Tough year ahead for Vestas after record revenues and losses in 2012

DENMARK: Vestas today revealed it had made record revenues and record losses in 2012, and expects revenues to fall in 2013.

Vestas CEO Ditlev Engel
Vestas CEO Ditlev Engel

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The turbine manufacturer's annual report for 2012, published today, reveals that the firm recorded revenues of €7.2 billion in 2012, up from €5.8 billion in 2011.

However, it made a record pre-tax loss of €713 million in 2012, far worse than 2011's loss of €153 million.

Vestas has failed to make a pre-tax profit since 2010 and the company's CEO, Ditlev Engel, told Windpower Monthly that this year's losses were chiefly due to write-downs totaling €551 million. Engel said these write-downs were due to factory closure and job losses previously announced in 2012.

"The write-downs come from various points, from selling non-core assets to costs in connection with staff layoffs," said Engel.

"But predominately they come from a more conservative outlook on the market, and whenever you do that you have to reassess the value of your assets."

Vestas shipped 2,765 wind turbines with an aggregate capacity of 6,171MW in 2012, compared with 2,571 wind turbines and 5,054MW in 2011.

However, by far the single biggest country market for Vestas turbines in 2012 was the US, which had 1.3GW in capacity shipped to it as developers frantically sough to get projects in place before the then-anticipated expiry of the country's main wind subsidy, the production tax credit (PTC). The spike caused by the PTC uncertainty is likely to leave the US market very flat in 2013.

Engel said it was this combined with regulatory uncertainty in Europe which had led Vestas to lower its expectations for business volumes in 2013. The company expects to ship between 4GW and 5GW of turbines this year. It is predicting a revenue of just €5.5 billion in 2013, a drop of €1.7 billion on 2012.

It is, however, expecting to make a 1% profit on this lower revenue, with Engel insisting that the firm would be announcing no further job cuts or closures this year.

The Vestas CEO declined to comment further on a threatened shareholder rebellion at the company's forthcoming AGM in March, where shareholder rights specialist Deminor Recovery Services plans to ask shareholders to vote on the appointment of a scrutiniser to examine the Vestas board's recent business decisions.

"I have no comment other than the board's stock exchange announcement that they will not support this, and I am sure at the AGM the chairman [Bert Nordberg] will elaborate why," said Engel.

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