordex reduced its expected profit from EUR 23 million to EUR 3 million.

The reduction is greater than even the most pessimistic market analysts had expected, leading to speculation among them that Nordex, with nobody at the helm, is not in a position to continue in profit. In fact, company leadership is being strengthened. Three key managers, among them sales director Carsten Pedersen, who represents the Danish family that founded Nordex, have reached agreement with the main shareholders to fire 150 workers and reduce costs by 20%, or EUR 8 million. All European production will be moved to Nordex's German factory at Rostock following closure of the Danish production line, which only contributed 2% to revenues last year. Pedersen and his brother Jens Pedersen are major shareholders through the Nordvest company along with German bank WestLB.

Carsten Pedersen has also been a member of the company's four-strong leadership group and as the most experienced now takes over the reins. Within the company sources say there is no panic. Aside from extraordinary costs with a single project, the downturn for Nordex reflects the seasonal swings in the wind business that are normal for this time of year. The main shareholders are using the poor quarterly result to push through a long-needed company rationalisation, say company sources.

Losses and overcapacity

According to the Hamburgische Landesbank, Nordex's prestigious and newly completed Havøygavlen plant in the Norwegian Arctic cost the company net losses of EUR 5 million. One of the project's 16, 2.5 MW machines failed spectacularly in November (Windpower Monthly, December 2002). Meantime, it is no secret that Nordex has built-up an over-capacity of 50% -- at a time when the company is saying prospects are not as good as they have been. With orders down by half -- now at EUR 67 million -- and with no managing director, the resulting lack of confidence in the leadership caused Nordex's share price to dip to EUR 1.10, just a quarter of what it was half a year ago.

Just as with Vestas and NEG Micon, the low share price has given rise to wide speculation that Nordex, with factories in Denmark and Germany, is ripe for takeover by an existing strong wind turbine manufacturer, such as GE Wind, or one of the international industrial conglomerates, such as Siemens, that have expressed interest in entering the wind market.

Nordex moved into German ownership in 1996 when it was taken over by the Balcke-Dürr group, owned largely by Deutsche Babcock. Nordex later became part of Borsig Energy, one of five divisions at Deutsche Babcock. In 2001, 70% of Nordex was floated on the Frankfurt stock exchange, with Babcock Borsig, in financial difficulties, selling its remaining 30% in Nordex to WestLB.

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